Start 2025 off right with key tax savings strategies

Jim Brady

Robert J. Gray

Tax planning for health care professionals is essential in helping to maximize savings and ensure financial stability. With 2025 around the corner, several strategies can be implemented now, and in the future, to help practitioners optimize their tax situation and retain more income.

Here are key tax-saving tips to remember as 2024 comes to an end, and 2025 inches closer:

Utilize Section 179 deduction

One of the most significant tax advantages available to health care practices is the Section 179 deduction. For 2024, practitioners can deduct up to $1,220,000 on new or used equipment, property, and vehicles. This is an increase from previous years and allows many practices to achieve a 100% deduction on their capital investments. To qualify, equipment must have been purchased and put into service by December 31 of last year.

Consider pass-through income deductions

For medical practices structured as pass-through entities (like S corporations), there is an opportunity to deduct up to 20% of qualified business income. However, this deduction phases out for single taxpayers with taxable incomes over $191,950 and married taxpayers over $383,900, according to the Internal Revenue Code Section 199A deduction. Notably, medical practices qualify as specified service trade businesses, which can still benefit from this deduction until it potentially expires in 2026, unless Congress intervenes. For doctors with earnings above those limits, the 179 deduction for equipment investments can be a double deduction by creating an additional 20% on top of the cost of the equipment, if planned properly.

Invest in clean energy solutions

Under the Inflation Reduction Act, small businesses that switch to solar power or make energy-efficient improvements can access valuable tax credits covering up to 30% of installation costs (This falls under Internal Revenue Code section 25D). This not only helps to reduce tax liabilities but also promotes sustainable practices within health care facilities.

Optimize inventory purchases

For health care practices that require supplies and inventory, strategically purchasing needed items before year-end can yield significant tax benefits. These purchases can be treated as expenses in the year they are made rather than being capitalized as inventory.

Invest in professional education

Health care professionals can deduct expenses related to continuing education and training necessary for maintaining or improving their skills. This includes costs for tuition, books, supplies, and travel costs for in-person learning. And as many practitioners shift towards online learning due to convenience and cost-effectiveness, these educational investments can be fully deductible if they are required to maintain their current job.

Stay updated on state tax laws

Tax regulations can vary significantly by state, impacting how deductions are applied. It’s crucial for practitioners to consult with a tax professional familiar with local laws to ensure compliance and to optimize deductions available at the state level. For example, if a practice owner lives in one of the states that permit partnerships and S-corporations to pay pass through entity tax, practice owners should take advantage of this opportunity and get a federal tax deduction for the state income tax paid.

Conclusion

Effective tax planning is crucial for practices aiming to maximize savings in 2025. By leveraging deductions like Section 179, understanding inflation adjustments, utilizing pass-through income deductions, and strategically managing inventory and equipment purchases, practitioners can significantly enhance their financial health. Engaging with a knowledgeable tax professional is essential to navigate these opportunities and ensure compliance with evolving tax laws. By implementing these strategies early in the year and staying informed about changes in tax legislation, medical professionals can position themselves for greater financial success while providing quality care to their patients.

For a complimentary consultation and to learn more about Section 179, please contact Henry Schein Financial Services online, call 1-877-776-7286, or email hsfs@henryschein.com. To explore Henry Schein Medical’s equipment capabilities, click here.

As always, it is important to consult your own financial and tax advisors to discuss your individual circumstances.

Neither Henry Schein, Inc. nor Henry Schein Financial Services provides tax advice. This article contains general information only and Henry Schein is not, by means of this article and information rendering accounting, business, financial, investment, legal, tax or other professional advice or services. This article is not a substitute for such professional advice or services, nor should it be used as a basis for any decision that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional tax advisor to discuss your individual circumstances and determine your eligibility. Henry Schein, Inc. and its affiliates and related entities shall not be responsible for any loss sustained by any person who relies on this information in this article.