Tax Write-Offs for New Medical Practices: The Complete List

Starting a medical practice is expensive, but the IRS offers a range of tax write-offs that can significantly reduce your first-year tax bill. This guide lists the deductions available to new medical practices in 2026, with realistic figures and actionable steps. Knowing what to deduct and how to document it can save you thousands, so read on to ensure you claim every legitimate expense.

Startup Costs

Before you open your doors, you incur costs that are deductible, but with limits. The IRS allows you to deduct up to $5,000 in startup costs in your first year, and an additional $5,000 for organizational costs, but these deductions phase out dollar-for-dollar once your total costs exceed $50,000. Any remaining costs must be amortized over 180 months (15 years).

Startup costs include:

• Market research and feasibility studies
• Advertising and marketing before opening
• Training staff before opening
• Legal and accounting fees for setup
• Licenses and permits
• Initial inventory and supplies (if not expensed separately)

For example, if you spend $12,000 on pre-opening costs, you can deduct $5,000 in year one and amortize the remaining $7,000 over 15 years, which is about $467 per year. Keep detailed records of all pre-opening expenses.

Equipment and Furniture

Medical equipment is a major expense. Under Section 179, you can deduct the full purchase price of qualifying equipment and software in the year you put it into service, up to a limit. For 2026, the Section 179 limit is $1,220,000, and the deduction begins to phase out after $3,050,000 of equipment purchases. This is a powerful write-off for new practices.

Alternatively, you can use bonus depreciation, which allows a 100% deduction for qualified property placed in service in 2026. This includes new equipment, furniture, and certain improvements. For example, if you buy an ultrasound machine for $50,000, you can deduct the full $50,000 in the first year under either Section 179 or bonus depreciation.

Leasing equipment is also deductible, but only the lease payments, not the full purchase price. Compare the tax benefits of buying versus leasing with your accountant.

Office Space and Utilities

Your office rent is fully deductible as a business expense. If you own your building, you can deduct mortgage interest, property taxes, insurance, and depreciation (over 39 years for commercial property). Utilities such as electricity, water, gas, and internet are also deductible.

If you have a home office, you can use the simplified method: $5 per square foot, up to 300 square feet, for a maximum deduction of $1,500. Alternatively, you can deduct actual expenses like a percentage of rent, utilities, and insurance, but this requires more paperwork. The home office must be used exclusively and regularly for business.

Staff Salaries and Benefits

Salaries, wages, and bonuses you pay to employees are deductible, as are employer-paid portions of payroll taxes, workers’ compensation insurance, and health insurance premiums. Retirement plan contributions, such as a 401(k) match, are also deductible.

For example, if you hire a medical assistant at $40,000 per year, you can deduct that salary, plus about $3,060 for Social Security and Medicare (7.65%), and any state unemployment taxes. If you offer health insurance, the premiums you pay are deductible, and you may qualify for the Small Business Health Care Tax Credit if you have fewer than 25 full-time equivalent employees and pay average wages below $56,000 (2026 figures).

Medical Supplies and Inventory

All medical supplies used in patient care are deductible as ordinary business expenses. This includes gloves, syringes, bandages, medications, and any consumables. Track your inventory carefully; you can deduct the cost of supplies as you use them (the consumption method) or when you purchase them (the purchase method), but be consistent.

For example, if you spend $2,000 per month on supplies, that’s a $24,000 annual deduction. Keep invoices and receipts to substantiate these expenses.

Professional Fees and Insurance

Legal, accounting, and consulting fees are deductible. This includes fees for setting up your practice, preparing tax returns, and ongoing advice. Malpractice insurance premiums are a major deductible expense, often ranging from $5,000 to $20,000 per year depending on your specialty. General liability, property, and business interruption insurance are also deductible.

Technology and Software

Electronic health records (EHR) software, practice management software, billing software, and other business software are deductible. If you purchase software, you can deduct it under Section 179 or amortize it over 36 months. Subscription-based software is fully deductible in the year paid.

For example, an EHR subscription costing $500 per month is a $6,000 annual deduction. Computers, tablets, and other hardware are also deductible under Section 179. Don’t forget cybersecurity software and services.

Marketing and Advertising

Marketing expenses are fully deductible, including website design and hosting, online ads, print ads, direct mail, and promotional items. If you sponsor a local event, that’s deductible too. Track all marketing costs, as they can add up quickly.

For example, if you spend $1,000 per month on Google Ads and $500 on social media marketing, that’s an $18,000 annual deduction.

Continuing Education and Travel

Continuing medical education (CME) courses, conferences, and seminars are deductible, including registration fees, travel, lodging, and meals (subject to the 50% limit on meals). If you travel for business, you can deduct airfare, hotels, and 50% of meals. Keep detailed records of the business purpose of each trip.

For example, attending a conference that costs $1,500 in registration, $800 in airfare, and $600 in hotel, plus $200 in meals, gives you a deduction of $2,900 (meals are 50% deductible, so $100).

Vehicle Expenses

If you use your car for business, you can deduct either the standard mileage rate (65.5 cents per mile in 2026) or actual expenses (gas, repairs, insurance, depreciation). The standard mileage rate is simpler, but you must track your business miles. Commuting between home and your office is not deductible, but travel between your office and other locations, like a hospital, is.

For example, if you drive 5,000 business miles in a year, your deduction at the standard rate is $3,275.

Miscellaneous Deductions

Other deductible expenses include:

• Bank fees and credit card processing fees
• Interest on business loans and credit cards
• Dues to professional organizations
• Subscriptions to medical journals
• Office supplies and postage
• Cleaning and janitorial services
• Security systems and monitoring
• Employee training and development

Keep receipts for all of these, no matter how small.

FAQ

Can I deduct the cost of starting my practice if I haven’t opened yet?

Yes, startup costs are deductible, but with limits. You can deduct up to $5,000 in the first year, and the rest is amortized over 15 years. You must have formally started the business (e.g., taken concrete steps to open) to claim these deductions.

What is the best way to track my deductions?

Use accounting software like QuickBooks or Xero, and keep all receipts, either physical or digital. Separate business and personal expenses by using dedicated business credit cards and bank accounts. Consider hiring a CPA who specializes in medical practices.

Are there any deductions I should be especially careful about?

Yes, the home office deduction requires exclusive and regular use of a space. Meals are only 50% deductible. Also, be careful with vehicle deductions: commuting is not deductible. Always substantiate your expenses with records.

How long should I keep tax records?

The IRS recommends keeping records for at least three years, but for assets like equipment, keep records for the life of the asset plus three years. For tax returns, keep them for at least seven years to be safe.

Related guides

• 7 Mistakes New Medical Practices Make in Their First Year
• S-Corp vs LLC for New Medical Practices: Which Saves More on Taxes?
• Tax Deductions for New Medical Practices You Are Probably Missing

The bottom line

New medical practices have many tax write-offs available, from startup costs to equipment, office, staff, and more. The key is to track every expense meticulously and work with a tax professional who understands the healthcare industry. By claiming all eligible deductions, you can significantly reduce your taxable income in your first year, giving your practice a stronger financial start. Don’t leave money on the table: review this list with your accountant and ensure you’re taking advantage of every write-off you qualify for.