As the year comes to a close, many healthcare practices are evaluating whether their current business structure still supports their long-term financial goals. For some doctors, electing S-Corporation status may offer meaningful tax advantages in 2026, particularly when combined with Pass-Through Entity Tax (PTET) opportunities available in many states. 

Proactive planning now can help your practice determine whether this strategy aligns with your operational and financial needs. 

Potential Tax Savings Through an S-Corporation Election 

For practices with strong net income, an S-Corporation structure can reduce overall tax liability by allowing owners to divide income into salary and distributive profits. This may help lower self-employment taxes while preserving flexibility in how income flows through to the owners. 

Healthcare practices often benefit from this structure because revenue and profitability tend to be consistent, making it easier to support reasonable compensation requirements. 

Enhanced Benefits When Combined With PTET 

In states that allow a Pass-Through Entity Tax (PTET), practices may receive an additional deduction by paying state income tax at the entity level. When paired with an S-Corporation election, PTET can create an effective combination of savings that may not be available to Schedule C filers. 

This approach can be especially impactful for smaller independent practices, including solo doctors, concierge providers, and specialty care groups with high taxable income. 

Planning Considerations for 2026 

To take advantage of S-Corporation status for the 2026 tax year, most practices must file the election by March 16, 2026. Before making this decision, practices should evaluate: 

• Expected profitability 

• Compensation structures 

• PTET eligibility and participation requirements 

• Payroll and administrative needs 

Assessing these factors now ensures your practice has time to implement any necessary changes before the new tax year begins. 

Supporting Your Practice’s Long-Term Financial Strategy 

An S-Corporation election may be beneficial for many healthcare practices, but it is not the right choice for everyone. Understanding how this decision fits within your broader tax and financial strategy is essential. 

YHB’s healthcare team offers year-round support to help medical, dental, and veterinary practices evaluate entity selection, understand potential tax savings, and strengthen their long-term financial outlook. Contact us to discuss whether an S-Corporation election or PTET strategy may be appropriate for your practice.