The OBBBA Just Changed the Math on Capital Equipment
For medical practices considering any significant capital investment -- diagnostic equipment, in-house laboratory build-outs, imaging technology, electronic health record systems, or facility improvements -- the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, fundamentally changed how those investments are treated for tax purposes.
Prior to the OBBBA, bonus depreciation had been phasing down. By 2025, it had dropped to 40% and was on track to be eliminated entirely by 2027. A $500,000 equipment purchase in 2025 under the old rules would have produced a $200,000 first-year deduction. Under the OBBBA, the same purchase produces a $500,000 first-year deduction. The law makes this change permanent.
One Big Beautiful Bill Act: What Changed for Practice Owners
The OBBBA permanently restored 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025, and significantly expanded Section 179 expensing limits. Both provisions apply to 2025 tax returns and beyond.
What Qualifies for Practices
Most tangible personal property with a recovery period of 20 years or less qualifies for 100% bonus depreciation under the OBBBA. For medical practices, this covers a wide range of common capital investments:
Critical date: equipment must be acquired after January 19, 2025
To qualify for 100% bonus depreciation under the OBBBA, property must be both acquired and placed in service after January 19, 2025. Property acquired under a binding written contract signed on or before that date is subject to the old 40% rate regardless of when it was physically received. If you are planning equipment purchases, the acquisition date -- meaning when the binding contract was signed -- determines which rules apply. This is a detail worth confirming with a qualified tax advisor before signing any purchase agreement.
How Section 179 and Bonus Depreciation Work Together
Section 179 and bonus depreciation are related but distinct. Section 179 is generally applied first and is limited to the business's taxable income for the year -- it cannot create a loss. Bonus depreciation has no such limitation and can produce a net operating loss that carries forward. For most practices making equipment purchases within the Section 179 cap, the practical result is the same: the full purchase price is deductible in the year the equipment is placed in service.
Section 179 has an additional advantage for practices in states that conform to the federal Section 179 rules but not to bonus depreciation. Many states decouple from federal bonus depreciation, which means the state deduction follows the old schedule. Section 179, by contrast, is recognized by most states. A qualified tax advisor familiar with your state's conformity rules can determine which approach produces the better combined federal and state outcome.
Illustrative example — in-house lab build-out
This example is for illustrative purposes only. Actual tax outcomes depend on individual circumstances, entity structure, income level, state conformity rules, and other factors. Consult a qualified tax professional before making any decisions based on this illustration.
The Connection to Practice Investment Decisions
One of the clearest applications of the OBBBA for medical practices is the decision to bring services in-house. An urgent care center or physician group evaluating whether to add molecular lab capabilities, advanced diagnostics, or upgraded technology infrastructure should include the first-year tax treatment of that equipment in the financial analysis.
Under prior law, a $400,000 lab build-out depreciated over multiple years with declining bonus depreciation percentages. Under the OBBBA, the same investment produces a $400,000 first-year deduction. Combined with the revenue that in-house service lines generate, and the improvement in collection rates that outsourced RCM produces, the economics of these investments look materially different today than they did two years ago.
The timing window for this planning is open now. The law is in effect for 2025 tax returns and applies permanently going forward. Practices that make qualifying acquisitions before year-end capture the benefit on this year's return.
Timing equipment purchases around the tax calendar is a legitimate planning strategy
A practice planning a lab build-out or major equipment upgrade in early 2026 may want to evaluate whether accelerating that purchase into late 2025 produces a better tax outcome on the current year's return. This is a conversation to have with a tax advisor in Q3 or Q4 -- not in April when the window has already closed.
What the Right Tax Specialist Will Focus On
The OBBBA equipment provisions are the most immediate opportunity for most practices right now. But a qualified tax strategist who works with medical practice owners will also look at the longer arc -- particularly for practice owners who may eventually sell.
Exit and transaction planning
For practice owners who may eventually sell, the structure and timing of the transaction -- installment arrangements, qualified opportunity zone investments, and the state tax treatment of the proceeds -- can have a larger financial impact than almost any other planning decision. In states like Washington where capital gains tax rates have increased materially, the difference between a well-structured and a poorly structured practice sale can be substantial. This planning must begin well before the intended transaction date to be effective.
Washington's "Millionaire's Tax": What Practice Owners Need to Know
Washington State has long been a favorable environment for high earners because it has no personal state income tax. That distinction is under direct and active challenge. In February 2026, the Washington State Senate passed SB 6346 -- widely referred to as the Millionaire's Tax -- which would impose a 9.9% tax on household income exceeding $1 million, with a proposed effective date of January 1, 2028.
The bill has not been signed into law as of this writing and faces significant opposition. The Tax Foundation ranked Washington 45th in its 2026 State Tax Competitiveness Index. Business owners across the state have organized against the measure, and polling has consistently shown broad opposition among Washington residents -- with roughly 70% opposed. A voter initiative effort to repeal the tax if enacted is already being discussed.
For physician practice owners, urgent care group owners, and other healthcare business owners in Washington, the bill as written raises several specific concerns. The $1 million threshold applies per household rather than per individual, creating a marriage penalty for two-income households. Income sourced through a Washington business may remain subject to the tax even if the owner relocates, depending on the final language of the legislation. And the bill's proposed retroactive effective date means there may be limited time to plan once it is enacted.
Washington already levies a capital gains excise tax at 7% on gains between $278,000 and $1 million, and 9.9% on gains exceeding $1 million -- rates that took effect retroactively to January 1, 2025 under SB 5813. The estate tax was also restructured in 2025, with top marginal rates now reaching 35% on the largest estates. For practice owners planning a sale, a liquidity event, or succession, the combined state tax picture has changed substantially in the past three years and is not finished changing.
The most practical advice from tax professionals working in this space is consistent: do not wait for the law to be finalized before beginning to plan. The strategies that matter most -- capital equipment timing, charitable giving coordination, and exit planning -- need to be in place months or years before the tax year they are intended to affect. If the Millionaire's Tax does not pass, the planning costs little. If it does pass, the window to act may be narrow.
The Broader State Tax Picture for High-Earning Practice Owners
Washington is not alone in targeting high earners. Several states have enacted or expanded income and capital gains taxes on high earners in recent years. For practice owners in these states, the combination of federal and state marginal rates at the top bracket has grown meaningfully:
Source: Tax Foundation 2026 State Tax Competitiveness Index; state revenue department websites
Connect Your CPA with Our Advanced Tax Strategy Specialist
We work with practices on the revenue side every day. We are not tax advisors -- but we have a direct relationship with advanced tax strategy specialists who work specifically with medical practice owners and high-income healthcare professionals. Have your CPA connect with ours. The conversation costs nothing.
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