How the One Big Beautiful Bill Impacts Your Private Practice Taxes, and What to Do About It

The One Big Beautiful Bill (OBBB) Act made sweeping changes to Medicare and Medicaid, affecting the coverage of millions of Americans. It also made tax rates introduced by the Tax Cuts and Jobs Act (TCJA) permanent, and put in place new tax rules meant to benefit businesses.

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But what does all this mean for therapists and other wellness practitioners in private practice? And what can you do to adapt your business to these changes?

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Here’s a complete list of changes introduced by the OBBB that could affect your private practice, and what you can do to prepare.

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What is the One Big Beautiful Bill Act?

The OBBB was signed into law on July 4, 2025. The aim of the bill is to cut government spending while increasing deductions for American workers and families, encouraging business growth, and shoring up national defense with an increased budget.

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Importantly, the OBBB changes who qualifies for Medicare and Medicaid, and also modifies the Affordable Care Act (ACA).

How the OBBB affects private practice

The OBBB’s biggest impact to therapists and other wellness practitioners is likely to come from healthcare cuts. You may find that some of your patients who previously relied on Medicare or Medicaid, or financial support through the ACA, can no longer afford treatment.

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On the other hand, the OBBB introduces changes to tax law that could allow your practice to benefit from higher limits on credits and deductions.

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This is a summary of all the changes relevant to private practice. For a more detailed look, skip ahead to How OBBB medical coverage changes affect private practice and How OBBB tax changes affect private practice.

Medical coverage for clients

New Medicaid limitations. A significant number of beneficiaries will no longer qualify for Medicaid. This is due to new work requirements and increased eligibility checks; cuts to state funding; and enrollment limitations on some lawfully present immigrants.

New Medicare limitations. The biggest impact on Medicare comes from new limitations on enrollment for lawfully present immigrants.

End of ACA assistance. Financial assistance that allows some beneficiaries to afford insurance purchased through the ACA marketplace will be withdrawn at the end of 2025. Partly as a result of this, 5.1 million people are expected to lose healthcare coverage.

Changes to taxes

Indefinite extension of current personal income and corporate tax rates. The rates, introduced provisionally in 2017 with the TCJA, are now permanent.

“No tax” on tips and overtime. Up to certain limits, tips and overtime pay may be deducted from taxes.

Small increase to the standard deduction. While minor, this change may be cause to reconsider itemizing your deductions.

Increased cap on state and local tax (SALT) deductions. Individuals and businesses may now deduct a greater amount of state and local tax from their federal taxes.

Pass-through entity tax (PTET) workarounds protected. Methods businesses may use to claim deductions greater than the SALT limits are now protected from federal interference, and explicitly allowed in over 30 states.

Changes to the qualified business income (QBI) deduction. Higher-income businesses now have a longer phase-in period for QBI, resulting in more savings. Smaller businesses benefit from a minimum QBI deduction.

Section 179 limits increased. Section 179 allows businesses to deduct the full cost of major purchases from their current-year taxes rather than amortizing them.

Immediate expensing and bonus depreciation. Businesses may now immediately write off 100% of qualifying current-year purchases rather than amortizing them.

Employer Child Care Credit increases. Employers who provide or subsidize childcare for employees benefit from increased tax credits.

Paid Family and Medical Leave Credit increases. Employers who provide employees with paid leave now benefit from increased tax credits.

Health savings accounts (HSA) expansion. The contribution limit to HSAs has doubled, and the number of qualified expenses has increased.

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How OBBB medical coverage changes affect private practice

Beneficiaries could lose access to medical coverage due to the OBBB. Private practices are likely to see an impact: current clients may no longer be able to afford care, and the number of potential clients will decrease.

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Here’s what your practice can do to prepare.

Consider ways to help existing clients

There are a number of strategies you can use to help retain clients who no longer have medical coverage due to the OBBB:

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Offer sliding scale fees. It may not make an enormous financial difference to someone who has completely lost medical coverage, but sliding scale fees demonstrate that you’re on their side and willing to do what you can to help them get the care they need.

