Demystifying Tax Brackets for Physicians

Welcome to the Doctor’s Eyes Only podcast, and today Vestia Partner and CEO Lauren Oschman talks about ways to potentially demystify tax brackets for physicians. Lauren explains the difference between flat tax rates and graduated tax rates, while using examples to illustrate how graduated tax rates work, with only the income above a certain threshold being taxed at a higher rate. An example of a flat tax, could be some state taxes which are a fixed percentage of your income. A graduated tax however would be one that stair steps up as you make more money.

After delivering some general information about the different ways your income could be taxed and clearing up some misconceptions, Lauren then explains how things can get complicated for physician clients when there are two incomes in the household. When considering graduated taxes, doctors typically have high incomes which already has them in a higher tax bracket. And even though certain percentages taxed only cover certain portions of that income, a spouses full income could be taxed at the higher rate when filing jointly. This becomes an issue if your spouse doesn’t have enough taxes withheld at their employer.