The “One Big Beautiful Bill” (OBBB), enacted on July 4, 2025, represents one of the most comprehensive tax reforms in recent years, with wide-ranging effects on dental and healthcare practice owners. This legislation not only locks in many of the tax benefits introduced in the 2017 Tax Cuts and Jobs Act but also introduces new provisions designed to support business growth, workforce retention, and long-term financial security. Understanding these changes is crucial for practice owners aiming to optimize their tax positions and plan strategically for the future.
Permanent Lower Tax Rates and Expanded Deductions
One of the most significant changes in the OBBB is the permanent extension of the lower individual and business tax brackets established in 2017. These brackets, which were set to expire at the end of 2025, will now remain in place indefinitely, providing greater certainty and preventing a tax increase that would have raised rates back to pre-2017 levels. Alongside this, the standard deduction has been increased significantly, where singles will see it rise to approximately $16,750, and married couples filing jointly to about $33,500, with annual inflation adjustments. Seniors benefit further from a new above-the-line deduction of up to $6,000 for singles and $12,000 for couples aged 65 and older, which applies regardless of whether they itemize deductions.
Enhanced Business Investment Incentives
The bill substantially boosts incentives for dental and healthcare practices to invest in their operations. The Section 179 expense limit has been raised to $2.5 million, with a phase-out starting at $4 million, allowing practices to immediately deduct the full cost of qualifying equipment and improvements. This is especially beneficial for practices upgrading technology or expanding facilities. Additionally, 100% bonus depreciation is extended through 2027, enabling full first-year write-offs on eligible property, accelerating tax savings and improving cash flow.
Qualified Business Income (QBI) Deduction Retained and Enhanced
Pass-through entities such as S corporations and partnerships, common structures for dental practices, continue to benefit from the 20% QBI deduction, which has been increased to 23% for some businesses. This deduction effectively lowers the taxable income from business profits, making it a critical tool for tax planning. However, the bill includes income phase-outs and restrictions on certain service businesses, which has raised concerns within the dental community. The American Dental Association actively opposes any limitations that could reduce these benefits for dental professionals, emphasizing the importance of advocacy in upcoming legislative discussions.
Significant SALT Deduction Changes
For practice owners in high-tax states including California, the bill’s increase of the SALT deduction cap from $10,000 to $40,000 is a major relief. This expanded cap allows for a larger portion of state and local taxes, such as income and property taxes, to be deducted on federal returns, reducing overall tax liability. However, this benefit begins to phase out for taxpayers with modified adjusted gross incomes above $500,000 and is scheduled to revert to the previous $10,000 cap in 2030 unless further extended. Practice owners must carefully evaluate whether to claim this deduction personally or through their business entity’s pass-through entity tax (PTE) election, as the choice can have significant tax implications.
New Provisions Supporting Workforce and Family
The bill introduces tax-free treatment for overtime and tip income up to specified limits, a provision that can enhance compensation packages for hourly staff such as dental assistants and front office personnel without increasing payroll taxes. This could improve employee retention in a competitive labor market. Additionally, new tax-advantaged children’s savings accounts have been established to help practice owners with family-related expenses, including education and healthcare, supporting long-term financial planning.
Estate, Gift, and Retirement Planning Enhancements
The estate and gift tax exemption has been raised significantly, providing greater flexibility for practice owners planning succession or wealth transfer. This change allows for larger amounts to be passed on without triggering federal estate taxes, which is critical for family-owned practices. Retirement plan contribution limits have also increased, enabling owners and employees to save more on a tax-advantaged basis, which can aid in attracting and retaining talent.
Additional Deductions and Credits
Other notable provisions include a new deduction for interest on car loans (up to $10,000 annually) for U.S.-made vehicles, expanded Health Savings Account (HSA) contribution limits, and permanent increases to the child tax credit, now indexed for inflation. These changes collectively support both personal and business financial health.
Important Effects on SNAP and Medicaid
Beyond tax changes, the OBBB enacts substantial reforms to Medicaid and SNAP (food stamps). Medicaid will see nearly $1 trillion in funding cuts over the next decade, stricter eligibility checks, and new work requirements for most adults under 65. These changes are projected to reduce coverage for millions, potentially increasing the number of uninsured patients and straining healthcare providers, especially in rural and underserved areas. SNAP recipients face tougher work requirements and more frequent eligibility reviews, with states shouldering more program costs and federal funding reductions estimated at up to $300 billion over ten years. As a result, many low-income families may see reduced benefits or lose access altogether. These major changes could affect patient populations and community health, and practice owners should review their tax strategies and stay informed about how these shifts may impact their practice and the communities they serve.
Strategic Implications for Practice Owners
While the OBBB delivers many tax-saving opportunities, it also introduces complexity. Practice owners must engage in proactive tax forecasting and work closely with qualified advisors to navigate choices such as SALT deduction methods, timing of equipment purchases, and the structuring of compensation. The potential phasing out of certain deductions based on income levels requires careful income management.
Furthermore, some proposals that could limit pass-through deductions for service businesses are still under discussion, underscoring the need for ongoing advocacy and vigilance.
Conclusion
The “One Big Beautiful Bill” offers dental and healthcare practice owners a powerful toolkit to reduce taxes, invest in growth, and secure their financial futures. However, realizing these benefits demands thoughtful planning and expert guidance. To ensure your practice is fully prepared for these sweeping tax and regulatory changes, now is the time to act. DentalCPA specializes in helping dental professionals navigate complex tax laws, maximize available deductions, and develop tailored strategies that support both immediate savings and long-term growth. Schedule a consultation with our expert team to review your current tax position, identify new opportunities under the latest legislation, and build a proactive plan that keeps your practice financially strong. Reach out to DentalCPA today by emailing cal.dental.cpa@gmail.com and take control of your financial success.
