Locum Tenens 1099 Taxes, Explained
By Cory Kleinschmidt
Locum tenens income is paid on a 1099 with no tax withheld. You owe regular income tax plus 15.3% self-employment tax on your net earnings. Two decisions move the number most: what you deduct and how you structure your business.
This is the plain version, sourced and dated. It covers self-employment tax, deductions, entity choice, and the QBI question every 1099 clinician runs into.
15.3%
Self-Employment Tax Rate
$184,500
Social Security Wage Base
2026
20%
Maximum QBI Deduction
$201,750
SSTB Phase-Out Start
single filer
How Are Locum Tenens Clinicians Taxed as 1099 Contractors?
As a 1099 locum, the IRS treats you as self-employed, so no employer withholds taxes for you and you pay them yourself. Your pay arrives gross. Nothing is taken out for income tax, Social Security or Medicare. The agency reports what it paid you on a Form 1099-NEC rather than a W-2.
That single fact drives everything else on this page. You report income and expenses on Schedule C, you pay self-employment tax on the profit and you make estimated tax payments yourself, which have their own guide on quarterly estimated taxes. The upside is that self-employment opens deductions a W-2 employee never gets to touch.
What Is Self-Employment Tax and How Much Is It?
Self-employment tax is 15.3% of your net earnings. It’s the price of being your own employer. It splits into 12.4% for Social Security and 2.9% for Medicare. You pay it because you’re covering both the employee and employer halves of the payroll tax a W-2 job shares with you.
Three mechanics soften it. Every locum should know them:
- You’re taxed on 92.35% of net profit, not 100%. SE tax applies to net earnings after a built-in adjustment, not to gross pay.
- The 12.4% Social Security portion stops at $184,500 for 2026. Above that wage base only the 2.9% Medicare portion continues, with no ceiling. For high earners that cap drives the entity math below.
- Half of your SE tax is deductible. You deduct one-half of what you pay as an above-the-line adjustment, which lowers your income tax though not the SE tax itself.
One more layer for higher earners: an Additional Medicare Tax of 0.9% applies to wages and self-employment income above filing-status thresholds, including $200,000 for single filers and $250,000 for married couples filing jointly. It isn’t deductible.
What Can a Locum Actually Deduct?
You can deduct ordinary and necessary business expenses, meaning costs common in your line of work and genuinely tied to earning your locum income. This is where 1099 status pays you back for the withholding it took away. Common, defensible locum deductions include:
- Licensing and credentialing: state license fees, DEA registration, board certification, hospital privileging costs.
- Malpractice premiums you pay yourself. Many opportunities cover this, so you only deduct what comes out of your pocket. See malpractice and tail coverage.
- Professional expenses: CME, society dues, subscriptions, required certifications.
- Home office, if you use part of your home regularly and exclusively for the administrative side of your practice.
- Mileage and travel not reimbursed on an opportunity, subject to the tax-home rules covered in travel and housing.
- Retirement contributions through a Solo 401(k) or SEP-IRA, which for a self-employed clinician can shelter far more than a workplace plan.
Disclosure: The Doctor’s CPA is a Locumpedia partner.
The discipline that makes this hold up is boring and non-negotiable: a separate business bank account, contemporaneous records and receipts.
Deductions you can’t substantiate are deductions you don’t have.
Should You Form an LLC or S Corp and When Does It Pay Off?
An LLC gives you liability separation and cleaner books. An S corp is a tax election that can cut self-employment tax, but only above a certain profit level and only if you run it correctly. These are two different tools and locums conflate them constantly.
A single-member LLC by default is taxed exactly like a sole proprietor, so on its own it changes your legal exposure and professionalism, not your tax bill. The S corp election is the one that can save money: you pay yourself a reasonable W-2 salary (subject to payroll tax) and take the rest as distributions (not subject to self-employment tax).
The catch is where the saving lands. Below the $184,500 Social Security wage base the S corp can save the full 15.3% on the distribution portion. Above it, because the Social Security portion has already capped out, the saving narrows to the 2.9% Medicare, plus 0.9% for high earners, on distributions. Set against that: payroll filings, a separate return, higher accounting fees and an IRS requirement that your salary be genuinely reasonable for the work.
An entity can also help beyond self-employment tax. In states that offer a pass-through entity tax (PTET) election, your S corp can pay the state income tax itself and deduct it at the entity level, so it doesn’t count against the SALT cap on your personal return. That cap is higher than it used to be, $40,000 for 2025 and $40,400 for 2026, but it shrinks back toward $10,000 once income passes $500,000 ($505,000 for 2026), so PTET still matters most for the highest earners. And if you work across state lines, expect to file in more than one state, because a no-income-tax home state doesn’t exempt you from the states where you earned.
The result is a real breakeven, not a slogan. For many locums the S corp pays off; for others the admin cost eats the benefit. Run your specific numbers with a CPA before electing, because the answer swings on your profit, your W-2 income from any other job and your state.
Does the QBI Deduction Apply to Locums?
