December 31 will be here before we know it. For veterinary practice owners balancing patient care with the demands of running a business, year-end tax planning deserves a place on the October calendar. Starting now gives you time to assess your financial results, explore available deductions, and make thoughtful decisions before the year closes.
Recent tax changes have expanded several planning opportunities for 2026. Their value to your practice depends on your income, business structure, and goals. An early conversation with your accountant helps bring those pieces together while there is still time to act.
Start With Your Numbers
A useful tax strategy begins with reliable financial information. Now is the time to bring your bookkeeping up to date, reconcile your accounts, and review your profit and loss statement. Arrange a year-end inventory count so your records accurately reflect the medications, supplies, and products on hand. Using those numbers, your CPA will be able to estimate your practice's year-end profit and your personal tax liability, and determine whether estimated tax payments need adjusting. If your hospital reports on an accrual basis, a conversion to cash basis may be necessary. Your accountant can make the necessary adjustments to calculate your taxable income accurately.
Review Equipment Purchases and Property Plans
If your practice needs new medical equipment or a technology upgrade, consider reviewing purchase timelines now. Delivery and installation schedules matter: qualifying equipment must be ready and available for use by December 31 to qualify for a 2026 deduction.
Remember—the 2025 tax law restored 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025. Section 179 also offers immediate deductions for eligible purchases, with a maximum deduction of $2.56 million for tax years beginning in 2026, subject to applicable limits.
A conversation with your accountant will help clarify how a planned purchase would affect both your tax liability and cash flow. The appropriate deduction strategy depends on your practice's needs and projected results, as well as federal and state tax rules.
Practice owners who have purchased, constructed, or renovated a building may also benefit from performing a cost segregation study to accelerate deductions. Your CPA can help you weigh the potential tax savings against the study’s cost and determine whether it fits your overall tax strategy.
Coordinate Compensation and Benefits
As the year winds down, many practice owners are thinking about how to recognize their team’s hard work. Staff bonuses offer a way to show appreciation to staff and may also provide a deduction for the practice. Your accountant can help you understand how the amount and payment timing fit your tax strategy, while your payroll provider handles the required withholding and reporting.
Owner compensation and benefits also deserve attention. For practices taxed as S corporations, owner salaries need to reasonably reflect the services provided. Health insurance premiums paid or reimbursed by the corporation for shareholders owning more than 2% require W-2 reporting. Coordinating these details before the final payroll helps keep year-end reporting on track.
Retirement contributions offer another opportunity to align your practice’s tax strategy with your personal financial goals. Depending on your plan, tax-deferred contributions may lower your current taxable income while building savings for the future.
How the QBI Deduction Fits In
These decisions may also affect your eligibility for the qualified business income (QBI) deduction. Made permanent by the 2025 tax law, the QBI deduction allows eligible pass-through business owners to deduct up to 20% of qualified business income. For 2026, eligible practice owners with taxable income up to $201,750 ($403,500 for joint filers) may receive the full QBI deduction. A reduced deduction is available for incomes between that threshold and $276,750 ($553,500 for joint filers).
If your projected income approaches those limits, the interaction between equipment deductions, retirement contributions, and QBI becomes especially relevant. Your CPA can help you understand how those choices work together and what they mean for your overall tax liability.
Make October Count
Starting year-end tax planning in October gives you time to work through these questions thoughtfully. A CPA who understands veterinary practices brings an informed perspective to both your tax opportunities and the financial demands of running your hospital. Together, you can develop a strategy that supports your practice’s needs and your personal goals, with time to put it into action before year-end. Reach out to us today to learn more about UHY’s services for veterinary practices.
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