5 far-reaching tax strategies every doctor should use to reduce their taxes in 2026

With costs rising and reimbursements decreasing, financial efficiency is now as important to a clinic's health as high-quality care. For physicians and medical business owners, this pressure transforms tax season from a mere obligation into a significant, untapped opportunity to enhance profitability that should be addressed year-round

Between complex entity structures, multi-location growth and ever-changing IRS regulations, even well-managed practices often end up paying thousands more in taxes each year. The real problem is not just poor accounting, but a lack of proactive strategies backed by smart technology and expert guidance that can identify cost savings before the end of the year.

AI-native tax company Gelt combines human CPAs with intelligent automation to help physicians identify opportunities earlier, modernize their financial structures and reduce tax risk. Their case studies show a consistent trend: Even high earners are leaving tens of thousands of dollars on the table each year simply because their tax planning is reactive rather than strategic.

Here are five tax strategies every physician and medical business owner should consider in 2026, based on real-life examples of W-2 employees, locum tenens clinicians, and mixed-income medical professionals.

1. Modernize your entity structure (if you earn a 1099)

Independent income adds complexity, especially when physicians juggle multiple facilities, telemedicine platforms, or consulting work. Gelt's hybrid model helps clinicians address this issue with precision: AI flags structural inefficiencies early on, while CPAs evaluate whether an S Corporation election or PLLC setup makes strategic sense.

In one Gelt case study, a locum tenens physician who was being paid personally moved to a PLLC through an S corporation election after a CPA-led analysis. Powered by an AI-driven model, the change resulted in tax savings of $62,000 in the first year and resulted in a clearer long-term structure.

This remains one of the most impactful strategies for doctors earning $1099.

2. Maximize tax-deferred retirement savings (especially for W-2 doctors)

W-2 doctors often believe there are fewer options available to them. Geert's hybrid approach proves otherwise: AI reviews compensation patterns and contribution history, while CPAs design retirement and philanthropic strategies that fit the physician's goals.

In Gelt's W-2-only case study, a hospital-employed physician expanded pension contributions, accumulated charitable contributions through a DAF, and reaped market losses, resulting in a first-year tax savings of $40,500.

For physicians in high-tax states, the right retirement strategy can meaningfully reduce taxable income.

3. Use short-term rentals and cost segregation to offset revenue

Short-term rentals (STRs) offer strong tax benefits, but the rules are nuanced. Gelt’s platform analyzes depreciation opportunities and predicts passive vs. non-passive outcomes, while human CPA advisors validate material participation and structure revenue appropriately.

In a mixed income case study, AI highlighted how to optimize STR losses, a CPA restructured a physician couple's income distribution and entity setup to support eligibility. The result: $45,500 in savings in the first year.

This is the strength of the Geert hybrid model, as technology helps identify opportunities, but human judgment determines what is feasible and appropriate.

4. Optimize business spending to improve cash retention

Physicians making 1099s often do not take full advantage of legitimate business deductions simply because they are not actively tracking or classifying them. Gelt’s platform automatically captures data and flags underutilized deduction categories, while advisors translate these alerts into actionable, IRS-compliant strategies.

Common missed deductions include:

• continuing medical education
• Board Exam Preparation and Licensing
• Electronic Medical Record Subscription
• home office
• equipment
• Travel between facilities

When used in conjunction with tools like structured planning and Solo 401(k)s, these deductions can significantly improve cash retention, especially for locum tenens physicians who often manage high cash flow without strategic tax planning.

5. Develop a long-term, holistic tax strategy rather than a one-time move

The doctors who keep the most money over time don't rely on isolated deductions. They adopt year-round strategies that change with income and career growth.

Gelt supports this by using AI to continuously monitor revenue changes, deductions, and regulatory changes, while dedicated CPAs adjust plans as physicians change jobs, add locations, or increase 1099 income.

In Gelt's W-2, interim and hybrid case studies, the combination of ongoing planning pillars such as entity optimization, retirement strategies, expense planning, STR integration and philanthropic tools resulted in annual savings of $40,000 to $62,000 and a significant long-term wealth impact.

The real differentiator is not a single strategy; It's a coordination between real-time technology and experienced CPAs who work closely with you and know how to apply it.

bottom line

Taxes are one of the few areas where physicians can immediately generate a meaningful financial boost without increasing patient volumes or reducing staff. With the combination of Gelt intelligent automation and professional CPAs, physicians get the visibility and hands-on guidance they need to navigate the complexities of entity selection, investment decisions and revenue.

In a healthcare environment defined by rising administrative costs and consolidation, proactive tax strategies have become a core component of financial resiliency. For physicians who want their financial health to be as precise as their patient care, Gelt's AI + human hybrid model offers a smarter, more personalized approach to tax planning; one that delivers benefits year after year.