Tax Rounds October 2025 - The Rest of the One Big Beautiful Bill Act (OBBBA)

What’s new at TaxSmart MD?

Thank you to all clients who have booked planning meetings for this year.  I hope that these were helpful, but please provide me with any feedback about the aspects you thought worked well, and those you think have room for improvement.  I’m aiming to finish the tax planning meetings within the next 2-3 weeks for clients who signed up between June and September.

In the future, my aspiration is to onboard new clients between 4/15 and 8/15.  This will allow us to maximize the benefits of tax planning and facilitate the smoothest possible filing season.  However, at this time, I still have capacity to take additional clients before the upcoming filing season. 

Most tax services are focused primarily on return preparation and filing.  For me, forward-looking planning is my passion.  That’s why I think it’s essential to provide tax planning, and although we are 75% of the way through 2025, it is better to do planning late than skip it altogether. 

Because the onboarding and planning processes will be compressed and subject to additional time constraints, I’ll be implementing a nonrefundable onboarding fee, equal to one month of a client’s base subscription, for prospective clients who have yet to enroll in the service.  As an alternative to an onboarding fee, I considered an a la carte fee for planning meetings after 9/30/25, but I concluded that the planning is so essential that it should be reflected in the pricing for all clients.  If you’ve read TaxSmart MD’s detailed schedule of fees, you may have noticed that there’s an onboarding fee of two months of the subscription price starting 1/1/26; the one-month onboarding fee, effective in October, follows the same principle. 

For prospective clients who have already booked an introductory meeting with me, I’ll waive the onboarding fee if they sign up within a week of the meeting (or, if the meeting took place in September or earlier, if they sign up in the next seven days).  Also, after you’ve been a client for twelve months, you’ll get a credit in the amount of the onboarding fee (essentially, this means there is no charge in Month 13).  

The Rest of the Big Beautiful Bill:

I imagine that avid readers of the blog may be getting tired of hearing about the OBBBA.  It is an enormous piece of legislation with wide-ranging ramifications, and I’ve tried to cover the most important parts that would benefit my base of clients (who mainly consist of self-employed professionals between 30 and 50 with moderate to high incomes).  There’s a lot more in the bill that you may have heard about, but for one reason or another, I don’t think many of my clients will be able to take advantage of them.  I’m including them here in case you could become eligible for them in the future, or you want to tell your friends and family about them.

Senior Deduction:  Taxpayers who are 65 or older get an additional $6,000 deduction if they are single, or $12,000 if they are filing jointly with their spouse.  They can take this whether they itemize or take the standard deduction.  It phases out with higher incomes.

This deduction is set to expire after 2028.  Of note, our current elected leaders campaigned on eliminating taxation of Social Security; in fact, tax on Social Security income remains alive and well, but this senior deduction was passed so that most seniors would have no tax liability, despite including SS in their Adjusted Gross Income (if their “combined income” is over certain limits, which almost all physicians are going to blow through).

Mortgage Insurance Premiums are Deductible:  Since 2022, taxpayers have not been able to include mortgage insurance as part of their deduction for mortgage interest.  If you have a doctor mortgage, you probably aren’t paying this anyway.  However, insurance on the first $750k of debt becomes deductible, starting in 2026.

Itemized Deduction Limits in the Top Tax Bracket:  Prior to the Tax Cuts and Jobs Act (TCJA), there was an annoying thing called the Pease limitations that reduced the value of itemized deductions if your income was too high.  This is a simpler version of the same thing, but only applies to taxpayers in the top tax bracket of 37% starting in 2026.  Basically, it means that itemized deductions reduce your tax liability by 35% (the next tax bracket), rather than your marginal tax rate of 37%. 

Deduction for Tips:  Chances are, you haven’t received much in the way of tips from patients lately.  Even if you did, they wouldn’t be deductible if you received them while working in a Specified Service or Trade Business (SSTB), such as medicine.  They’re also phased out at moderate levels of income ($150k single, $300k filing jointly).  Deduction goes away after 2028.

Deduction for Overtime:  Like the deduction for tips, it phases out at the same income limits and goes away after 2028.  Deduction is for up to $12.5k of income if single, and $25k if filing jointly. 

Since TaxSmart MD is tailored to self-employed physicians, who are generally not eligible for overtime pay (as they control their schedule and hours), this is a nothingburger for most of my clients.  However, if you have an outside W2 position, or your spouse does, this could be relevant.  Generally, I wonder how this is going to be reported on the W2; the reporting could be a nightmare for HR departments.  I don’t recommend reducing your W4 withholding for this unless you are tracking your overtime pay, and we can account for it accurately in a tax projection.

Lastly, if you are an S Corp owner, theoretically, family members could be eligible for the overtime deduction.  If your spouse or adult children are in fact working more than 40 hours a week, make sure you are tracking their hours accurately, preferably through Gusto or other software.

Deduction for Auto Loan Interest:  The most likely reason why you won’t qualify for this is your income.  The phase out starts at $100k for single filers and $200k for joint filers, and the deduction is lost completely over a range of $50k.  You can’t get this deduction if you’re married and file separately.  Otherwise, the vehicle needs to be assembled in North America, and this is another deduction that goes away after 2028.

Change in Alternative Minimum Tax:  If you don’t know what the Alternative Minimum Tax (AMT) is, consider yourself blessed.  It is a separate parallel tax calculation applied alongside the tax code we all know and do our best to understand.  Those of us (including me) who were in practice before the TCJA had a good chance of getting ensnared by it.

The TCJA didn’t eliminate the AMT but instead loosened the rules so that almost no one was subject to it (mostly, I think it applied to tech workers getting large stock option income).  Now, most physicians will still be able to avoid the AMT, but the higher State and Local Tax (SALT) deduction means that tax professionals can’t just ignore it completely. 

