How Much Should a New Podiatry Practice Set Aside for Taxes?

Starting a podiatry practice comes with many financial questions, and taxes are among the most critical. The short answer: most new podiatry practice owners should set aside 30% to 40% of their net income for federal and state taxes, plus self-employment tax. This range covers the combined burden of income tax, Social Security, and Medicare, which can easily reach 35% or more for a profitable solo practice. In this guide, we’ll break down the numbers, explain what drives your tax rate, and give you a step-by-step plan to set aside the right amount from day one.

Why 30% to 40% Is the Right Starting Point

Your tax liability depends on your business structure, income level, and state. For a new podiatry practice, the most common structures are sole proprietorship, LLC, S-corp, or PLLC. Each has different tax implications, but the baseline calculation is similar.

Here’s a realistic breakdown for a solo podiatrist earning $150,000 in net profit (after business expenses) in 2026:

• Federal income tax: 24% to 32% depending on your total taxable income (single filer or married filing jointly).
• Self-employment tax: 15.3% (12.4% for Social Security, 2.9% for Medicare) on net earnings, though you can deduct half of this on your personal return.
• State income tax: 0% to 13.3% depending on your state. For example, Texas and Florida have no state income tax, while California’s top rate is 13.3%.

Combined, these can easily total 35% to 45% of your net income. The 30% to 40% range is a safe starting point, but you may need to adjust based on your specific situation.

How to Calculate Your Estimated Tax Payments

The IRS requires you to pay taxes quarterly if you expect to owe more than $1,000. Most practice owners do. Here’s how to estimate:

1. Estimate your net profit: Project your revenue minus all business expenses (rent, staff, supplies, insurance, etc.). For a new practice, this might be $80,000 to $120,000 in year one.
2. Calculate your effective tax rate: Use the IRS Tax Withholding Estimator or a tax software like QuickBooks Self-Employed. For a single filer with $100,000 net profit, the effective federal rate (including self-employment tax) is roughly 25% to 30%.
3. Add state tax: Check your state’s rate. For example, if your state rate is 5%, add that to your federal rate.
4. Divide by 4: Your quarterly payment is your total estimated tax divided by 4.

For a $100,000 net profit, a 30% effective rate means $30,000 in total taxes, or $7,500 per quarter. That’s a realistic number for many new podiatrists.

What Drives Your Tax Rate Higher or Lower

Several factors can push your percentage up or down:

• Business structure: An S-corp can save on self-employment tax because you can pay yourself a reasonable salary and take the rest as distributions, which aren’t subject to Social Security and Medicare. However, you must pay yourself a fair salary, and the payroll costs can offset some savings.
• Retirement contributions: Contributions to a SEP IRA or solo 401(k) reduce your taxable income. For example, a $20,000 contribution could lower your tax bill by $5,000 to $7,000.
• Business expenses: Maximize deductions for equipment, continuing education, professional liability insurance, and home office if applicable. Every dollar deducted reduces your taxable income.
• Dependents and filing status: Married filing jointly with children may have a lower effective rate.

Practical Steps to Set Aside Money This Week

Don’t wait until tax season. Here’s what you can do today:

1. Open a separate business savings account for taxes. Aim to transfer 30% of every deposit into this account. For example, if you collect $10,000 in a week, move $3,000 to your tax account.
2. Set up a quarterly payment schedule: Use IRS Form 1040-ES. The due dates are typically April 15, June 15, September 15, and January 15 of the following year. Mark them on your calendar.
3. Use accounting software: Tools like QuickBooks or FreshBooks can track income and expenses and estimate your tax liability automatically. Many have a tax savings feature.
4. Consult a CPA: A tax professional who works with medical practices can help you estimate accurately and plan for deductions. Expect to pay $300 to $500 for a consultation, but it’s worth it.

Common Mistakes to Avoid

• Underpaying: If you underpay, you’ll face penalties and interest. The IRS safe harbor rule: pay at least 100% of last year’s tax liability (110% if your adjusted gross income is over $150,000) to avoid penalties.
• Mixing personal and business funds: This complicates bookkeeping and can trigger audits. Keep separate accounts.
• Ignoring state taxes: Some states have their own quarterly requirements. Check with your state’s revenue department.

FAQ

Q: Can I pay taxes annually instead of quarterly? A: No, if you owe more than $1,000, the IRS requires quarterly payments. However, if you’re in your first year, you might qualify for a waiver of penalties if you pay the full amount by April 15 of the following year.

Q: What if my income fluctuates? A: You can adjust your quarterly payments based on actual income. If you have a slow quarter, you can reduce your payment, but you’ll need to make it up later.

Q: Should I incorporate as an S-corp to save on taxes? A: Possibly, but it’s not automatic. S-corps require payroll processing and can cost $1,000 to $2,000 per year in administrative fees. For a new practice earning under $80,000 net, the savings may not outweigh the costs. Talk to a CPA.

Q: What deductions should I track? A: Track all business expenses, including rent, utilities, staff salaries, medical supplies, equipment, software, marketing, continuing education, and professional dues. Also, consider the home office deduction if you have a dedicated space.

The Bottom Line

Set aside 30% to 40% of your net income for taxes, and adjust based on your actual situation. Open a separate tax savings account, make quarterly payments, and work with a CPA to maximize deductions. By planning ahead, you’ll avoid surprises and keep your practice financially healthy. Start today by transferring 30% of your latest deposit into your tax account, and schedule a consultation with a tax professional this week. Your future self will thank you.

For more guidance, check out IRS Publication 505 (Tax Withholding and Estimated Tax) or consult a CPA who specializes in healthcare practices.

Related guides

• How to File Quarterly Estimated Taxes as a New Podiatry Practice
• S-Corp vs LLC for New Podiatry Practices: Which Saves More on Taxes?
• What Taxes Does a New Podiatry Practice Pay? A Complete Guide