Reduce frequency of treatment. Some clients may be able to afford less frequent treatment sessions. Work with them to adjust their treatment plans and reassess goals and timelines, so they can still benefit from a reduced schedule.

Refer clients out to more affordable options. If possible, help clients find more affordable care, for instance through subsidized programs or clinics in your community. Working one-on-one with other care providers can help ensure a smooth transition.

Offer alternative treatments. Existing clients who can no longer afford one-on-one sessions may benefit from group treatment or telehealth options. If you do not already offer these types of treatment, expanding your practice to include them could help retain clients and even attract new ones.

Prepare for the loss of clients

If any of your clients rely on Medicare, Medicaid, or ACA financial assistance, assume the worst case scenario. Losing clients means a loss of revenue. Hopefully it will be a temporary one, but for the time being, here’s how you can prepare:

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Set up an emergency savings fund. If you don’t have one already, setting up an emergency fund can give you a buffer in times of reduced cash flow. Even a few months’ savings may make a difference, so set up an emergency fund ASAP.

Review your budget. There may be opportunities to reduce expenses in your private practice. Temporary cuts can help make up the difference in your cash flow while you work to attract new clients.

Apply for loans. Taking on debt to cover revenue shortfalls should always be a last resort. But if it’s your only option, take time to research the different types of business loans available to private practices.

Switch from insurance to cash pay. While it may be counterintuitive, dropping insurance panels and switching to cash pay earns you more revenue on a per-client, per-session basis. You could end up earning enough to offset the loss of current clientele who rely on insurance, and earn more from each future client you bring on.

Attract new clients to help fill your list

When your client list falls below maximum capacity, your financial productivity goes down. By planning ahead, you can increase the flow of new clients to your practice:

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Review your marketing budget. A temporary increase in marketing spending could be a necessary investment for attracting new clients. Consider increasing your spend on advertising and building up your online presence.

Apply to insurance panels. Expanding the types of insurance you accept may make you an eligible choice for new clients, and in-network referrals will drive more business to your door.

Build your referral network. Relationships with other professionals in your field—or practitioners who offer complementary services—can help ensure you continue getting new referrals. That fills up your client list faster.

Consider expanding your services. By hiring new staff or partnering with other practitioners, you could increase your offerings to include treatment that complements your current services. For example, if you run a chiropractic practice, you could bring a reflexologist onboard, potentially increasing earnings from existing clients while attracting new ones.

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How OBBB tax changes affect private practice

Changes to tax law included in the OBBB are meant to benefit small business owners. Whether they do so on a national level remains to be seen, but there are a number of changes you can leverage as an individual practice owner to reduce your tax bill.

The TCJA tax rates are now permanent

The income tax and corporate tax rates introduced in 2017 by the TCJA are now permanent. Accountants and tax planners were warning of a potential tax hike when the rates expired in 2025, but now that they’re permanently in place, you can plan your tax withholdings and make financial projections with confidence.

“To tax” on tips and overtime (up to a point)

Up to $25,000 in tips and $12,500 in overtime pay ($25,000 for joint filers) are now 100% tax deductible for qualified dilers. In effect, this means that individuals do not pay income tax on those earnings.

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While you may not accept tips at your private practice, the overtime deduction could affect your staff scheduling. The overtime deduction is meant to encourage workers to put in extra hours and benefit from tax-free income as a result.

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If you have employees, this may be a good time to consult with them about extra overtime—particularly if you would like to expand your operating hours or take on additional clients. You could avoid the cost of hiring new staff by giving your existing staff the opportunity to work more hours.

The standard deduction has increased

The OBBB raises the individual standard deduction from $15,000 to $15,750, indexed for inflation. If you already take the standard deduction, that means more tax savings. If, on the other hand, you itemize your deductions, this is a good time to crunch the numbers and make sure you’re enjoying the largest write-off possible.

The SALT deduction cap has increased

The SALT deduction allows you to deduct the cost of state-level taxes on your federal tax filing. It’s an above-the-line deduction.

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Before 2017, there was no cap. The TCJA introduced a $10,000 cap. Now the OBBB is raising the cap to $40,000, indexed at 1% per year.

