Tax Deductions Most Colorado Doctors Miss: A CPA’s Checklist

Physicians are trained to be thorough — except, sometimes, when it comes to their own tax returns. Between patient loads, administrative demands, and the complexity of medical practice finances, legitimate deductions slip through the cracks every year.

Whether you own a private practice in Denver, work as a partner in a Colorado Springs clinic, or do locum tenens work across the Front Range, the tax code offers deductions specifically designed for your situation. The problem is that most general-purpose tax software — and even some generalist CPAs — don't catch them all.

Here's a checklist of the deductions we see Colorado physicians leave on the table most often.

1. Medical Equipment and Technology (Section 179 and Bonus Depreciation)

If your practice purchased imaging equipment, diagnostic tools, surgical instruments, or IT systems in 2025, you may be able to deduct the full cost in the year of purchase rather than depreciating it over several years.

The One Big Beautiful Bill Act (OBBBA), signed in July 2025, made two major changes:

• Section 179 limit doubled to $2,500,000 (up from $1,250,000), with a phase-out beginning at $4,000,000 in total purchases
• 100% bonus depreciation restored for property acquired and placed in service after January 19, 2025

For practices investing in EHR systems, telemedicine platforms, or office renovations, these provisions can create substantial first-year deductions that reduce both federal and Colorado tax liability.

2. Retirement Plan Contributions

Most physicians know they should contribute to retirement accounts. What many miss is just how much they're allowed to contribute — and how the right plan structure can dramatically reduce taxable income.

2025 contribution limits:

Plan Type	Maximum Contribution
SEP IRA	$70,000 (25% of compensation)
Solo 401(k) (under 50)	$70,000 (employee + employer)
Solo 401(k) (age 50–59 or 64+)	$77,500
Solo 401(k) (age 60–63)	$81,250 (super catch-up)
Defined Benefit Plan	Up to $280,000 annual benefit

The defined benefit plan is the one most physicians overlook. For high-earning practice owners in their 40s and 50s, a defined benefit plan can allow annual contributions of $150,000 to $300,000+ depending on age and income — far exceeding what a 401(k) or SEP IRA permits. The contributions are fully tax-deductible to the practice.

3. Continuing Medical Education (CME)

CME expenses are fully deductible when they maintain or improve skills required in your current practice. This includes:

• Conference registration fees and course materials
• Travel, lodging, and 50% of meals while attending CME events
• Online medical education subscriptions (UpToDate, medical journals)
• Board recertification exam fees

The deduction doctors miss most often is the travel component. If you attend a medical conference in another city and the primary purpose is educational, your round-trip airfare is fully deductible — even if you extend the trip by a day or two for personal time. Lodging, ground transportation, and 50% of meals are deductible for business days only (not personal extension days).

4. Self-Employed Health Insurance Premiums

If you're a practice owner or partner and pay for your own health insurance, you can deduct 100% of premiums for medical, dental, vision, and qualifying long-term care insurance — for yourself, your spouse, dependents, and children under 27.

This is an above-the-line deduction (reported on Form 7206), meaning it reduces your adjusted gross income directly. However, two rules trip up physicians regularly:

• You cannot claim the deduction for any month you were eligible to participate in a spouse's employer-subsidized plan
• The deduction cannot exceed your net self-employment income from the practice

5. Home Office for Telemedicine and Administrative Work

The expansion of telemedicine since 2020 means more Colorado physicians have a dedicated space at home for virtual patient visits, charting, or administrative work. If you use a portion of your home regularly and exclusively for business, the home office deduction applies.

You can use the simplified method ($5 per square foot, up to 300 sq ft, for a maximum $1,500 deduction) or the regular method, which allows you to deduct the actual proportion of mortgage interest, property taxes, utilities, and maintenance attributable to the office space.

For physicians who own their practice, the regular method often yields a larger deduction — especially with Colorado's housing costs along the Front Range.

6. Vehicle and Mileage

Physicians who travel between multiple practice locations, hospitals, or nursing facilities during the workday can deduct business mileage. The 2025 IRS standard mileage rate is $0.70 per mile.

What counts:

• Driving between your primary office and a hospital where you have privileges
• Travel to satellite clinic locations
• Visits to nursing homes or assisted living facilities
• Travel to CME events (if driving)

What doesn't count: your commute from home to your primary practice location (unless you have a qualifying home office, in which case the first trip of the day becomes deductible).

7. Professional Fees and Memberships

These are individually small but add up quickly across a career:

• State medical license renewal fees
• DEA registration
• Board certification and recertification fees
• Professional association dues (CMA, AMA, specialty societies)
• Malpractice insurance premiums
• Medical staff and hospital privilege fees
• Subscriptions to medical journals and databases

For practice owners, these are deducted as business expenses on Schedule C or your entity return. For employed physicians, these are not deductible on your personal return — the TCJA suspended the employee business expense deduction starting in 2018, and the OBBBA permanently eliminated it (Section 110010). W-2 physicians cannot deduct these expenses unless their employer offers an accountable reimbursement plan.

