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OBBBA Tax Changes for Direct Primary Care Practices: Complete 2025 Guide

The One Big Beautiful Bill Act (H.R. 1), enacted July 4, 2025, fundamentally changes tax planning for Direct Primary Care practices. This guide explains exactly what changed, what it means for your practice finances, and the specific actions to take.

Author: Daniel, DPC Bookkeeper | Specialized accounting for direct primary care practices
Disclosure: No affiliate relationships with any tax software, payroll providers, or financial services mentioned.

Quick Answer: What Is OBBBA and Why Does It Matter to DPC?

The One Big Beautiful Bill Act makes permanent several tax provisions that were set to expire, adds new deductions specifically valuable to small medical practices, and creates significant equipment write-off opportunities.

For DPC practices, the biggest impacts are:

  1. Permanent 20% QBI deduction for pass-through income
  2. 100% bonus depreciation restored for equipment and build-outs
  3. HSA funds can pay DPC membership fees starting January 1, 2026
  4. New payroll tax exemptions for tips and overtime (if configured correctly)
  5. Higher standard deductions reducing itemization needs

Bottom line: Most DPC practices will see lower taxes in 2025 and beyond, but only if you adjust payroll settings, time equipment purchases correctly, and update your patient billing structure before 2026.

Section 1: Pass-Through Business Income (QBI Deduction)

What Changed

The 20% Qualified Business Income deduction is now permanent with improved thresholds and a new $400 minimum deduction for active business owners.

What This Means for DPC Practices

Most DPC practices operate as S-Corporations or LLCs taxed as partnerships. Your practice income “passes through” to your personal tax return.

Example:

Important limitations:

Who benefits most:

Action item: Review your 2024 income with your CPA. If you’re under the phase-out threshold, ensure your entity structure maximizes this deduction.

Section 2: Equipment and Build-Out Write-Offs

What Changed

Two major depreciation tools now work together:

  1. Bonus depreciation returns to 100% for assets placed in service after January 19, 2025
  2. Section 179 expensing remains available with increased limits

What This Means for DPC Practices

You can now write off the full cost of eligible equipment and improvements in the year you buy them, rather than depreciating over 5-7 years.

Eligible for 100% bonus depreciation:

Requires Section 179 instead:

Real-world example:

You’re opening a second location. Total costs:

Old rules (2024): Depreciate over 5-7 years = roughly $20,000 deduction in year one

New rules (2025):

Tax impact: At 24% federal bracket, that’s $33,600 in tax savings compared to $4,800 under old depreciation rules.

Strategic timing:

If you’re planning any major purchases or build-outs:

Action item: If you’re planning expansion, renovation, or major equipment purchases, model the tax impact with your CPA before finalizing timing.

Section 3: HSA Funds Can Now Pay DPC Membership Fees

What Changed

Starting January 1, 2026, patients can use Health Savings Account (HSA) funds to pay for Direct Primary Care membership fees.

This is a significant change. Previously, DPC memberships were not considered qualified medical expenses for HSA purposes.

What This Means for DPC Practices

Patient benefits:

Practice benefits:

Important restrictions:

FSAs (Flexible Spending Accounts) are NOT included in this change. Only HSA funds qualify.

Billing structure requirements:

To keep HSA payments compliant, your billing must separate:

Example of compliant billing:

Example of non-compliant billing:

Action items:

  1. Review your current membership structure (do this before January 2026)
    • Are any non-medical services bundled into membership fees?
    • If yes, separate them in your billing and contracts
  2. Update patient agreements and billing descriptions to clearly show what’s covered
  3. Train your admin team on how to explain HSA eligibility to patients
  4. Update your marketing to highlight HSA compatibility starting January 2026
  5. Consider your EHR/billing system – can it generate statements that clearly show HSA-eligible charges?

Common questions:

Q: Can patients on health sharing ministries use HSA funds?
A: No. HSAs require enrollment in a qualified high-deductible health plan (HDHP). Health sharing plans don’t qualify.

Q: What if a patient pays with HSA funds but I have non-medical amenities included?
A: The patient could face penalties and taxes on the non-qualified portion. Keep billing clean.

Q: Do I need to verify HSA eligibility before accepting payment?
A: No. The responsibility is on the patient to ensure their expenses are qualified. Your job is to provide clear documentation of what services you’re billing for.

