A House GOP bill, cleared May 22 by a 215–214 vote, would eliminate the pass-through entity tax deduction, a move that many physician groups warn would raise taxes on private medical practices, more than 20 national medical organizations wrote in a May 20 letter.
Here are five things to know:
1. Many small and midsize medical practices are structured as pass-through businesses, meaning their income is taxed at the individual rather than corporate level, making them especially vulnerable to the proposed change, according to the letter.
2. The groups — which include the American Academy of Family Physicians and American Gastroenterological Association — warn the repeal would result in double taxation on physicians, once at the business level and again on personal returns. The letter argues it unfairly targets service-based professionals and would widen the tax gap between small practices and large corporations.
3. Increased tax pressure could lead to staff cuts, reduced service or outright closures of independent practices, particularly in rural and underserved areas, according to the letter.
4. The bill would raise the state and local tax deduction cap from $10,000 to $40,000, but critics say the benefit is offset by eliminating PTET, making the overall package harmful to small business owners, including physicians. Medical associations emphasized that PTET is not a tax dodge — it was established to ensure parity for small businesses, and repealing it runs counter to that original legislative intent.
5. The legislation now heads to the Senate, where further amendments are likely. If altered, the measure must return to the House before it can reach the President.
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