8. The Student Loan Interest Trap

This isn't a deduction most doctors miss — it's one they think they can take but can't.

The student loan interest deduction allows up to $2,500 per year, but it phases out completely at $100,000 MAGI (single) or $200,000 MAGI (married filing jointly). Most practicing physicians exceed these thresholds, making the deduction worth $0.

If you're still in residency or fellowship with income below these limits, claim it. Otherwise, focus your planning energy on the deductions above — they're worth far more.

9. Colorado-Specific Considerations

Colorado physicians face a few state-level tax items that general tax software often handles poorly:

SALT Cap Increase

The OBBBA raised the state and local tax (SALT) deduction cap from $10,000 to $40,000 ($20,000 for married filing separately), retroactive to January 1, 2025. However, there's an income-based phase-down: the $40,000 cap is reduced by 30% of modified AGI exceeding $500,000 (single, HoH, or MFJ) or $250,000 (MFS), with a floor of $10,000 ($5,000 MFS). At roughly $600,000 MAGI, the cap is fully reduced to $10,000. For Colorado physicians earning above $500,000, your CPA should model the exact benefit based on your income level.

Colorado FAMLI Contributions

Colorado's Family and Medical Leave Insurance (FAMLI) Act requires a 0.9% premium on wages, split equally between employer and employee (0.45% each). The employer portion is deductible as a business expense. Note that the employee share is not deductible on your personal return — the Colorado Supreme Court classified FAMLI premiums as insurance fees, not state taxes, so they don't qualify for the SALT deduction on Schedule A.

Pass-Through Entity Tax (PTET)

Colorado allows S-Corps and partnerships to elect to pay state income tax at the entity level rather than passing it through to individual owners. This effectively allows practice owners to deduct Colorado's 4.40% state income tax as a business expense, working around the SALT cap entirely. Important: Under current law, 2025 is the final year the Colorado PTET election is available (the SALT Parity Act covers tax years prior to January 1, 2026). If your practice hasn't made this election for 2025, talk to your CPA before year-end — the savings can be significant even with the higher SALT cap.

QBI Deduction Addback

Colorado requires certain high-income taxpayers to add back their federal QBI deduction on their state return. However, because medical practices are classified as Specified Service Trades or Businesses (SSTBs), the federal QBI deduction phases out well before the Colorado addback thresholds kick in. For most physicians, this is a non-issue — but it's worth confirming with a CPA who understands both the federal SSTB rules and Colorado's addback provisions. We covered this in detail in our Colorado QBI Addback guide.

10. Why a Medical-Focused CPA Matters

The deductions above aren't obscure loopholes — they're standard provisions in the tax code. The issue is that applying them correctly to a medical practice requires understanding how physicians earn income, how practices are structured, and where the common blind spots are.

A CPA who works with medical practices regularly knows to ask about CME travel, review equipment purchase timing against the OBBBA cutoff dates, and evaluate whether your retirement plan structure is leaving money on the table. A generalist might not.

At Lockhart & Powell, we work with medical practices across Denver, Colorado Springs, and the Front Range through monthly CPA packages that include tax preparation, bookkeeping, and year-round advisory — so these deductions get caught during the year, not scrambled for at filing time.

Frequently Asked Questions

Can employed (W-2) physicians deduct professional expenses?

No. The Tax Cuts and Jobs Act suspended the unreimbursed employee business expense deduction in 2018, and the OBBBA permanently eliminated it. W-2 physicians cannot deduct CME, licensing fees, or malpractice insurance on their personal returns. However, if your employer offers an accountable reimbursement plan, expenses can be reimbursed tax-free. Practice owners and partners deduct these as business expenses on their entity returns.

Should my medical practice elect S-Corp status?

An S-Corp election allows practice owners to split income between salary and distributions, potentially reducing self-employment tax. However, the IRS scrutinizes physician S-Corps closely — your salary must be "reasonable" for your specialty and region. A CPA experienced with medical practices can model whether the tax savings outweigh the additional payroll and compliance costs. Learn more on our Medical Practice CPA page.

Is the Colorado PTET election worth it for a medical practice?

In many cases, yes — and 2025 is especially important because it's the final year the Colorado PTET is available under current law (the SALT Parity Act expires January 1, 2026). The PTET allows your practice to deduct Colorado income taxes as a business expense, bypassing the federal SALT cap entirely. Even with the SALT cap increase to $40,000, the PTET often provides additional savings for physicians with significant state tax liability. The election must be made annually, and the math depends on your income level, filing status, and entity structure.

What records do I need for CME travel deductions?

Keep conference registration confirmations, receipts for travel and lodging, a log of educational sessions attended, and meal receipts. The IRS wants to see that the primary purpose of the trip was educational. If you extend the trip for personal days, only the business-related travel days and expenses are deductible.

How do I know if my retirement plan is optimized?

If you're contributing to a SEP IRA or Solo 401(k) and your practice net income exceeds $300,000, you may benefit from adding or switching to a defined benefit plan. A CPA can model the tax savings of different plan structures based on your age, income, and retirement goals. This is especially valuable for physicians in their 40s and 50s who want to accelerate retirement savings.