The Preceptor Pay Problem: A State-by-State Guide to Tax Credits, Incentives, and Why They’re Not Enough
The Hardest Job in Healthcare Education — And It Usually Pays Nothing
There’s a job in healthcare that requires years of clinical experience, a current license, the patience to teach while treating patients, and the willingness to take responsibility for a student’s clinical development. It’s one of the most important roles in the entire health education pipeline.
Most of the time, it pays exactly zero dollars.
Clinical preceptors — the licensed physicians, nurse practitioners, and physician assistants who supervise students during their required clinical rotations are the backbone of every graduate health program in the country. Without them, students can’t complete their training. Without enough of them, programs can’t grow. And right now, there aren’t nearly enough of them.
According to NC AHEC’s 2025 report, a significant percentage of preceptors say that precepting contributes to burnout, and nearly half report negative impacts on both their personal and professional lives. Ninety percent of nursing programs in the U.S. don’t pay their preceptors at all. In PA education, the share of programs paying for rotation slots has climbed from roughly 28% to over 52% in just a few years, adding $200,000 or more in annual costs per program.
Legislators are starting to notice. A growing number of states have enacted preceptor tax credits, and a new federal bill — the PRECEPT Nurses Act — could create the first nationwide incentive. But the question program directors, deans, and preceptors should all be asking is: are financial incentives alone enough to fix a structural problem?
The Federal Landscape: The PRECEPT Nurses Act
In January 2025, the bipartisan PRECEPT Nurses Act was reintroduced in both the House (H.R. 392) and Senate (S. 131). Sponsored by Rep. Jen Kiggans (R-VA) — herself a geriatric nurse practitioner — alongside a bipartisan group of co-sponsors, the bill would establish a $2,000 nonrefundable tax credit for eligible nurse preceptors.
To qualify, a preceptor must provide at least 200 certified hours of supervision and mentorship to nursing students, APRN students, or newly hired nurses within a designated Health Professional Shortage Area (HPSA). The bill would create a seven-year pilot program running through 2032, with IRS reporting requirements to evaluate the credit’s effectiveness.
The PRECEPT Nurses Act has earned endorsements from the American Association of Colleges of Nursing (AACN), the American Nurses Association, the Arizona Hospital and Healthcare Association, and several university systems. Its bipartisan support in both chambers is a strong signal — but as of now, the bill remains in committee and has not yet been voted on.
If passed, it would be the first federal tax incentive specifically targeting clinical preceptors. But at $2,000 for 200+ hours, that works out to $10 per hour or less — hardly a market-rate compensation for the expertise involved.
State-by-State: Who’s Paying Preceptors and How Much
While federal action is pending, six states have already enacted preceptor tax credit programs. The details vary significantly — in eligible professions, dollar amounts, caps, and expiration dates. Here’s where things stand.
Georgia has the most established program. Since 2019, the state has offered tax credits (not deductions) to community-based preceptors who supervise medical, PA, or NP students. Physicians can earn $500 per rotation for the first three rotations and $1,000 each for rotations four through ten — up to a maximum of $8,500 per year. APRNs and PAs earn $375 for the first three and $750 for rotations four through ten, up to $6,375. A preceptorship rotation is defined as 160 aggregate hours. Preceptors who receive direct compensation from any source are ineligible. The program is currently authorized through December 31, 2026. Georgia’s data shows promising results: since the program’s inception, the number of registered providers completing at least one rotation increased by 72%.
Colorado offers a $2,000 credit per qualifying preceptorship, with a maximum of three preceptorships ($6,000) per year. The program is limited to 300 preceptors statewide per tax year. Originally restricted to rural and frontier areas, recent legislation expanded eligibility to include a broader range of health professions — registered nurses, pharmacists, psychologists, social workers, counselors, and dental hygienists — and now allows nonconsecutive preceptorship days to count toward eligibility.
Maryland provides a $1,000 income tax credit to physicians and nurse practitioners who precept without compensation in designated workforce shortage areas. The annual cap is $10,000 per preceptor.
South Carolina enacted a tax credit for physicians, PAs, and APRNs who complete two or more clinical rotations and whose practice serves a patient population that is at least 30% Medicaid, Medicare, or self-pay. The credit was effective for tax years 2020 through 2025.
Alabama and **Hawaii** have also passed preceptor tax incentive legislation, though Hawaii’s program does not yet include PA students or preceptors — a gap that advocates are working to close.
Missouri offers a $1,000 income tax credit to community-based faculty who precept medical students or physician assistants, with an annual maximum of $3,000.
Virginia has taken a grant-based approach rather than a tax credit, allocating state funds to support APRN preceptors.
Washington established the Student Nurse Preceptorship Grant in 2023, offering incentive payments of up to $1,000 to preceptors who supervise nursing students, with a focus on acute shortage areas including rural communities and long-term care facilities.
Several additional states — including Michigan, Mississippi, New York, and Florida — have explored preceptor tax legislation but have not yet passed it.
Why Tax Credits Alone Won’t Solve This
These programs are genuinely helpful. Georgia’s 72% increase in participating preceptors demonstrates that financial recognition matters — even when the dollar amounts are modest. Any program director operating in a state with an active tax credit should be helping their preceptors take advantage of it.
But there are fundamental limitations to a tax-credit-only strategy.
The math doesn’t add up. A $2,000 federal credit for 200+ hours works out to under $10 per hour. Georgia’s maximum of $8,500 for a physician completing ten rotations is better, but still far below what that clinician earns seeing patients. When the choice is between a full patient schedule and supervising a student for a modest tax benefit, most providers choose the patient schedule — not because they don’t care about teaching, but because the economics make it irrational to choose otherwise.
