The end of the year tends to move quickly for most doctors. Patient demand usually rises, schedules shift, and it becomes harder to slow down and think about the financial side of your practice. Yet the weeks leading up to December 31 are one of the most important opportunities to reduce your tax bill. Many of the decisions that shape your taxes for 2025 happen now, not during filing season.
If you are a physician, practice owner, or specialist with side income, a little planning can make a meaningful difference. In this guide, we walk through the year-end tax deductions for doctors, explain how year-end timing affects your taxes, and help you feel more prepared as you head into the new year.
Make The Most Of Equipment And Technology Purchases
Modern medicine relies heavily on technology. Whether you run a private practice, operate within a small group, or manage a specialty clinic, you depend on tools that allow you to diagnose, treat, and support patients effectively. Many doctors wait until something breaks before replacing it, but from a tax perspective, planning these purchases before the year ends can be smarter.
Section 179 lets you deduct the full purchase price of eligible equipment placed in service this year. That means exam room monitors, diagnostic tools, ultrasound machines, computers, tablets, EMR upgrades, telehealth systems, and even waiting room technology can qualify. Instead of spreading deductions over several years, you may be able to take the deduction now and lower this year’s taxable income.
Bonus depreciation is gradually decreasing, so the timing of larger purchases matters more than it did a few years ago. If you have been considering an upgrade or expansion, reviewing the numbers with your CPA can help you decide whether moving forward by year-end strengthens your financial position.
Review Your Retirement Contributions
Retirement contributions are one of the most powerful tools available to doctors. They reduce taxable income while building long-term security, which is especially important in a field where income and workload can change unexpectedly.
If you are employed, take a moment to confirm whether you have maximized your 401(k) or other employer plan contributions. Many doctors realize late in the year that they can increase their contributions to reduce their tax bill, especially if their income ended up higher than expected.
If you own your practice, the opportunities can be even greater. Reviewing your 401(k), profit sharing, or defined benefit plan with your CPA helps ensure your practice is taking full advantage of current limits. Doctors with cash balance plans benefit from year-end planning the most, since these plans allow very high contributions but require careful coordination with payroll and practice profits.
Consider Prepaying Certain Expenses
Many medical practices use cash-basis accounting. If this applies to you, prepaying certain expenses before December 31 can lower your taxable income for the current year. This approach works best for expenses your practice would incur in the near future anyway.
For example, you might choose to prepay a portion of malpractice insurance, renew software early, or cover maintenance contracts that you know will be due soon. The key is not to spend just for the sake of spending, but to shift the timing of planned expenses so they work in your favor.
Talking through these options with your CPA can help you decide which prepayments make sense and which ones to leave for next year.
Track CME, Licensing, And Professional Education Costs
Doctors invest heavily in continuing education, but many forget how much of it is deductible. CME fees, board exams, license renewals, conference registrations, and specialty society memberships all count as business expenses when they relate to your practice.
If you attended conferences earlier in the year or purchased study materials, now is a good time to gather receipts and make sure everything is recorded. If you plan to take a CME course early next year, registering before December can allow you to take the deduction this year while securing your schedule.
These small steps add up and help you reflect a more accurate picture of your professional expenses.
Review Payroll And Compensation Decisions
Year-end is a useful moment to review how you are compensated, especially if your practice is structured as an S Corporation. Your salary must reflect reasonable compensation guidelines, and the balance between your W2 wages and distributions affects both taxes and cash flow.
If you plan to give year-end bonuses to staff or clinicians, deciding whether those bonuses are paid in December or January can change the way your expenses fall across tax years. The same applies to your own compensation if you are a practice owner. A brief payroll review can prevent surprises and help you feel more confident heading into the new year.
Doctors with additional income streams, such as consulting, expert testimony, locum work, aesthetics, or telemedicine, should also review estimated taxes. A quick projection now can prevent underpayment penalties later.
Review Your Loans, Interest, And Financing
Many doctors have financing tied to equipment, practice improvements, or ownership transitions. The interest on these loans is often deductible, but only if recorded correctly. If you refinanced, expanded, or purchased major equipment in 2024, this is a good time to review your records and confirm accuracy.
Doctors planning to refinance in 2025 also benefit from reviewing amortization schedules now. That way, you have a clear understanding of your debt, interest payments, and how they flow into your tax return.
Understand The 2025 Changes That Affect Doctors
The rules shift each year slightly, and 2025 is no different. Bonus depreciation is lower, retirement plan limits have increased, and certain phaseouts have been adjusted. These updates may seem small, but they can affect high-income physicians more than expected.
Checking in with your CPA ensures you understand how the changes apply to your situation and whether you should adjust your strategy before December 31.
Plan Your Next Step With Virjee Consulting
Year-end tax planning does not need to feel overwhelming. With the right guidance, you can reduce your taxes, protect your income, and make decisions that support your long-term goals. At Virjee Consulting, we work with physicians and medical practice owners across the country, helping them feel more in control of their finances and more prepared for the year ahead.
Book a call with us, and we’ll make tax planning easier and more aligned with the realities of running a medical practice.