Section 4: New Payroll Tax Relief (Tips and Overtime)

What Changed

Two new provisions exempt certain wages from federal income tax:

  1. Tips: Up to $25,000 annually (exempt from federal income tax, not FICA)
  2. Overtime premium: Up to $12,500 (single) / $25,000 (married) of the premium portion of overtime wages

Both provisions run through 2028 and phase out at higher income levels.

What This Means for DPC Practices

If you have hourly employees (front desk, medical assistants, care coordinators) who occasionally work overtime, this can provide meaningful tax relief.

Important: This relief is not automatic. Your payroll system must be configured correctly.

How overtime exemption works:

Only the “premium” portion of overtime is eligible.

Example:

If an employee works 10 hours of overtime in a year:

Who benefits:

What you need to do:

  1. Update your payroll software to properly code tip income and overtime premium
  2. Verify with your payroll provider (Gusto, ADP, Paychex, etc.) that they’ve implemented OBBBA coding
  3. Don’t over-withhold – if your system isn’t updated, you’re taking federal income tax from wages that are now exempt

Action item: Contact your payroll provider this month and ask: “Has your system been updated to handle OBBBA tip and overtime exemptions?” If not, find out when the update is coming.

Section 5: Higher Standard Deduction

What Changed

The standard deduction increases to:

Additional $6,000 deduction for filers age 65+ (for four years, subject to phase-outs at higher incomes).

What This Means for DPC Practices

Most DPC owners will stop itemizing.

Previously, many practice owners itemized to deduct:

With the higher standard deduction, itemizing often provides less benefit than simply taking the standard deduction.

Example:

Married couple, practice owner and spouse:

Old standard deduction (2024): $29,200
→ Itemizing saved $2,800 in deductions

New standard deduction (2025): $33,500
→ Standard deduction is higher, no need to itemize

SALT cap increase:

The state and local tax deduction cap rises from $10,000 to $40,000 (phasing out for very high earners).

However, this often doesn’t change the calculus because the standard deduction is now so high.

Pass-through entity (PTE) tax elections:

Some states allow pass-through businesses to pay state income tax at the entity level rather than personally. This can create a “double benefit”:

Action item: Ask your CPA whether a PTE election makes sense in your state. Not all states offer this, and the math varies significantly.

Section 6: Child Tax Credit and Family Benefits

What Changed

Child Tax Credit:

“Trump Accounts” for children born after January 1, 2025:

What This Means for DPC Practices

For practice owners with children:

The higher child tax credit provides modest additional relief, but the bigger planning opportunity is the Trump Account for newborns.

Trump Account strategy:

If you have a child born in 2025 or later:

This is essentially a government-seeded retirement account for your child, with more flexibility than a standard IRA for education and home purchase.

Action item: If you have young children, watch for Treasury guidance on Trump Accounts in mid-2026. Consider whether maxing the $5,000 annual contribution fits your family financial plan.

Section 7: Employer Childcare Credit

What Changed

Employer-provided childcare support now earns:

What This Means for DPC Practices

If you help employees pay for childcare (either through direct payments to providers or subsidies), a portion of that cost comes back as a dollar-for-dollar tax credit, not just a deduction.

Example:

You employ two medical assistants. You provide $6,000 annually in childcare assistance to each ($12,000 total).

As a small business, you may qualify for a 50% credit:

This is a credit, not a deduction. It directly reduces your tax bill by $6,000.

Who should consider this:

How to implement:

  1. Work with your CPA to structure the benefit correctly (there are specific requirements)
  2. Coordinate with payroll to ensure proper reporting
  3. Document the program in your employee handbook

Action item: If you’re considering adding benefits to attract or retain staff, childcare assistance now has a significantly better ROI than it did previously.

Section 8: R&D Tax Credits for DPC

What Changed

R&D incentives expanded for domestic work:

What This Means for DPC Practices

DPC practices qualify for R&D credits more often than most owners realize.

R&D isn’t just lab coats and test tubes. It includes:

Real-world DPC examples that may qualify:

How R&D credits work:

You get both:

  1. A tax credit (typically 6-8% of qualified expenses)
  2. An immediate deduction for domestic R&D costs

Example:

You spend $50,000 developing a custom patient engagement platform:

At 24% tax bracket:

Who should explore this:

Action item: Ask your CPA whether your practice activities qualify for R&D credits. Many DPC practices are leaving significant money on the table by not claiming these.

