Tax Deductions for Nurses in California

Tax Deductions for Nurses in California

California nurses — whether you are a hospital employee, travel nurse, home health nurse, or self-employed private duty nurse — have access to specific tax deductions that most nurses overlook. The rules differ significantly depending on whether you are a W-2 employee or a 1099 contractor, and travel nurses face a uniquely complex tax situation that requires careful planning.

For medical professional tax strategy, see KDA's Medical Professionals page.

Travel Nurse Tax Rules — The Most Complex Situation

Travel nurses working through staffing agencies are typically paid a combination of a taxable hourly rate plus non-taxable stipends (housing, meals, incidentals). The non-taxable stipend treatment requires that you maintain a "tax home" — a permanent residence in another location where you have ongoing living expenses. If you do not have a legitimate tax home, all stipends become taxable income.

California is aggressive about taxing travel nurses who work in the state. If you work in California for more than a brief period, California will tax all income earned while in the state — including the taxable portion of your travel nurse pay. California does not recognize the federal tax-free stipend treatment for state tax purposes in the same way.

Scrubs, Equipment & Supplies

For self-employed and 1099 nurses, scrubs, medical equipment, stethoscopes, blood pressure cuffs, and other supplies used exclusively for work are fully deductible. W-2 nurses lost the ability to deduct unreimbursed employee expenses under the 2017 Tax Cuts and Jobs Act — this deduction is no longer available on federal returns for employees. California, however, still allows W-2 employees to deduct unreimbursed employee expenses on the California return (Schedule CA).

Malpractice insurance premiums are fully deductible for self-employed nurses. Professional liability insurance is also deductible. Union dues paid by nurses are deductible on the California return (though not federal for W-2 employees).

Continuing Education & Licensing

California BRN license renewal fees are deductible for self-employed nurses. Continuing education required to maintain your nursing license is deductible — online CE courses, conferences, and specialty certifications. ACLS, BLS, PALS, and other certification renewals are deductible.

For W-2 nurses, these expenses are deductible on the California return as unreimbursed employee expenses (California did not conform to the federal elimination of this deduction). This is a significant California-specific benefit that many nurses miss.

California-Specific Rules for Nurses

California still allows W-2 employees to deduct unreimbursed employee expenses on Schedule CA — scrubs, equipment, CE courses, union dues, and professional dues. This is a major difference from federal law and can produce a meaningful California tax deduction even for hospital employees.

California nurses who work as 1099 contractors pay both federal and California self-employment taxes. California's SDI tax (1.1% in 2026) applies to self-employed nurses' net earnings. California also taxes all income earned in the state, regardless of where you live — relevant for travel nurses who work California assignments.

LLC & S Corp for Self-Employed Nurses

Private duty nurses, home health nurses, and nursing consultants who earn 1099 income can benefit significantly from an S Corp election once net income exceeds $60,000-$70,000. A nurse netting $100,000 as a sole proprietor pays approximately $14,130 in SE tax. With an S Corp and a $60,000 reasonable salary, SE tax drops to approximately $9,180 — a savings of approximately $4,950 per year.

See KDA's Medical Professionals page for how KDA structures entities for healthcare professionals, or use the LLC vs S Corp Calculator.