I won’t bore you with numbers, but the most likely taxpayers who will get hit with the AMT are married, have an income between $300k and $500k, and take a lot of deductions that the AMT disallows.  The most likely of these among my clients is the SALT deduction (up to $40k) and accelerated depreciation. 

The good news is that this change takes effect in 2026, so we have some time to prepare.

HSA/HDHP changes:  Starting in 2026, all “bronze” and “catastrophic” plans purchased through the exchanges are considered High-Deductible Health Plans (HDHP), which are HSA eligible.  Previously, some of these plans (including mine) didn’t meet the criteria for the minimum deductible or maximum out-of-pocket, rendering them HSA ineligible.

Secondly, the bill allows taxpayers to work with a Direct Primary Care (DPC) physician and still maintain HSA eligibility - good news for independent doctors!

100% Bonus Depreciation:  Ok, this one really could be helpful for self-employed docs, but there’s not enough to say about it to warrant a separate blog post.  Basically, 100% bonus depreciation is available for business property purchased after 1/19/2025.  There are some big caveats here:
1.  There are separate rules for “listed property,” such as automobiles.
2.  Most states don’t conform to the federal bonus depreciation rules.
3.  You may pay more tax in the long run with accelerated depreciation.

Previously, the maximum bonus depreciation was being phased down (prior to the OBBBA, it would have been 40% of the purchase in 2025) and would have expired after 2026.

1099-K Reporting Limits:  The threshold for processors such as Venmo, Stripe, Cashapp, etc to issue a 1099-K was scheduled to go down to $600, similar to thresholds for other types of 1099’s.  Now, it is back to the old limit of $20,000 and 200 transactions.  Most of my clients won’t get a 1099-K.  However, while the reporting rules have changed, the income is still taxable.

Qualified Opportunity Zones:  I will likely write a blog post on Qualified Opportunity Zone (QOZ) investing at some point.  I’m not a financial planner and stay away from investment recommendations.  However, there is a special tax break available for them.

To take advantage of this, you’d invest capital into a fund that invests in geographic areas (QOZ’s) that are low income.  If you sell appreciated investment property and invest the gains into a QOZ fund, the basis can go up by 10% if you hold the investment for five years.  One of the changes with the new tax law is that if the fund invests in rural areas, the basis goes up 30%.  The second, more significant tax advantage is that after you hold the investment more than ten years, the investment gains are exempt from tax.

Most likely, you would need to be an accredited investor to invest in QOZ’s.  I see them as a potential strategy for high-income, high net-worth clients.  I got invested in one of these in 2021, and based on my experience so far, I wouldn’t do it again.  If you’d like to know more about my experience, feel free to ask me.


What’s new in the blog:

How Getting Married Could Affect the Swift-Kelce Taxes - Hoping there are at least a few Swifties or Chiefs fans that read my blog.  Regardless, there’s some potentially useful information on how getting hitched changes your tax situation.

The New SALT Deduction - The bad news is that this is temporary and goes away if your income is over $600k.  The good news is that $40k is a lot more than the $10k limit in prior years.

Changes to the QBI Deduction - Not the most impactful change in the world, but maximizing the QBI deduction is one of the most important things that self-employed docs can plan for.

Changes in Charitable Donations - Starting in 2026, if you take the standard deduction, you can still deduct cash donations.  If you itemize your deductions, you draw the short straw.

The OBBBA - What Parents Should Know - Five minor provisions of the new tax bill covered here.  The higher child tax credit is the most broadly useful.


Outside news and views:

No Changes to Withholding Tables in 2025 - This makes it slightly more likely that W2 taxpayers will get refunds.  These may change starting in 2026.  

Pittsburgh repeals “jock tax” - This illustrates how jurisdictions may try to tax nonresidents and how courts respond — relevant for professionals with multi-state exposure.

Required Roth 401k Catch Up (Gift Article) - If you made over $145k last year and are eligible for catch-up contributions (meaning you’re over 50), these must be Roth contributions, rather than pre-tax.

List of Professions Qualifying for "No Tax on Tips" - Although doctors and other service professionals are shut out, it’s a surprisingly expansive list.  Tell your relatives if you see their occupation listed.

2026 Retirement Contribution Limits - Not official, but Harry Sit consistently gets these right based on his analysis of historical inflation.

Why ‘Going 1099’ Won’t Solve All Your Financial Problems (White Coat Investor) - I’m including this here so readers have a summary of the factors the IRS uses to distinguish between an employee and independent contractor.

Impact of the OBBBA on Student Loans - I know this is a priority for many of my readers.  The rules change in a big way in 2026.

Anniversary of the Biggest Tax Crime Case - This shows how different our political climate and tax regulation was twenty years ago.

Judge Allows Bankrupt Steward to Keep Employee Retirement Funds - This is one of the few cases I can find where hospital bankruptcy resulted in employees losing their retirement savings.  It is still exceedingly rare, from what I can discern, but it is nevertheless a real risk.


Wait, I can deduct this?

Meals on Alaska Fish Boats:  Straight from the OBBBA (Section 70305)

Is there any good policy reason that meals on fish boats should be 100% deductible, while you can only deduct half of office meals in the break room or a restaurant?  And is there a good reason that meals on fish boats north of 50 degrees latitude and outside of a metropolitan area are twice as deductible as those around Boston or the San Francisco bay?  Of course not, but that’s what you get if your state has Vote #50 for major tax legislation.

I only share this to remind you that while I obey and abide by the tax code, it isn’t any less ridiculous to me as it probably is to you.

That’s it for October!  Thanks for reading, and email me at logan@taxsmartmd.com if you think of any questions, or have other topics you want me to cover in the blog or newsletter!