Section 9: Estate Tax and Succession Planning

What Changed

The estate tax exemption increases to:

What This Means for DPC Practices

For most single-site DPC practices: This doesn’t directly impact you. Few solo or small group practices have estate values exceeding $15M.

For multi-site or rapidly scaling practices: This is significant.

If you’re building a DPC group with:

You now have permanent certainty for estate planning. Previously, the exemption was set to drop to around $7M per person in 2026.

Action items for larger practices:

  1. Get a business valuation (know what your practice is actually worth)
  2. Review your succession plan with an estate attorney
  3. Consider gifting strategies if you’re planning to transition ownership to family or partners
  4. Update your buy-sell agreements if you have partners

Section 10: Home Energy and Vehicle Deductions

What Changed

Home energy efficiency:

Personal vehicle loan interest:

What This Means for DPC Practices

Home office users:

If you maintain a home office for practice administration, energy efficiency upgrades may now pencil out better with the expanded credit.

Vehicle deduction clarification:

The new personal vehicle loan interest deduction is separate from business vehicle deductions.

Action item: If you’re considering solar or efficiency upgrades to a home where you maintain a home office, run the numbers with the 30% credit included.

Common Questions from DPC Practice Owners

Can patients use HSA funds for DPC memberships?

Yes, starting January 1, 2026. Ensure your billing clearly separates clinical services from any non-medical amenities.

Can patients use FSA funds for DPC memberships?

No, not under current rules. Only HSA funds are eligible.

Does the car loan interest deduction apply to my practice vehicle?

No. The new personal deduction targets personal vehicle loans for new, U.S.-assembled cars with income limits. Business vehicle interest remains deductible under existing business expense rules.

I’m on a health sharing plan. Can I contribute to an HSA?

No. HSAs require enrollment in a qualified high-deductible health plan (HDHP). Health sharing plans don’t meet that requirement.

Do I automatically get the tip and overtime tax exemptions?

No. Your payroll system must be configured correctly to code eligible wages. Contact your payroll provider to confirm they’ve updated their system for OBBBA.

Should I accelerate equipment purchases into 2025 to take advantage of bonus depreciation?

Maybe. It depends on your current-year income, cash flow, and whether you actually need the equipment. Don’t buy things you don’t need just for a tax deduction. Work with your CPA to model the impact.

Does the QBI deduction apply to my W-2 salary from my S-Corp?

No. The QBI deduction applies to pass-through business income, not W-2 wages. However, your S-Corp’s net income (after your salary) passes through and may qualify for the deduction.

Action Checklist: What to Do Now

Immediate (This Month):

Before Year-End 2025:

Before January 1, 2026:

Ongoing:

Final Thoughts

OBBBA creates real opportunities for DPC practices, but only if you take specific action.

The permanent QBI deduction, restored bonus depreciation, HSA compatibility, and targeted payroll relief can collectively save five figures annually for many practices. But none of it happens automatically.

The practices that benefit most are the ones that:

I’ve worked with DPC practices long enough to know that most of you didn’t start your practice to become tax experts. You started it to practice medicine the way it should be practiced.

But tax planning isn’t optional when you own a business. The good news is that OBBBA makes the rules clearer and more stable. Take advantage of it.

Need Help Implementing These Changes?

I specialize in helping DPC practices navigate exactly this type of operational and financial planning.

Services:

Schedule a consultation: daniel@dpcbookkeeper.com | DPCBookkeeper.com

About the Author

Daniel is the founder of DPC Bookkeeper, a specialized accounting and operations firm serving direct primary care practices. He works exclusively with DPC providers to build financial systems that support clinical independence. This guide represents his analysis of OBBBA’s practical impact on the DPC practices he serves daily.

Disclaimer: This article provides general information about tax law changes and is not personalized tax advice. Consult with a qualified CPA or tax attorney about your specific situation before making any tax planning decisions.

DPC Bookkeeper: Financial infrastructure for independent practices.

Last updated: January 2025
Primary source: H.R. 1 (One Big Beautiful Bill Act), enacted July 4, 2025

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