Home

Tax Reform Update
Featured

Tax Reform Update

Taxes

 

2025 Tax Update for Healthcare Travelers

Last Updated: November 12, 2025

For most healthcare travelers, the tax landscape in 2025 remains steady. The core financial advantages of travel work, especially tax-free stipends for housing, meals, and travel, are still intact. While the IRS continues to make small annual inflation adjustments, no major legislation has altered how travel pay is taxed or reported.

Standard Deduction and Take-Home Pay

Single travelers who do not itemize deductions in 2025 will see a modest increase in take-home pay due to higher standard deductions and inflation adjustments to tax brackets.

For tax year 2025 (returns filed in 2026):

  • Single or Married Filing Separately: $15,000

  • Married Filing Jointly: $30,000

  • Head of Household: $22,500

Personal exemptions remain suspended under the Tax Cuts and Jobs Act (TCJA) through at least 2025.

For most travelers, this increase translates to a small bump in take-home pay, usually less than $10 per week. It is not dramatic, but every bit helps offset rising costs of housing and travel.

Itemizers Still See Limitations

Travelers who itemize continue to face restrictions that have been in place since 2018. The following deductions remain unavailable for W-2 employees:

  • Mileage: No deduction for unreimbursed work mileage, including commutes from temporary housing to the facility.

  • Meals & Incidentals (M&IE): No deduction for the difference between agency-paid stipends and the IRS per diem rate.

  • Other Work Expenses: Costs for scrubs, CEUs, professional memberships (including PanTravelers), or state licenses are still not deductible.

These limits mean that most W-2 travelers will not benefit from itemizing unless they have significant mortgage interest, medical expenses, or other non-travel-related deductions.

What You Can Still Get

The good news is that tax-free stipends remain a cornerstone of traveler compensation.

If you maintain a legitimate tax home and meet IRS guidelines for being “away from home,” your housing, meal, and travel stipends are not considered taxable income. This remains the single biggest financial advantage of being a healthcare traveler.

Tip: Keep documentation for your permanent residence, housing leases, travel mileage, and assignments. The IRS is paying closer attention to tax-home claims, and your paperwork is your best defense.

W-2 vs. 1099: The Contractor Question

Some travelers still explore becoming 1099 independent contractors to claim business deductions, but this remains impractical for most.

Why:

  • Most staffing agencies do not offer 1099 contracts because of liability, workers’ compensation, and IRS compliance issues.

  • Many hospitals and Vendor Management Systems (VMS) prohibit independent contractor placements in their agreements.

  • Even when possible, the IRS considers most nurses and allied health professionals to be employees rather than independent businesses.

Independent contractors can deduct mileage, M&IE, and other expenses on Schedule C, but they must also pay self-employment tax and handle their own insurance and benefits.

The Section 199A (Qualified Business Income) deduction still exists, offering a 20 percent pass-through deduction for certain self-employed taxpayers. However, healthcare providers are often classified as a “specified service trade or business” (SSTB), which limits or eliminates this benefit at higher income levels.

Classification Controversy

There is an ongoing debate about whether a nurse working inside a hospital can ever truly qualify as an independent contractor under IRS rules. The IRS defines an independent contractor as someone for whom the payer controls only the result of the work, not what will be done or how it will be done.

In most hospital settings, nurses do not control their schedules, patient assignments, procedures, or how their work is performed. These are all directed by the facility or agency, which fits the IRS description of an employee, not a contractor.

Because of this, tax experts and legal advisors often argue that classifying hospital-based nurses as 1099 contractors does not meet IRS standards. Even when agencies attempt it, the arrangement may invite IRS scrutiny and reclassification.

Rare Exceptions

A small number of travelers successfully operate as 1099 contractors, usually those working through boutique agencies or contracting directly with facilities. These travelers may benefit from:

  • Deductions for mileage and M&IE on Schedule C

  • The Section 199A deduction in limited cases

  • Greater financial control and business flexibility

However, these arrangements come with added responsibilities, higher audit risk, and increased self-employment costs.

A few travelers have even formed their own staffing agencies to bypass the middleman, but this path is increasingly difficult because of VMS and MSP systems controlling access to facility contracts.

