Key OBBBA Tax Changes for Medical Practices

The One Big Beautiful Bill Act, also known as OBBBA, introduces tax changes that could matter to many medical and physician practices. It makes permanent several provisions that encourage business investment, including bonus depreciation and higher Section 179 limits, and it allows certain research costs to be expensed right away. For some practice owners, that might mean moving ahead sooner with plans for an upgraded imaging system, an expanded records platform, or a long-postponed renovation.

Private practices are still the main workplace for physicians, employing more than half of the doctors in the country. Many are small, physician-owned offices that have built strong, lasting relationships in the community. When these practices have more room to invest in tools, technology, and spaces, patient care often benefits. To support clients, prospects, and others in the healthcare field, Wilson Lewis has outlined the key provisions below.

Key Tax Provisions for Medical Practices                   

• Bonus Depreciation Restored — OBBBA permanently restores 100% bonus depreciation for most qualified property with a recovery period of 20 years or less. This applies to property acquired after January 19, 2025, and placed in service thereafter. For medical practices, this change means that large purchases such as MRI or CT scanners, digital X-ray systems, surgical equipment, dental chairs, and IT infrastructure can be fully deducted the year they are placed in service. This will generally improve cash flow and allow practices to reinvest in patient care sooner.
• Higher Section 179 Expensing Limits — The annual Section 179 deduction limit increases to $2.5 million, with a phase-out beginning at $4 million in qualifying purchases. These thresholds apply to tax years beginning after 2025 and will be indexed for inflation starting in 2026. Medical practices can use Section 179 to expense a wide range of property, including certain facility improvements such as HVAC systems, security upgrades, and interior renovations. 
• Permanent QBI Deduction (Section 199A) — The 20% Qualified Business Income (QBI) deduction for pass-through entities is permanent now. Although healthcare remains classified as a Specified Service Trade or Business (SSTB) and is subject to income-based phaseouts, the law increases the amounts to $75,000 for single filers and $150,000 for married couples filing jointly. With the anticipated IRS guidance coming later this year, planning early can help some practices keep this deduction on the table. 
• Immediate Expensing for R&D — OBBBA restores immediate expensing for domestic research and experimental (R&E/R&D) costs under Section 174, beginning with the 2025 tax year. In a private practice, qualifying research may include building custom EHR software or creating new processes to improve office efficiency or patient care. Documentation is important. Practices that meet the definition of research under the tax code can deduct these expenses in the year they are incurred.
• Expanded Interest Deduction — For tax years beginning with 2025, the business interest deduction limit is once again based on earnings before interest, taxes, depreciation, and amortization (EBITDA). This change can be valuable for practices with current financing obligations. By increasing the amount of deductible interest, the rule can reduce taxable income and improve net cash flow.
• Section 179D — OBBBA moves up the end date for the Section 179D energy-efficient commercial building deduction. Projects must begin construction by June 30, 2026, to qualify. If a practice owns the medical facility, this deduction can apply to improvements such as high-efficiency HVAC systems, insulation, exterior doors, and windows. Planning and starting these types of “building-envelope” projects before the deadline can secure additional tax savings.

Other Considerations

OBBBA raises the cap on the state and local tax (SALT) deduction from $10,000 to $40,000 through 2029. Income limits and phase-outs apply. Although this applies at the individual level, practice owners in higher-tax states may benefit, improving personal cash flow that could be used to support business investments.

The law also includes a new temporary deduction for overtime wages, available to individual taxpayers from 2025 through 2028. While this is not a business deduction, employers are required to track the overtime premium so it can be reported on employee wage statements. Medical practices with non-exempt staff, such as clinical or administrative employees who work additional hours, will want to review payroll systems to see that this information is accurately recorded and reported

Outside of taxes, OBBBA reduces Medicaid funding and changes some eligibility rules, which may increase the number of uninsured patients. Practices serving Medicaid populations could see more administrative work verifying coverage.

Contact Us

OBBBA has changed the tax code, and now medical practices have the opportunity to make strategic investments, reduce taxable income, and strengthen long-term financial stability. The application of these provisions will vary by practice. If you have questions about the information outlined above or need assistance with another tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.