Tax credits don’t address burnout. The NC AHEC study found that preceptors’ primary barriers aren’t financial — they’re time constraints and productivity demands. A preceptor who’s already working 50+ hours per week doesn’t need $2,000; they need a model that doesn’t require them to sacrifice clinical productivity to teach. No tax credit solves the fundamental problem of a one-to-one, in-person precepting model that demands the preceptor’s full attention on top of their clinical workload.
Geographic limitations reduce effectiveness. The federal PRECEPT Nurses Act is limited to Health Professional Shortage Areas. Colorado’s program was originally limited to rural and frontier areas. These restrictions make sense politically but miss the reality that preceptor shortages exist in urban teaching centers too — just ask any NP program in a major metro area trying to place students.
Coverage is still a patchwork. Only six states have active programs. A preceptor in Texas, New York, or California — states with some of the largest graduate health programs and most severe workforce shortages — has no state-level tax incentive at all. Students in those states are competing for preceptors in markets where there’s zero financial recognition for teaching.
Eligibility gaps exclude key professions. Hawaii’s program doesn’t include PA preceptors. Several state programs exclude nursing. The federal bill is limited to nurse preceptors specifically. Until incentive programs are comprehensive across all health professions that require clinical precepting, they’ll remain partial solutions.
What Actually Moves the Needle
The preceptor shortage isn’t going to be solved by a single policy lever. It requires a combination of financial incentives, structural innovation, and technology that makes precepting less burdensome. Here’s what that looks like in practice.
Make precepting more efficient, not just better compensated. The biggest unlock isn’t paying preceptors more for the same workload — it’s reducing the workload itself. Virtual precepting platforms allow providers to supervise students during telemedicine encounters that are already part of their clinical practice. Instead of adding teaching hours on top of patient care, the teaching happens within the care delivery. This means a preceptor can mentor a student during sessions they’d be conducting anyway, dramatically reducing the time cost of participation.
Expand the preceptor pool beyond local markets. Traditional precepting requires geographic proximity — the student and preceptor must be in the same physical location. Virtual models eliminate this constraint entirely. A psychiatrist in Atlanta can precept an NP student enrolled at a program in rural Nebraska. A family medicine physician in Dallas can supervise a PA student in Maine. This geographic liberation transforms the preceptor supply equation from a local scarcity problem to a national matching problem — a much more solvable challenge.
Guarantee placements at the institutional level. When a program contracts with a platform that maintains a nationwide preceptor network, individual students no longer bear the burden of finding their own preceptors. Programs can guarantee placements across required specialties on confirmed schedules — often up to 12 months in advance. This removes the chaos, the cold-calling, and the anxiety that define the current system for many NP and PA students.
Layer technology on top of policy. Tax credits and virtual precepting aren’t competing strategies — they’re complementary. A preceptor in Georgia can earn up to $8,500 in state tax credits while precepting through MomentMD that makes their participation more flexible and less disruptive. A preceptor in a HPSA can qualify for the federal PRECEPT credit once it passes while using technology to mentor students they’d never have access to in a purely in-person model. The best outcomes come from combining policy incentives with infrastructure innovation.
What Program Directors Should Do Right Now
If you’re running a graduate health program, here are the immediate actions this landscape calls for.
First, educate your preceptors about available credits. Many eligible preceptors don’t know these programs exist. If your program operates in Georgia, Colorado, Maryland, South Carolina, Alabama, Hawaii, Missouri, Virginia, or Washington, make sure every preceptor in your network is aware of the incentive available to them. Build it into your onboarding materials. Send a reminder at tax time. Make it easy.
Second, advocate for your state. If you’re in a state without a preceptor incentive program, connect with your state medical association, nursing board, or PA society to advocate for one. Georgia’s model provides a strong template, and its data showing a 72% increase in participating preceptors is the kind of evidence legislators respond to.
Third, diversify beyond in-person precepting. Even if your state has the best tax credit in the country, you’ll still face placement shortages if your model depends entirely on local, in-person preceptors. Integrating virtual clinical rotations into your program doesn’t replace in-person training — it expands your total capacity and gives you a guaranteed baseline of available placements regardless of local market conditions.
Fourth, track the PRECEPT Nurses Act. If this legislation passes, it will create the first federal preceptor incentive and could catalyze additional state-level action. Programs that are already integrated with preceptor networks positioned to leverage these credits will be ahead of those that scramble to adapt after the fact.
The Bottom Line
The preceptor shortage is real, it’s worsening, and it’s the single biggest constraint on clinical education capacity in the United States. Financial incentives — from Georgia’s pioneering tax credit to the federal PRECEPT Nurses Act — are meaningful steps forward. They signal that policymakers are beginning to recognize what program directors have known for years: that preceptors deserve compensation and recognition for the essential work they do.
But tax credits alone won’t build the infrastructure that clinical education needs. The underlying model — one student, one preceptor, one physical location, no pay — is structurally unsustainable. Solving the preceptor crisis requires not just paying for the old model, but building a new one: one that’s technology-enabled, geographically flexible, and designed to make precepting a sustainable part of clinical practice rather than an unsustainable burden on top of it.
The states that have acted are ahead. The federal government is catching up. The programs that combine these policy tailwinds with modern clinical education infrastructure will be the ones that grow — and the ones whose students actually graduate on time.