The Bottom Line

  • No major tax changes have affected healthcare traveler compensation in 2025.

  • Most of the itemized deductions lost in 2018 remain unavailable.

  • W-2 status continues to be the standard and most practical employment structure for travelers.

  • Tax-free stipends remain the most valuable financial advantage for travel nurses and allied professionals.

  • Maintaining a tax home and proper documentation is essential to preserve stipend eligibility.

  • IRS definitions of independent contractors make 1099 nursing arrangements extremely difficult to justify.

Looking Ahead

We will continue monitoring IRS updates and any congressional proposals that might affect traveler pay or classification.

For now, the financial advantage of being a traveler remains strong. Be sure to work with a tax professional who understands travel healthcare so you can stay compliant and make the most of your benefits.

 

Featured

Tax Reform - Implications for Travelers

Articles

Last update: Nov 17, 2017

Although the tax reform plans that were recently passed by the House and the Senate could reduce federal income taxes for many Americans, as it currently stands healthcare travelers could be among the losers.

Under the current proposals, traveling health professionals who work as regular employees could lose the ability to deduct unreimbursed expenses for things such as license renewal fees, uniforms, mileage and continuing education according to Joseph Smith, a traveling respiratory therapist turned accountant and president of TravelTax. 

“The proposed changes eliminate deductions for out-of-pocket expenses that typically exceed per diem rates and travel stipends in favor of higher standard deductions,” Smith explained. 

“Depending on the circumstances, a travel assignment may have less appeal. Especially, if agencies decide to increase reimbursement rates and lower wages.”

Even worse, travelers – and other taxpayers – may lose the ability to write off mortgage, rent or utility costs for a primary residence as well as the cost of COBRA or medical expenses. 

However, it’s important to point out that the standard deduction may also rise so your taxes could actually be lower under the current proposal. There’s no way to tell how the proposed changes will impact you unless you crunch the numbers.

Although it’s too early to panic as the two chambers still need to iron out their differences and create a single bill, at the very least the proposals require a call to action and perhaps a change in your flexible work arrangements.  Just in case, here are some steps you might want to take.

Action Steps

Featured

Non-compete FAQ

Legal

What is a non-compete clause?

A non-compete clause (also called a do-not-compete agreement, or more whimsically a faithless servant doctrine) in an employment contract is a hiring restriction.

 

What is it for?

It is intended to limit your choices of other employers (competition) or protect or maximize an employer’s investment in your services. Typically this means protecting trade secrets, confidential information or an investment in an employee’s training and skills.

Featured

Overtime rate negotiation

Articles

negotiation

Overtime Rate Negotiation


 This is an interesting subject. Most travelers are surprised to learn that overtime is something that can be negotiated like any other item. Here are some examples: everyone is familiar with negotiating your base rate. If you negotiate the base rate down, perhaps due to an upgrade in housing, or a tax free reimbursement, why should your overtime rate suffer and the agency benefit? Many travelers are also familiar with agencies that pay double time for overtime instead of the usual time and a half. How is it possible for them to do this? And there are number of agencies who pay less than time and a half for overtime. Is that legal? 

Key Points: 

  • There are several methods of setting overtime pay.

  • Generally speaking, all methods are legal.

  • Overtime is negotiable just like any other contract item.

 

Basic concepts

In fact, almost any rate an agency pays for overtime is legal. In many states, overtime laws have been interpreted to mean time and a half based on state or federal minimum wage. All healthcare professionals make substantially more than that, limiting intervention by state labor departments. Recent federal laws passed further obscure the issue of overtime (for nurses) as they define nurses  as supervisory personnel exempt from overtime regulations. While it this legislation turns out to be a red herring for hourly employees, it is still misunderstood by some employers and even some lawyers.

{mprestriction ids="3,6"}

For the purposes of this article today, we will ignore labor legislation and agree that as contract employees, overtime is governed solely by our contracts with the agency. Realizing this gives the traveler the freedom to negotiate a contract based on not only the traveler's individual work patterns, but also on the ability of agency to pay a fair percentage of the bill rate they receive for your hard work.