Practices buy expensive things. Operatory chairs, imaging, lasers, sterilisers, practice management systems, tenant improvements. And every year around November someone points out that you can write the whole thing off immediately, which sounds obviously good and sometimes is not.
The two ways to write off equipment fast
Section 179 expensing
For tax years beginning in 2025, Section 179 lets you expense up to $2,500,000 of qualifying property, with the limit reducing dollar for dollar once total qualifying purchases exceed $4,000,000. Both figures are indexed annually.
The important constraint: Section 179 is limited by taxable income. You cannot use it to create or deepen a loss. Anything disallowed carries forward.
Bonus depreciation
100% bonus depreciation was restored for qualifying property acquired after January 19, 2025. Unlike Section 179, bonus is not limited by taxable income, so it can create a loss.
That difference is the whole reason to understand both rather than defaulting to whichever your equipment rep mentioned.
The California problem
Here is the part that surprises practice owners at state filing time.
California does not conform to federal bonus depreciation, and its Section 179 limits are far below the federal figures. So a purchase you expensed entirely on your federal return is being depreciated over years on your California return.
The practical consequences:
- You maintain two depreciation schedules, federal and state, permanently
- Your federal deduction does not reduce your California tax the way you expected
- A practice that planned only around the federal number gets an unwelcome state bill
Any planning conversation that ignores the California side is only half a conversation.
Why the biggest deduction is often not the best one
The instinct is to deduct as much as possible, as soon as possible. Consider what that actually does.
Suppose a practice has an unusually weak year, then expects to return to normal. Expensing a large equipment purchase entirely into the weak year burns the deduction against income taxed at a lower marginal rate. Spreading it, or using Section 179 selectively, may put more of the deduction against income that would otherwise be taxed at the top rate.
The same logic runs the other way. In an unusually strong year, accelerating everything you legitimately can is exactly right.
The question is never simply how much can I deduct. It is which year does this deduction do the most work.
Where the QBI deduction complicates it further
Health is a specified service trade or business. For 2025 the qualified business income deduction phases out completely above $494,600 of taxable income for joint filers, or $247,300 otherwise.
If your income sits near that range, a large equipment deduction can push you back under the threshold and restore some QBI deduction — which makes the equipment write-off worth more than its face value. If you are far above the range, that effect does not exist.
Knowing where you sit relative to that line changes the answer, and it is not something you can work out in December from books that were last closed in September.
Financing does not change the deduction
A common misunderstanding: practices assume that financing equipment means deducting only the payments. It does not. If the equipment is placed in service and you are obligated on the debt, the deduction generally follows the asset, not the cash.
You may be able to deduct the full cost of a financed piece of equipment in the year it goes into service while paying for it over five years. That is a genuine cash flow advantage, and it is worth knowing before you decide how to fund a purchase.
Placed in service, not purchased
The deduction depends on when the asset is placed in service, not when you ordered it or paid for it. Equipment sitting in a crate on December 31 is not in service.
If a year-end purchase is part of your tax plan, build in installation time. We have seen practices miss a deduction by a week.
Talk it through with a Fresno CPA
We maintain federal and California depreciation schedules for practices across Fresno and Clovis and model equipment timing before you commit. See our medical and dental practice accounting page.
Schedule a meeting or call 559-372-9213.
This post is general information, not advice for your specific situation. Tax figures are current for the year stated and many are indexed annually. Talk to a CPA before acting on any of it.
