One Big Beautiful Bill Tax Reforms: What Veterinary Hospital Owners Need To Know

The One Big Beautiful Bill (OBBB) was signed into law on July 4, 2025, enacting sweeping tax reforms that have direct relevance for veterinary hospital owners. The legislation included a range of significant tax provisions. Key changes for veterinary hospitals and hospital owners are highlighted below.

Bonus Depreciation and Section 179 Deductions

• Permanent 100% bonus depreciation applies to assets acquired and placed in service starting Jan. 19, 2025. This allows veterinary hospitals to fully expense the cost of qualifying equipment for federal tax purposes in the year acquired.
• The Section 179 deduction limit has increased from $1 million to $2.5 million, with phase-outs now starting once purchases exceed $4 million.

SALT Deduction Cap Raised

• The state and local tax deduction limitation for individual tax returns has been raised to $40,000 from the the previous $10,000 limit. However, this benefit phases out once a taxpayer’s adjusted gross income exceeds $500,000.
• Veterinary hospitals in states with a pass-through entity tax (PTET) can continue to benefit from deducting PTET payments at the business level, even if income exceeds the individual phase-out.

Other Business Tax Provisions

• Employers can still pay up to $5,250 tax-free toward student loans for each employee.
• The 1099 reporting threshold increases from $600 to $2,000 starting in 2026.
• The statute of limitations related to the Employee Retention Credit has been increased.

Other Individual Tax Provisions

• The estate tax exemption increases to $15 million per person beginning Jan. 1, 2026, providing relief for executing estate tax planning needs.
• New Trump IRA accounts are now available for individuals under 18 years old, providing another retirement plan savings option.
• Withdrawals from 529 plans may now be used for up to $20,000 per year to pay for elementary and secondary school expenses. Eligible post-secondary expenses have also expanded to include credentialed programs.
• Additional deductions have been established related to cash tips, overtime, seniors, and car loan interest, subject to income limitations.
• The child tax credit is permanently increased.
• The mortgage interest deduction limit of $750,000 has been made permanent.
• Miscellaneous itemized deductions have been eliminated.
• Beginning in 2026, taxpayers who do not itemize deductions may claim an above-the-line charitable deduction of up to $1,000 for single filers and $2,000 for joint filers.

The OBBB introduces lasting tax benefits for veterinary hospital owners that were previously set to expire. These provisions expand opportunities for immediate write‑offs, enhance long‑term planning options, and create more flexibility in managing both business and personal finances.

To maximize the value of these reforms for your hospital, consult with your KSM advisor or complete the form below for help from our team of veterinary tax specialists.