Growth changes the tax picture for a healthcare practice. As providers, locations, and service lines are added, decisions can affect cash flow. These effects also influence owner taxes in ways that are easy to miss. That is true for dental practices, primary care groups, specialty physician practices, and other multi-provider organizations.
In a multi-provider practice, tax planning is about much more than the annual return. Before year-end, much planning remains useful. You can still decide on entity structure. This includes retirement plans, state tax elections, capital purchases, and owner compensation.
For 2026, six areas deserve a closer look with your CPA.
1. Is Your Current Entity Structure Still the Right Fit?
A practice’s entity structure often gets less attention once the business is up and running. Adding providers, locations, or new service lines can change the economics. Many physician and dental practices operate as S corporations or partnerships. Whether that arrangement still makes sense depends on ownership, compensation, profitability, succession plans, and state tax rules.
The qualified business income rules classify healthcare services as specified service trades or businesses. Therefore, owner income levels and entity design matter. It is easier to review the structure before an expansion, buy-in, or sale than after the transaction has narrowed the available options.
2. Get More from the Retirement Plan
Retirement plan design can do more than provide a standard employee benefit. For a profitable healthcare practice, it may also create a current tax deduction while helping owners build retirement assets. A multi-provider group may have options beyond a basic 401(k), including safe harbor plans, profit-sharing arrangements, and cash balance or defined benefit plans.
The right design depends on physician ages, compensation levels, employee demographics, and the owners’ contribution goals. Modeling the alternatives before year-end helps show the trade-offs among owner tax savings, employee benefits, and the cash the practice will need to commit.
3. Revisit the Pass-Through Entity (PTE) Tax Election After OBBBA
The One Big Beautiful Bill Act (OBBBA) increased the federal itemized deduction limit for state and local taxes (SALT). For 2026, the limit is $40,400 ($20,200 for married taxpayers filing separately). The limit begins to phase down when modified adjusted gross income exceeds $505,000 ($252,500 for married filing separately), but it cannot be reduced below $10,000 ($5,000 for married filing separately).
The higher individual SALT deduction does not automatically make a state Pass-Through Entity tax election irrelevant. Many states still allow eligible S corporations and partnerships to pay state income tax at the entity level. Under IRS Notice 2020-75, qualifying state income taxes paid by a partnership or S corporation are generally deductible in computing the entity’s federal taxable income instead of being subject to the owner’s individual SALT limitation.
That can still produce a federal tax benefit for profitable physician and dental groups, especially when an owner’s state and local taxes exceed the individual cap or higher income reduces the increased SALT deduction. The result varies by state and by owner. Resident and nonresident owners, state credits, estimated payments, and election deadlines all need to be modeled before an election is made.
4. Be Deliberate About Equipment and Technology Purchases
Equipment purchases are common in growing healthcare practices: imaging systems, diagnostic technology, treatment rooms, computers, and other business property. OBBBA made 100% bonus depreciation permanent for qualifying property generally acquired and placed in service after January 19, 2025. For 2026, the Section 179 expensing limit is also $2.56 million, with the phaseout beginning when qualifying property placed in service exceeds $4.09 million.
Those rules can make purchase timing matter, but the deduction should not be the reason to buy. The practice still has to consider financing, cash flow, expected useful life, and whether taking the deduction now is better than preserving deductions for later years.
5. Recheck Owner Compensation, Distributions, and Estimated Taxes
Profitability can shift quickly when a practice adds providers, changes its payer mix, or develops a new service line. S corporation owners should periodically revisit reasonable compensation in light of distributions and overall profitability. Partnerships may need a similar review of guaranteed payments and profit allocations.
A fourth-quarter tax projection gives owners time to adjust federal and state estimated payments, plan for PTE tax obligations, review retirement contributions, and set distributions before year-end. In a multi-owner practice, that planning matters because the tax needs of several physicians or dentists have to be coordinated with the practice’s cash needs.
6. Connect Tax Planning to Business Decisions
Tax planning works best when it is part of the practice’s normal business decision-making. Bringing in an associate, admitting a new owner, buying equipment, opening or expanding a location, or changing compensation can all affect taxes.
A regular planning meeting with your CPA creates a place to work through those decisions while there is still time to act. That may include projecting taxable income, evaluating a PTE election, modeling capital expenditures, reviewing retirement contributions, and preparing for owner-level tax payments.
What to Review Before Year-End
Multi-provider practices have more moving parts than solo practices, and the tax planning becomes more interconnected as the organization grows. A decision about equipment, compensation, ownership, or retirement benefits can affect more than one owner and more than one part of the business.
If your practice grew in 2026—or you are preparing for an expansion, a new partner, or a major investment—a year-end review should focus on the decisions that can still be made before December 31. The point is to make those decisions while there is still time to act.
This article is for general informational purposes only and is not intended as tax, legal, or investment advice. Tax results depend on each practice’s facts and applicable federal and state law.
Technical Sources
- IRS, Correction to state and local income tax deduction amount in the 2026 Form 1040-ES[IRS source]
- IRS Notice 2020-75, Deductibility of State and Local Income Taxes Imposed on and Paid by a Partnership or S Corporation[IRS source]
- IRS Notice 2026-11, Interim Guidance on Additional First Year Depreciation Deduction under Section 168(k)[IRS source]
- IRS Publication 946 (2025), How To Depreciate Property – 2026 Section 179 limits[IRS source]