Tax Planning For Physicians In Ventura County: The Questions To Bring To Your CPA

The Short AnswerCalifornia's 2025 rate schedules reach 12.3%, and a 1% Behavioral Health Services Tax applies to taxable income over $1,000,000. The IRS lists wages among common types of income that are not net investment income for the 3.8% tax. The 2026 401(k) deferral limit is $24,500. All or some qualified-plan pension or annuity payments may be taxable, except qualified designated Roth distributions.

What Does California Tax A Physician’s Income At?

California income tax rates reach 12.3% on the 2025 schedules, the latest the Franchise Tax Board has published. The top bracket starts above $742,953 of taxable income for a single filer and above $1,485,906 for a married couple filing jointly.

A second layer sits on top. The FTB says the Behavioral Health Services Act “imposes an additional 1% tax on taxable income over $1,000,000.” The Form 540 worksheet applies the rate of 1% to the amount over $1,000,000. Where taxable income is above both lines, the top combined state rate is 13.3%.

Both thresholds apply to taxable income, which is what remains after deductions, and not to salary or practice revenue. For a physician in Camarillo, Ventura or Simi Valley, the useful number to ask a CPA about is a projected taxable income for the year, including any year with a one-time event such as a practice sale or a large partnership distribution.

What Does The 3.8% Net Investment Income Tax Cover?

The IRS says the net investment income tax “applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts.” Modified adjusted gross income must pass $250,000 for a married couple filing jointly or $200,000 for a single filer, and the IRS notes these thresholds are not indexed for inflation.

The IRS lists what investment income generally includes: interest, dividends, capital gains, rental and royalty income, non-qualified annuities and income from passive business activities. It also lists common types of income that are not net investment income, among them wages, operating income from a nonpassive business, self-employment income and distributions from the qualified plans the IRS describes in sections 401(a), 403(a), 403(b), 408, 408A or 457(b).

A physician’s salary falls on the excluded list. Interest, dividends and capital gains from a taxable account fall on the included list, and the tax applies only once modified adjusted gross income is above the threshold. Whether a practice owner counts as passive or nonpassive for a particular business is a facts question for a CPA.

What Are The 2026 Retirement Plan Limits?

The IRS published the 2026 figures in a news release and in Notice 2025-67. Each limit applies to a different thing, which is why the same dollar amount cannot be assumed to cover every plan a physician has.

Which row applies depends on the plans an employer or practice sponsors and on the plan documents. An employed physician may see only the first two rows. A practice that sponsors additional plans may bring the last two into the conversation. This list of limits is not exhaustive, and the plan administrator and CPA can say which ones reach a particular plan.

When Is Money From A Pre-Tax Plan Taxed?

The IRS says: “If you receive retirement benefits in the form of pension or annuity payments from a qualified employer retirement plan, all or some portion of the amounts you receive may be taxable unless the payment is a qualified distribution from a designated Roth account.” The IRS retirement topics page adds that withdrawals are included in taxable income “except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts).”

Put plainly, all or some qualified-plan pension or annuity payments may be taxable, except qualified designated Roth distributions. We call the bill that may arrive later the Second Bill, and the Second Bill article shows how the timing of withdrawals can change its size.

For a physician the planning question is the mix. How much of the retirement balance is pre-tax, how much is Roth and how much sits in a taxable account can each be taxed differently when withdrawals start.

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What Does Ventura County Filing Data Show About Medical Practices?

The Department of Labor publishes Form 5500 filings for retirement plans. We read the 2024 filings for small defined benefit plans, cash balance plans included: 25 or fewer participants and a target normal cost (the actuary’s measure of the cost of benefits earned in the year) of at least $100,000.

Businesses in Ventura County cities sponsor 115 of these plans. Of those 115 businesses, 38 (33.0%) carry the data’s healthcare label, and all 38 are in ambulatory health care services, NAICS subsector 621. That subsector lists offices of physicians (621111), offices of dentists (621210) and offices of other health practitioners such as chiropractors (621310), so the 38 are not all physician practices. The 38 report a median of $2,802,951 across the employer’s plans, against $2,402,250 for all 115 businesses. Their plans have a median of 5 participants, and none has more than 20.

The counts are a floor, since addresses in Westlake Village are excluded because the city sits in Los Angeles County. The data covers businesses that file for this type of plan. It says nothing about the income of any physician or the practices without such a plan. The plan totals are reported across each employer’s plans, and no single participant holds them.

Which Questions Can A Physician Bring To A CPA?

Filing status, practice structure, plan documents and timing can each affect the answers, and this list is not exhaustive. This article is general education. Your CPA advises on your own return.

About The Author

Tyler Ostrovsky founded 19th Hole Financial after eight years as a professional golfer, including status on PGA Tour Canada. He builds tax strategy and advanced life insurance plans for high earners and works alongside their CPAs and attorneys.