Section 179 vs. Bonus Depreciation: A Medical Practice Guide

A physician buying $150,000 of new imaging or a dental office replacing four operatory chairs can write off far more in year one than most owners realize. The mechanics come down to two elections: Section 179 and bonus depreciation. Choose the right one and you can front-load six figures of deduction into the year the equipment is placed in service. Choose the wrong one, or fail to plan the timing, and you leave real money on the table.

Both provisions apply to Section 179 medical equipment purchases, but they work differently, have different limits, and interact with state tax rules in ways Idaho and Utah practice owners should not assume are identical to federal. Here is how the two elections stack up in 2026 and how to decide which one fits a given purchase.

What Section 179 Covers for Medical and Dental Practices

Section 179 lets a practice immediately expense the full cost of qualifying tangible property in the year it is placed in service, up to an annual limit. For tax year 2026 the maximum deduction is $2,560,000, and the deduction begins to phase out dollar for dollar once total qualifying purchases exceed $4,090,000. Very few private medical or dental practices hit that ceiling in a single year, which means the practical cap is the business income limitation: Section 179 cannot create or increase a taxable loss.

Qualifying property includes new and used equipment such as imaging units, chairs, sterilizers, digital scanners, ultrasound, lasers, office furniture, computer hardware, and off-the-shelf software. Section 179 also covers certain improvements to nonresidential real property, including HVAC, roofs, security systems, and fire protection, once the building is already in service.

How Bonus Depreciation Works After the OBBBA

Bonus depreciation is a first-year deduction taken on qualified property in addition to any Section 179 election. Under the One Big Beautiful Bill Act signed in July 2025, Congress restored 100 percent bonus depreciation permanently for qualifying property placed in service on or after January 19, 2025. The scheduled 60-40-20 percent phase-down that applied under the TCJA is gone.

Qualified property still generally means tangible property with a recovery period of 20 years or less, along with certain qualified improvement property. Both new and used equipment qualify, provided the practice did not previously use it.

Because bonus depreciation is not limited by the Section 179 annual cap, and because it can create or increase a net operating loss, it becomes the workhorse for larger single-year purchases or for practices with modest current-year income.

Section 179 vs. Bonus Depreciation: Which Election Wins When

The decision comes down to three factors: total qualifying purchases, current-year taxable income, and how each state treats the deduction.

Use Section 179 when you want line-item control. A practice can pick which specific assets to expense and elect only part of the cost, spreading the rest over regular depreciation. That flexibility matters when a practice owner is managing income around the QBI phase-in range, an S-corp shareholder wage base, or a partnership special allocation.

Use bonus depreciation when the purchase is large enough to bump against the Section 179 business-income limit, when the practice expects to run a net operating loss, or when a physician-owner is planning to acquire equipment through a partnership and needs a partner-level deduction that flows regardless of practice-level income.

Practices often use both. A $500,000 equipment year might see $250,000 elected under Section 179 to manage the shareholder wage base, with the balance taken as 100 percent bonus depreciation on the remaining assets.

Idaho and Utah State Conformity

Federal is only half the picture. Idaho conforms to the Internal Revenue Code as of a fixed date and revisits that conformity each legislative session. Utah tracks the federal treatment of Section 179 and bonus depreciation reasonably closely but has historically decoupled in specific years. A deduction that saves a physician forty percent federally may recover only part of that on the state return depending on which conformity update is in force.

Before you sign a purchase order, confirm the current state conformity status for the year the property will be placed in service. The state math often changes the ranking between the two elections.

Common Mistakes When Writing Off Medical Equipment

Three mistakes come up more than any other. First, placing property “in service” is the trigger, not signing the invoice or taking delivery. A CBCT unit sitting in a crate until January produces no year-one deduction for the prior year. Second, listed property such as vehicles used for practice errands carries stricter substantiation rules and lower luxury caps. Third, Section 179 recapture applies if business use drops below 50 percent, which occasionally catches owners who lease equipment out to another entity.

The right answer for a specific purchase depends on the practice’s entity type, the shareholder-wage strategy, projected taxable income, and whether Idaho or Utah is the state return. Run the numbers with a CPA before you sign. Our team at Cooper Norman advises medical and dental practice owners across Idaho and Utah on practice tax planning, and equipment timing is one of the highest-leverage conversations we have.

This overview is general information, not tax advice for your specific situation.