Prepare For OBBBA: Tax And Depreciation Changes In Healthcare

The One Big Beautiful Bill Act (OBBBA) introduces a series of tax and depreciation changes that directly affect the financial planning landscape in healthcare. While the legislation spans a broad range of policy areas, the provisions most relevant to healthcare organizations involve modifications to bonus depreciation schedules, changes to pass-through entity taxation, and adjustments to research and development expense treatment that affect technology investments in clinical settings.

Medical groups that fail to analyze and respond to these changes before the implementation deadlines will miss strategic opportunities to optimize their tax position. Forward-thinking practices are already working with their CPAs and financial advisors to model the impact and adjust capital expenditure plans accordingly.

1. Understand the Revised Bonus Depreciation Schedule

   The OBBBA modifies the phase-down of bonus depreciation that has been underway since 2023. For medical practices making significant capital investments in equipment, technology, and facility improvements, the timing of purchases relative to the new schedule has meaningful tax implications.

   • Review the updated bonus depreciation percentages for assets placed in service in 2026 and beyond

   • Evaluate whether planned equipment purchases (imaging systems, surgical instruments, dental chairs, IT infrastructure) should be accelerated or deferred based on the revised schedule

   • Coordinate with the practice's CPA to model the tax impact of different acquisition timelines

   • Assess whether leasing or financing alternatives provide a more favorable tax position under the new depreciation rules

   • Document the placed-in-service date for all capital assets to ensure accurate depreciation claims

2. Evaluate Pass-Through Entity Tax Implications

   Many private medical and dental practices operate as S-corporations, partnerships, or LLCs taxed as pass-through entities. The OBBBA includes provisions that affect the taxation of pass-through income, including modifications to the qualified business income deduction and state-level pass-through entity tax elections.

   • Review the updated qualified business income (QBI) deduction thresholds and phase-out ranges for healthcare professionals

   • Evaluate whether the practice's entity structure remains optimal under the new provisions

   • Analyze the impact of state-level pass-through entity tax (PTET) elections in conjunction with the federal changes

   • Model the combined federal and state tax impact for each practice owner under different income scenarios

   • Consult with a healthcare-specialized tax advisor before making entity restructuring decisions

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3. Reassess Research and Development Expense Treatment

   The OBBBA addresses the treatment of research and development expenses, which affects practices investing in clinical technology, AI integration, and practice management system development.

   • Determine whether the practice's technology investments qualify as R&D expenses under the updated definitions

   • Evaluate the tax treatment of AI implementation costs, EHR customization, and clinical workflow automation projects

   • Review whether Section 174 amortization requirements have been modified and how those changes affect current-year deductions

   • Identify credits or deductions available for technology investments that improve clinical outcomes or operational efficiency

   • Maintain detailed records of technology investment rationale, costs, and outcomes to support tax positions

4. Plan Capital Expenditures Strategically

   The intersection of depreciation changes, interest deduction limitations, and potential investment incentives creates a complex decision matrix for capital expenditure planning.

   • Develop a multi-year capital expenditure plan that aligns major purchases with the most favorable depreciation treatment

   • Evaluate the impact of interest expense deduction limitations on financing decisions for major equipment acquisitions

   • Consider cost segregation studies for facility renovations or new construction to accelerate depreciation deductions

   • Assess whether energy-efficient building improvements qualify for enhanced deductions or credits under the new provisions

   • Coordinate capital expenditure timing with the practice's overall tax planning strategy to optimize cash flow

5. Address How OBBBA Affects Employment Tax and Healthcare Compensation Changes

   The OBBBA includes provisions affecting payroll taxes, retirement plan contributions, and executive compensation that are relevant to medical group compensation structures.

   • Review changes to Social Security and Medicare tax thresholds and rates that affect physician compensation

   • Evaluate the impact on retirement plan contribution limits and employer matching provisions

   • Assess whether changes to the treatment of employee benefits affect the practice's total compensation strategy

   • Model the tax impact of different compensation structures (salary, bonus, distributions) under the new provisions

   • Update payroll systems and withholding tables to reflect any changes effective in the current tax year

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6. Implement Compliance Documentation for New Tax Positions

   New tax provisions create new compliance requirements. Practices must document the basis for tax positions taken under the OBBBA to withstand potential IRS scrutiny.

   • Maintain contemporaneous records supporting the classification and depreciation of all capital assets

   • Document the business purpose and tax analysis for any entity restructuring decisions

   • Retain copies of all tax advisor opinions and analyses related to OBBBA provisions

   • Implement a tax calendar that tracks filing deadlines, election windows, and estimated payment adjustments

   • Include OBBBA tax planning as a standing agenda item in quarterly financial review meetings with practice leadership

Final Takeaway

Tax legislation is rarely designed with private medical practices in mind, but its impact on practice profitability, capital planning, and compensation structures is direct and significant. The OBBBA presents both risks and opportunities for medical groups that take the time to understand its provisions and act before implementation deadlines arrive. Tax strategy is not an annual exercise. It is a continuous discipline that separates practices managing their financial trajectory from those reacting to it.

Solstice Group is a healthcare operations consulting firm helping medical and dental practices build sustainable, high-performing businesses. With a background in clinical care and business strategy, we advise practice owners on compliance, revenue optimization, and scalable growth. We can be reached at info@solstice-groups.com or by visiting www.solstice-groups.com.