The short answer is a lot and in very practical ways. The One, Big, Beautiful Bill Act (OBBBA) gives medical and dental practice owners with plans for expansion several tax tools that improve cash flow right away and reduce owner-level tax on future profits. Savings will be even more considerable if you purchase new (or qualifying used) equipment, keep your pass-through entity structure or live in a higher-tax state.
What this means for medical and dental practices
Immediate full expensing of equipment (100% bonus depreciation)
You can generally deduct the entire cost of qualifying tangible property placed in service after Jan 19, 2025, in year one such as chairs, digital x-ray/CBCT units, lab equipment, computers and practice-management servers. This can lower taxable income in the year you expand and buy assets.
Higher Section 179 limits (larger immediate expensing cap)
The dollar limits in Section 179 were increased (and indexed), so smaller purchases, substantial equipment bundles and certain leasehold improvements can be expensed immediately rather than capitalized. That’s helpful when your expansion includes build-outs or many equipment items.
QBI (Section 199A) protection for pass-through income
The 20% Qualified Business Income deduction for many pass-through entities was made permanent and has expanded phase-in ranges for service businesses. For medical and dental owners organized as S corps, partnerships or LLCs, this preserves an important owner-level tax shelter on operating profits.
Increased SALT cap for many taxpayers
The state and local tax (SALT) deduction cap was temporarily raised to $40,000. This cap can help owners in high-tax states who itemize potentially lower taxable income available for reinvestment. Note: Ensure you’re compliant with income phaseouts and state conformity rules.
Cash-flow-effect illustration for example
If your practice buys $300,000 of qualifying equipment and takes 100% bonus depreciation, the taxable income for that year is reduced by $300,000. If your marginal federal and state effective tax rate on that income is around 24%, the tax saved that year would be about $300,000 × 0.24 = $72,000.
Practical expansion strategies to consider now
Buy and place qualifying equipment in service sooner
The year of purchase matters to enable immediate deductions. Discern whether bonus depreciation or Section 179 fits better for your situation.
Model cash-flow and tax scenarios
Compare one-time large deductions to spreading depreciation over years for different tax rates and revenue growth.
Check business entity and compensation structure
Compare S-Corp salary to distributions or partnership allocations to maximize QBI benefits and minimize payroll tax surprises.
Confirm state conformity
Some states won’t follow federal changes immediately, which affects the net benefit. (SALT and depreciation conformity vary.)
Document acquisition dates and use rules carefully
The property must meet the IRS used or new rules and be “placed in service” under the statute to survive audit scrutiny.
Possible issues to be aware of
- Some OBBBA provisions are temporary or have phaseouts based on income; others are permanent. Timing and your practice’s taxable income in the year of expansion change the optimal strategy.
- Large one-year deductions can reduce current tax but may increase taxable income in later years (less depreciation remaining), so think through multi-year forecasts.
- State tax treatment can reduce the federal benefit. Always check state conformity and whether your state decouples from federal bonus depreciation or SALT changes.
Understanding tax code changes, how they affect your practice and helping you make informed decisions is our firm’s priority. Feel free to schedule time to visit with us about the impact your plans for expansion of your medical or dental practice could have on your tax responsibility. We’re here to help.