For most full-time locum physicians, no. For many NPs and PAs, yes. The dividing line is income. The Qualified Business Income (QBI) deduction under Section 199A lets many pass-through owners deduct up to 20% of business income, but medicine is a “specified service trade or business” (SSTB), which strips the deduction from high earners.
Here’s the arithmetic. For 2026 the SSTB deduction phases out between $201,750 and $276,750 of taxable income for single filers and between $403,500 and $553,500 for joint filers. Above the top of that band it’s eliminated entirely. A full-time locum physician almost always clears the single-filer ceiling, so the practical answer is that QBI does little or nothing for them. A new-for-2026 minimum deduction of $400 exists for eligible taxpayers with at least $1,000 of QBI, but at that size it’s a rounding error, not a strategy.
How Is 1099 Income Different From a W-2 Job?
The biggest difference is that nothing is withheld, which means a tax bill you fund yourself and, if you ignore it, a penalty. A W-2 job hides your tax burden inside every paycheck. A 1099 hands you the gross and trusts you to set the money aside, pay self-employment tax you never saw as an employee and send the IRS quarterly payments on your own schedule.
| How it works | W-2 employee | 1099 locum |
|---|---|---|
| Tax withholding | Employer withholds each paycheck | None. You pay it yourself |
| Payroll tax | Employer pays half (7.65%) | You pay all 15.3% as SE tax |
| Payment schedule | Automatic, every payroll | Quarterly estimates you send |
| Business deductions | Very limited | Schedule C deductions available |
| Retirement headroom | Workplace plan limits | Solo 401(k) or SEP-IRA, far higher |
| Entity options | None | LLC or S corp election |
That trade isn’t automatically worse. You gain the deductions, the retirement headroom and the entity options above. But it turns tax planning from something your employer did into something you do. The first place it bites people is quarterly estimated taxes.
How This Differs for NPs, PAs and CRNAs
The tax mechanics on this page are identical for every 1099 clinician. What changes is the dollar outcome, because QBI turns on income and incomes differ.
NPs and PAs often keep the full QBI deduction. The SSTB phase-out doesn’t start until $201,750 of taxable income for a single filer in 2026. BLS puts the median nurse practitioner at $132,300 and the median physician assistant at $135,880 (BLS, May 2025), both well under that start, so an NP or PA earning near the median can claim the full 20% deduction that full-time locum physicians lose. This is one of the few places APPs get a better tax result than physicians. See the nurse practitioner guide and physician assistant guide.
CRNAs sit closer to the physician outcome. The median CRNA earns $236,590 (BLS, May 2025), which lands inside or above the single-filer phase-out band of $201,750 to $276,750, so the deduction shrinks or disappears. See the CRNA guide.
Full-time locum physicians clear the ceiling. Their taxable income almost always tops the $276,750 single-filer cap, above which the SSTB deduction is gone entirely.
Two caveats keep this honest. QBI is figured on taxable income after your deductions, not on gross wages, so joint filers get roughly double the band ($403,500 to $553,500) and a spouse’s income and what you write off both move the line. Separately, the S corp breakeven arrives at a lower profit for APPs, because more of an APP’s income can fall below the $184,500 Social Security wage base, where the election can save the full 12.4% Social Security portion rather than just Medicare.
Scope-of-practice terms don’t affect how you’re taxed, but they do affect your contract. See reviewing a locum contract.
Key Takeaways
- Locum pay arrives gross on a 1099-NEC. You owe income tax plus 15.3% self-employment tax on net earnings and you send it yourself.
- The Social Security portion of SE tax stops at $184,500 for 2026; the Medicare portion has no ceiling.
- Deductions are your refund for lost withholding: licensing, malpractice you pay, CME, home office, unreimbursed travel and self-employed retirement plans. Substantiate everything.
- An LLC changes your liability, not your tax bill. The S corp election is what cuts SE tax, but only above a profit where the saving beats the added cost.
- QBI turns on income: many NPs and PAs keep the full 20%, most full-time locum physicians lose it and CRNAs fall in between.
Frequently Asked Questions
Do locum tenens clinicians pay more tax than employees?
Not necessarily more income tax, but they carry the full self-employment tax a W-2 job splits with an employer. Deductions and retirement contributions available to the self-employed often offset much of the difference.
How much should a locum set aside for taxes?
There’s no official percentage. A conservative starting range is 30% to 35% of net income. You can see where it comes from: 15.3% self-employment tax, plus your federal income tax bracket, plus any state tax. Your real number comes from your quarterly estimate, not a rule of thumb.
Is malpractice insurance tax-deductible for a locum?
Yes, when you pay it yourself. Premiums you personally pay for coverage tied to your locum work are deductible. Coverage an agency provides isn’t something you paid, so there’s nothing to deduct.
Does forming an LLC lower my taxes?
Not by itself. A single-member LLC is taxed like a sole proprietor by default. The saving comes from electing S corp status on top of it, but only above a profit level where it beats the added cost.
Can locums deduct travel and housing?
Sometimes. The rules are specific enough to have their own guide. It turns on your tax home and whether costs were reimbursed. See travel and housing and per diem and stipends.
This guide explains how the rules work; it isn’t tax advice for your situation. A CPA who knows locum and 1099 practice will save you more than the fee.