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If you live in a state with high taxes, that could mean a higher write-off the next time you file taxes. Make sure you’re accurately tracking all of the state and local tax you pay, so you can report them accurately.

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One caveat: the increased cap only lasts until 2029. After 2029, it will lower to $10,000.

The PTET workaround is now protected

Many states allow businesses to take advantage of the PTET workaround. The workaround allows a pass-through entity to pay state taxes directly, and then deduct the expense on its federal income tax return. By doing this, a business can deduct an amount from its federal taxes higher than the SALT cap.

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The PTET workaround is managed individually by states. In total, more than 30 states allow it.

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Only qualifying businesses may take advantage of PTET. Generally, that includes S corporations, partnerships, and LLCs with more than one member. But the exact requirements vary by state.

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Prior to the OBBB, there was potential for federal tax authorities to challenge individual states on the PTET, meaning the future of the workaround was uncertain. But the PTET includes provisions explicitly protecting PTET from federal interference.

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If you typically take advantage of the PTET, or if you’re considering it for the first time, you can now confidently include it in your tax strategy.

The QBI deduction has changed

The QBI deduction allows qualifying businesses to deduct 20% of their income from their taxes.

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The OBBB does not change the 20% amount, which businesses qualify, or the basic calculation method.

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However, it makes the QBI permanent, and increases the phase-in period for high-income businesses from $50,000 to $75,000. That means the amount you can deduct decreases more gradually if your business is in a higher income bracket.

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Lower-income businesses benefit from a minimum deduction. If your practice has at least $1,000 in qualifying income, your deduction is the greater amount of $400 or 20% of that income.

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For more, read our guide to QBI for private practices.

The Section 179 write-off cap is now higher

Businesses can elect to write off expenses under Section 179, avoiding the need to depreciate new business property and writing off the entire expense in the current year.

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The limit was $1.25 million, but with the OBBB, it has now doubled to $2.5 million. The phaseout limit has increased to $4 million.

Limits on immediate expensing and bonus depreciation have increased

Similarly to Section 179, bonus depreciation allows your business to write off the cost of an asset in the current year rather than depreciating it.

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The bonus depreciation amount was scheduled to phase out, and had lowered to 40% of qualifying assets. With the OBBB, it returns to 100 per cent.

The Employer Child Care Credit has gone up

The Employer Child Care Credit allows businesses that provide or subsidize childcare for their employees to enjoy tax savings.

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Prior to the OBBB, the credit was set at 25%, up to a limit of $150,000.

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The OBB gave this credit a boost. Now businesses can receive a 40% credit on up to $500,000 in childcare costs. Certain qualifying small businesses receive a 50% credit up to $600,000.

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If you’re concerned about employee retention, or hoping to attract new employees, now is a good time to consider offering subsidized childcare. The new credit increases can help offset the cost.

The Paid Family and Medical Leave Credit has increased

The Paid Family and Medical Leave has been permanently extended. The OBBB also expands and improves this credit, with broader eligibility criteria and higher percentages for qualifying employers.

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Like subsidized childcare, paid leave can help to retain and attract employees. Changes to this credit may be an incentive for expanding employee benefits.

Form 1099 thresholds increase

The threshold on Form 1099 determines who needs to file the form. It has increased for three common 1099s:

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Form 1099-NEC: Previously, a business that paid a contractor $600 or more over the course of the year was required to submit a Form 1099-NEC. The threshold has increased to $2,000.

Form 1099-MISC: As with Form 1099-NEC, the 1099-MISC threshold has increased to $2,000.

Form 1099-K: Payment processors are required to send a Form 1099-K to customers. Like other 1099s, this one has a threshold. Prior to the 2025 tax year, the threshold was $600, with no transaction minimum. With the OBBB, the threshold is set at $20,000 and a minimum of 200 transactions.

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If you commonly pay contractors (Form 1099-NEC) or other individuals or businesses (Form 1099-MISC), you may now find you need to submit fewer Form 1099s because of the increased thresholds.

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If you accept online payments through platforms like Venmo or Paypal, you may no longer receive a Form 1099-K each year from those payment processors. Ultimately, this means less paperwork to keep track of.

