As physician shortages amplify, we’ve globally seen an increase in the size of physician signing bonuses across physician specialties on our salary and negotiation databases. Similarly, we are seeing more and more reports of retention bonuses. For new graduates or doctors contemplating a change, signing bonuses can be a very important part of contract negotiations for a new physician job. It’s important to understand what signing bonuses are, how big of a signing bonus to expect in your specialty, when they are typically paid, how they are taxed, and whether it makes sense to use your negotiating collateral to get a higher signing bonus. Below, we’ll cover this and more.
Disclaimer: Information below is derived from our physician salary and compensation databases, but is subject to self-reporting errors and availability of relevant data points from our online communities. This information is provided for educational purposes only, and is aimed at advocating for individual physicians. It is not intended to be used for collective bargaining; please see additional disclosures and disclaimers on the physician salary data pages. Please also do your own research before making any decisions based on the information provided. We are not formal financial, legal, or tax professionals and do not provide individualized advice. You should consult these as appropriate. We highly recommend having your physician employment agreement reviewed by a physician contract review attorney to ensure you have the most up to date and relevant information for your specific situation.
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What is the signing bonus in a physician employment agreement?
Most physicians signing a new contract these days expect some sort of signing +/- relocation bonus. The vast majority of physicians on our most recent salary and negotiation databases for physicians report receiving one, and the size of the average physician signing bonus has globally increased across specialties on every specialty we’ve explored on our “how much do doctors make” series. If you don’t see one in your contract, don’t be shy about asking if one exists. The worst they can say is no.
A signing bonus is essentially a recruitment incentive offered by the employer to help convince or motivate you to make a move or to pick their offer over other offers. It has traditionally been a one time payment made to you when you start working for them or when you sign the contract, though as signing bonuses get larger, more organizations are structuring tiered payments to incentivize you to stay, which can make it feel more like a retention incentive.
Obviously, there’s not much not to like about getting a large signing bonus! However, you want to be careful about focusing on it too much for the reasons outlined below.
What is the average signing bonus given to a physician in 2024?
As we’ve seen in our series on physician salary and compensation data by specialty, signing bonuses can vary widely based on a variety of factors, including specialty, location, rural versus urban practice environment, employer type, and simply how much of a hard time the practice has had filling the vacancy or how urgent the need to fill the physician position is.
To give you an idea of the spread, on our 2024 database to date, we’ve seen signing bonuses ranging from $1,000 all the way up to $300,000, with a median of $20,000 and a mean of $30,112. We also saw some isolated reports of signing bonuses of $400,000 and above, ranging up to $600,000 (!!), but view these as outliers. As such, we didn’t include them in the mean and median statistics above.
In order to compare apples to apples, browse our physician salary and negotiation data by specialty to see individual data points that correspond to your situation, including by specialty, location, and practice environment. This will help you know your worth and give you leverage in physician contract negotiations.
Can and should I negotiate my signing bonus?
You can negotiate anything. However, be aware that you have a limited number of things that you can emphasize in your physician contract negotiations before the employer is going to get tired of negotiating. Having a list of 100 things you’re negotiating for and being emphatic about each of them is generally a good way to turn a negotiation sour. Therefore, it’s always important to prioritize your must-haves, your deal breakers, and your ‘would be nice’ asks so you know where how to spend your negotiating collateral wisely.
Unless you have a pressing need for immediate cash, we typically recommend downplaying the signing bonus in contract negotiations. This is because fundamentally, the signing bonus is a one time incentive payment that is taxed heavily.
Unlike negotiating your salary, which will have longstanding implications for how much you earn annually for the long run, the signing bonus is a one and done. Assuming you’re planning on staying at a job for a long time, you’d likely rather have $5000 more every year than a one time payment of $10,000, for example. Also note that with especially large signing bonuses, getting that amount in a one time payment is going to result in a heavy tax bill that may be in a higher marginal tax bracket than if you had been paid the sum out over the course of years in a larger salary.
Similarly, remember that money isn’t everything in a contract. You don’t want to get so enticed by a large signing bonus that it influences which job you take. Career longevity is the most important thing, so spending that negotiating collateral on things like more PTO, less call, or other things may serve you better in the long run in terms of both happiness and burnout.
Learn more about average PTO that physicians get.
Learn more about physician call schedules and compensation.
Because of all of these things, consider negotiating the signing bonus at the end as icing on the cake, after the bigger things like salary have already been settled.
What are the downsides / cons of signing bonuses, and what are other things to be aware of before accepting one?
We are certainly aware of the upsides and pros of a signing bonus, in that you get extra money in your pocket that has nothing to do with work you actually have to perform. However, signing bonuses can always have some downsides or other aspects that are important to be aware of.
Golden handcuffs. Signing bonuses almost always have conditions attached to them. No savvy employer is going to pay you $50,000 and then have you quit the next week. Therefore you should pay close attention to the termination clause to see what happens if you leave before your contract expires. In many cases, if you leave early, you will have to pay back a portion or all of the signing bonus. Negotiate this part of the stipulations to make sure that it is fair.
One time incentive that is taxed heavily. Signing bonuses are generally taxed. Make sure you don’t spend all the money or plan on the total amount of money listed in your contract without setting aside money for taxes. This is a mistake many graduating residents and fellows make and then are very unpleasantly surprised at tax time.
Impacts your success in other things you’re negotiating. Remember that everything has an opportunity cost. As mentioned above, consider what you are giving up when you accept a signing bonus, or what you should be asking for instead. In addition to the examples above about salary, PTO, and call, consider other things that aren't taxed. Of note, you may hear someone tell you that you should negotiate a relocation bonus instead as those were reimbursed and not taxed, but this no longer accurate as of the Tax Cut and Jobs Act that took into effect in 2018. Relocation bonuses will also be taxed.
Frequently Asked Questions about Physician Signing Bonuses
When will I get my signing bonus?
This is going to be very contract dependent, so if you have a pressing need for the money sooner rather than later, make sure you ask for clarity and specify you’d like it spelled out in your contract. Some employers may issue the check as soon as you sign the contract, whereas others may issue it a few months before your start date (for example, after you finish training and get your state license), and others may wait until you’ve actually started your job. Additionally, as we mentioned above, as these signing bonuses trend higher, more employers are choosing to spread the payments out over time, which could be over months or even years.
Will I pay taxes on my signing bonus?
Yes, almost definitely. Signing bonuses are generally considered ordinary income and you’ll owe federal, state, and local income taxes on them. Many employers will withhold the taxes from you in the sign on bonus check, similar to how they would with your first attending paycheck. However, especially if you are not yet formally employed, they may instead write you a check for the gross amount, leaving you responsible for paying the taxes on your own. This is very important to keep in mind so that you don’t blow the entire signing bonus and then get hit with a tax bill that you can’t pay. You should set aside the money that you’ll need for taxes until you need to pay them. A high yield savings account can be a good place to do this.
Learn more about how bonus withholdings work with our physician's guide to understanding taxes.
Conclusion
Sign-on bonuses are definitely a nice ‘icing on the cake’ part of the physician contract negotiations process, but it’s important to keep it in perspective, as well as be aware of the strings that are attached to it and the tax consequences. Generally speaking, unless you have a pressing need for cash up front, consider saving negotiations for the signing bonus until after you’ve negotiated the bigger aspects of your contract, like salary, responsibilities, noncompete clauses, and termination clauses. When in doubt, get the opinion of your physician contract attorney, who can help you navigate the contract negotiations process.