A guide for dentists, doctors and healthcare professionals on maximizing tax deductions for equipment and building upgrades 

KEY TAKEAWAYS 
  • Depreciation allows healthcare professionals to recover costs from major equipment and building investments. 
  • The One Big Beautiful Bill updated rules around bonus depreciation and Section 179 deductions, creating opportunities for tax savings. 
  • Healthcare practices who are building, expanding or investing in new equipment should strongly consider depreciation strategies now. 

 

Running a dental or medical practice means balancing excellent patient care with some of the most expensive overhead costs in business. That new $250,000 imaging machine, a full operatory upgrade, or the construction of a new facility can feel overwhelming from a cash flow perspective. The good news? Tax rules allow you to write off much of those costs through depreciation. 

And with the One Big Beautiful Bill (OBBB) changing the rules for 2025 and beyond, now is the time to revisit your depreciation strategy. The right moves can lower your tax bill, improve cash flow, and help you reinvest in your practice. 

Depreciation 101 

When you buy equipment or invest in your building, the IRS doesn’t let you deduct the full amount all at once. Instead, you spread the cost over the asset’s “useful life” through depreciation. For healthcare professionals, this often applies to: 

  • Dental chairs and operatories 
  • Imaging machines and surgical tools 
  • Renovations or expansions of office space 

Some assets qualify for accelerated depreciation, meaning you can deduct more of the cost upfront rather than waiting years. Under the Modified Accelerated Cost Recovery System (MACRS), certain equipment and property types have shorter recovery periods. 

  • Bonus depreciation: Applies to equipment with a recovery period of 20 years or less, certain software and water utility property. It allows you to deduct a large portion of the cost in the first year. This applies to both new and used property (as long as it hasn’t been used previously by you or a related party). 
  • Section 179 expensing: Lets you deduct the full cost of certain assets upfront, up to annual limits. This includes tangible personal property, off-the-shelf software and qualified real property like roofs, HVAC units, and fire/security systems. 

OBBB Updates And Key Provisions 

The OBBBA made two major changes that matter directly to dentists, doctors, veterinarians, and other practice owners: 

  1. Bonus Depreciation Restored to 100%
  • For property acquired after Jan. 19, 2025, you can deduct 100% of eligible costs in the first year. 
  • Property under a binding contract signed before Jan. 19, 2025, must still follow the old phase-down schedule (40% in 2025, 20% in 2026 and then phased out). 
  • A Transitional Election lets taxpayers choose to stick with the old 40% rate for property acquired after Jan. 19, 2025, if that works better for their situation. 
  1. Section 179 Expensing Expanded
  • Deduction limit increased to $2.5 million (up from $1.22 million in 2024). 
  • Phaseouts now begin at $4 million. Both are indexed for inflation going forward. 
  • Vehicle updates: the SUV deduction limit rose to $31,300 for 2025. 

These changes mean practices investing in new technology or expanding facilities can recover costs much faster than before. 

Who Should Be Considering This 

Not every practice will benefit equally. But if you’re: 

  • Purchasing major equipment (digital imaging, operatory setups, surgical tools) 
  • Building or expanding office space 
  • Undertaking significant renovations 

…then depreciation could save you meaningful dollars at tax time. 

Example:
If your practice spends $500,000 on new operatories in 2025, Section 179 expensing could allow you to deduct the entire cost this year, instead of spreading it out over a decade. That’s cash flow you can put toward payroll, debt repayment or additional growth investments. 

Practices considering building construction should also explore a cost segregation study, which breaks down a building into multiple asset categories with shorter recovery periods. This can accelerate deductions dramatically. 

If your practice is preparing for a large capital investment, especially before year-end, it is worth discussing with an advisor to see whether these rules apply to your situation. 

What You Can Do Now 

To capture these savings, timing and planning are everything. Here are practical steps: 

  • Talk with your healthcare tax advisor early. Don’t sign purchase agreements or break ground on construction without understanding how timing affects your deductions. 
  • Evaluate cost segregation feasibility. If you’re expanding or remodeling, this study could unlock significant upfront savings. 
  • Document everything. Keep invoices, purchase agreements and placed-in-service dates organized—these details are important for bonus depreciation and Section 179 eligibility.
  • Think beyond this year. Align purchases with your long-term strategy. The biggest deduction isn’t always the best move if it strains your cash flow or financing. 

Don’t Miss the Window of Opportunity 

The OBBB has opened a powerful tax-saving window for healthcare practice owners, but those opportunities won’t last forever and timing is important.  

If you have any questions about how these items apply to your specific situation or if you need assistance in planning the timing for an asset purchase or disposal, please contact an Adams Brown healthcare advisor.