HSA contribution limits have doubled

An HSA lets you set aside money to cover health expenses while reducing your tax burden. If you’re an employer, you may provide contributions to employees’ HSAs as part of your benefits package.

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Starting in 2026, the maximum annual HSA contribution increases from $4,150 (individuals) and $8,300 (family) to $8,450 (individuals) and $16,850 (family).

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HSAs have been expanded to include more qualifying expenses—namely Direct Primary Care, telehealth, and gym memberships.

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In 2026, consider increasing contributions to your HSA to increase your tax savings, and review your benefits package for employees.

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When does the OBBB come into effect?

Different provisions of the OBBB come into effect at different times:

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2025

TCJA tax rates permanent
Tax deductions on tips and overtime
SALT cap increase
PTET workaround protected
Increased standard deduction
Childcare tax credit increase
Paid leave tax credit increase
QBI changes
Section 179 and bonus depreciation changes

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2026

Form 1099-NEC, 1099-MISC, and 1099-K reporting thresholds increase
HSA contribution limits increase

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2027

Medicaid work requirements

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2028

Reduced ACA health marketplace eligibility

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The OBBB timeline for private practices

Once you have an idea of the changes you expect from the OBBB, it’s time to plan how your practice will adapt.

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This timeline should serve as a rough guide to help you implement changes.

Q3 and Q4 of 2025

Track and plan new deductions

Bonus depreciation, increased HSA contributions, a raised cap on SALT deductions, and the PTET workaround may all serve to lower your practice’s tax burden.

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Review the relevant expenses now, and make sure you’re tracking them accurately. Then do some research—or talk to an accountant—about any additional tax forms you may need to include when you file.

Revisit above-the-line deductions

The increase to the standard deduction may make it a more attractive option if you typically itemize your write-offs. Conversely, the increased SALT deduction cap may mean it’s time to switch from the standard deduction to itemized deductions.

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Calculate your itemized deductions, taking the OBBB changes into account, and plan which method you will use when you file.

Keep an eye on Form 1099 thresholds

If you were planning to file Form 1099-NEC or Form 1099-MISC for the 2026 tax year, review the numbers. The amount you have paid (or will pay) contractors or other individuals may fall below the new reporting thresholds. That means less paperwork when tax season arrives.

Plan to implement employee benefits

The increased Employer Child Care Credit and Paid Family and Medical Leave credits may now make these benefits affordable for your business. And contributions to employee HSAs can reduce your tax burden. It’s time to start planning if or how you will implement them in 2026.

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Keep in mind that you can implement them immediately and enjoy some tax savings, but it may be best to wait until you have prepared your next annual budget before incurring the expenses.

2026

Make your first post-OBBB tax filing

Your tax filing for 2025 will be impacted by the changes introduced by the OBBB that have already come into effect. Work with an accountant to make sure you’re maximizing your tax savings and complying with new rules.

Prepare for the impact of healthcare cuts

Loss of coverage may start to impact your clients. Others will be impacted by changes later in the year and in 2027. Make plans now to provide all the help you can to your clients, and adapt your practice to a potential loss of revenue.

Implement new employee benefits

If you planned to add childcare, paid leave, or HSA contributions to your benefits packages for employees, this is the time to put those changes into effect. You should see the impact on your tax bill after the end of the year, when you file your 2026 taxes.

Review quarterly payments

If lost revenue, new tax credits and deductions, or other changes due to the OBBB will impact your practice’s taxable income, take the time to make projections. If you anticipate a lower tax bill, you may benefit from making lower quarterly payments—but keep the safe harbor rule in mind.

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Heard helps you manage the OBBB beautifully

Heard is the complete bookkeeping and accounting solution for therapy and wellness practices. Our specialists are up-to-date with the latest changes to tax laws, so you’re guaranteed an accurate filing that takes advantage of increased deductions and credits.

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Plus, with automatic transaction categorization and financial reports that are always up to date, you have the information you need to make informed business decisions. That helps your practice adapt to changes now and in the future.

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Book a free consult now.

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Want to learn more about preparing for tax season as a private practice owner? Check out our guide to tax planning strategies for therapists.

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

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Bryce Warnes is a West Coast writer specializing in small business finances.

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