How the One Big Beautiful Bill Could Affect Tax Compliance and Deductions for Medical Practices

What the House’s tax reform bill signals for medical practices

As the House passed the One Big Beautiful Bill Act (OBBBA) on May 22, 2025, medical practice owners and managers must prepare for some significant shifts in tax compliance and deductible expense rules. While the Senate vote is expected by July 2025, the House-passed provisions already signal important changes for healthcare practices—especially those structured as pass-through entities.

Here’s what you need to know about how this proposed legislation could impact your practice’s tax position—focusing on deductions, capital expenditures, and business-income treatment.

1. Section 179 and bonus depreciation enhancements

OBBBA significantly boosts capital-expense deductions for business entities, including medical practices:

Section 179 Expansion

• • Deduction cap doubles from $1.25 million to $2.5 million, phasing out at $4 million in purchases up from $3.13 million for property placed in service post‑2024.

Bonus Depreciation Restored

• • The House bill restores 100% bonus depreciation for qualified property—including equipment and certain nonresidential real estate—acquired and placed in service from January 19, 2025, through January 1, 2030. While the Senate draft bill would make 100% bonus depreciation permanent.

What this means for healthcare practices:

• Immediate deductions for qualifying property can reduce taxable income and boost cash flow—ideal timing for planned expansions or upgrades.

2. QBI Deduction —Stronger deduction for owners that qualify (Section 199A)

OBBBA changes the Qualified Business Income (QBI) deduction into a larger deduction for pass-through entity owners who qualify:

• • Deduction made permanent, removing the scheduled expiration after 2025, while also indexing for inflation from 2025 forward.
  • Increased from 20% to 23% of QBI, lowering the effective tax rate for eligible income in the House version of the bill. The current Senate draft maintains the 20% deduction rate.
  • Two-step phased calculation introduced for high-income taxpayers, simplifying compliance and reducing administrative burden.

What this means for healthcare practices:

• Medical practices are generally considered to be Specified Service Trade or Businesses (SSTB) so QBI deductions for owners with income exceeding current thresholds (483,000 for married filing jointly and $241,950 for all other filing statuses) will still be disallowed. However, the increased deduction (to 23%) and permanence support long-term planning, especially if compensation is structured thoughtfully.
• The two-step method makes it easier to calculate and defend the deduction, reducing the compliance burden.

3. Expanded SALT deduction cap

OBBA proposes raising the cap on state and local tax (SALT) deductions from $10,000 to $40,000 per year, effective 2024 through 2028.

• • Removes the state tax pass through entity tax (PTET) deduction for SSTBs. This potential disallowance of deduction will mean that practices won’t be able to deduct the state taxes paid on behalf of the practice owners. The SALT tax deduction increase will potentially make up for some of the entity level disallowed deduction. However, this will require further planning and discussion with your tax advisor to ensure the maximum deduction is able to be utilized. Non-SSTB businesses will have more flexibility as to how the state tax payments are made in the future, if OBBBA is passed by the Senate with similar language as passed by the House.

Strategic compliance checklist for your medical practice

• Optimize capital spending: Map out equipment and facility upgrades to benefit from Section 179 and full bonus depreciation.
• Monitor QBI eligibility: Work with your CPA to adjust salary structures or allocations so owners remain eligible.
• Model scenarios: Use your advisor’s expertise to simulate outcomes with the new 23% QBI and higher expensing limits.

Timing and outlook

• Senate action scheduled by July 4, 2025; SALT, 179, depreciation, and QBI measures remain possible.
• Effective dates: 2024 for expensing improvements; QBI and bonus depreciation enhancements begin in 2025.
• Stay vigilant: Updates to SSTB thresholds and phased QBI rules may shift during Senate reconciliation.

Additional insights

If enacted, OBBBA would provide healthcare practices and their owners with:

• Expanded expensing rules—$2.5M Section 179 cap and 100% bonus depreciation through 2030/31.
• A strengthened QBI deduction for those that qualify—23%, permanent, and administratively streamlined.
• A quadrupled SALT cap—delivering major savings in high-tax states.

Keiter’s Healthcare & Medical Practice team will continue to track the progress of OBBBA in the Senate. We will keep you informed of changes for proactive planning. If you would like to discuss planning opportunities specific to your practice, contact your Keiter Opportunity Advisor. Interested in Keiter’s tax services for your healthcare practice? Email | Call: 804.747.0000