How Trump's Tax Plan Could Affect Doctors

Karen Riccio

Disclosures

November 10, 2017

In This Article

Big Changes May Be in Store

Although nothing has been cast in stone and changes may be yet to come, the recent passes at the GOP tax reform plan revealed in early November include a handful of changes that could affect wealthier Americans—some negatively, some positively.

Considering that primary care doctors earned $217,000 per year on average and specialists $316,000, according to Medscape's 2017 Physician Compensation Report, there's a good chance that many physicians fall into that category.

Physicians who have been delivering many years of specialized service may even represent the top 1% in this country. On the basis of the latest Internal Revenue Service (IRS) data from 2015 tax returns, that group includes people earning at least $480,930. While physicians early in their careers may not command high salaries today, it's possible that they will catch up with their veteran peers.

Before we dissect the tax reform bills, keep in mind that there's no telling what the final bill needing approval by both the Senate and the House of Representatives will look like. We shouldn't have to wait too long, however; The goal is to have the final bill signed, sealed, and delivered by the end of 2017, with laws taking effect on January 1, 2018.

Both the House of Representatives and the Senate have proposed bills, both called the Tax Cuts and Jobs Act (TCJA). But they differ in some key elements.

According to the Center on Budget and Policy Priorities (CBPP),[1] the 429-page House tax plan as it stands today would cut millionaires' taxes in 2018 by $200,000 on average.

We've whittled the House document down to the five key proposed changes that could affect physicians, starting with the one that many tax experts believe will provide a large windfall for the wealthy—and potentially change the way some doctors choose to conduct business, according to James M. Dahle, MD, founder of The White Coat Investor, LLC. Then we'll look at the Senate's version of the bill.

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