For tax year 2026, a medical spa can expense up to $2,560,000 in qualifying equipment under Section 179. Bonus depreciation is 100% for property placed in service after January 19, 2025. A $200,000 laser device purchase this year is fully deductible in the year it is placed in service rather than depreciated over five years. When you buy it within the tax year changes your deduction.
Two separate provisions govern equipment deductions for a med spa this year. Section 179 is a taxpayer election that allows immediate expensing of qualifying property up to a defined limit, with a phase-out for practices with high capital expenditures.
Bonus depreciation applies on top of or in place of Section 179, with different rules for income limitations. The One Big Beautiful Bill Act changed the bonus depreciation calculation retroactively for property placed in service after January 19, 2025, reinstating the 100% rate that had been stepping down under prior law.
What is Section 179 for a medical spa? Section 179 is a taxpayer election under the Internal Revenue Code that allows immediate expensing of qualifying equipment in the year it is placed in service, up to $2,560,000 for tax year 2026. For medical spas, the election covers laser devices, body-contouring equipment, EMR systems, and qualified improvement property. Paired with 100% bonus depreciation (reinstated January 19, 2025 under the One Big Beautiful Bill Act), a $200,000 laser purchase converts from a six-year depreciation schedule into a full year-one deduction, worth roughly $74,000 in year-one tax savings at the 37% bracket.
What Section 179 and bonus depreciation actually do for a med spa's tax bill
Under the default depreciation rules, a $200,000 laser device is classified as five-year property and deducted in roughly equal increments over six calendar years using the modified accelerated cost recovery system (MACRS). In year one, you might deduct $40,000. The remaining $160,000 carries over years two through six.
Under Section 179 combined with 100% bonus depreciation, the same $200,000 is fully deductible in the year the equipment is placed in service. For a practice in the 37% tax bracket, that is $74,000 in tax savings in year one versus approximately $14,800 under straight-line depreciation.
The equipment does not generate more revenue either way. The question is purely the timing of the tax deduction.
Section 179 has an income limitation that bonus depreciation does not. The Section 179 deduction in any tax year cannot exceed the practice's taxable income from active business. If the deduction would create a loss, the excess carries forward to the next year. Bonus depreciation has no such limitation and can generate a net operating loss, which may be carried forward to offset future income.
The 2026 limits: what changed from 2025
Rev. Proc. 2025-32 provides the inflation-adjusted figures for tax year 2026. Section 4.24 states: "The maximum aggregate cost a taxpayer may elect to expense (Code Section 179(b)(1)) cannot exceed $2,560,000." The phaseout threshold, per the same revenue procedure, "begins when the cost of Code Section 179 property placed in service during the year exceeds $4,090,000."
For most single-location medical spas, neither the $2,560,000 cap nor the $4,090,000 phase-out threshold is a practical constraint. A practice would need to purchase more than $4 million in equipment in a single year before the Section 179 deduction begins to phase out dollar for dollar.
| Parameter | 2025 | 2026 |
|---|---|---|
| Maximum deduction | $2,500,000 | $2,560,000 |
| Phase-out threshold begins | $4,000,000 | $4,090,000 |
| Full phase-out at | $6,500,000 | $6,650,000 |
| SUV deduction cap | $31,300 | $32,000 |
| Bonus depreciation | 40% (pre-OBBBA) | 100% (reinstated Jan 19, 2025) |
Source: IRS Rev. Proc. 2025-32; IRS Notice 2026-11.
Which equipment qualifies: lasers, devices, EMR systems, leasehold improvements
Qualifying property for Section 179 includes tangible personal property used in an active trade or business. For a medical spa, that covers a broad range of capital purchases:
- Laser and energy devices: Laser resurfacing devices, IPL systems, RF microneedling machines (Morpheus8, Vivace), body contouring devices (CoolSculpting, truSculpt), and ultrasound devices (Ultherapy).
- Injectable and treatment equipment: CoolTone, Emsculpt Neo, and similar devices where the practice owns the equipment outright or through a qualifying purchase arrangement.
- EMR/EHR systems: Electronic medical record software and associated hardware, including computers, servers, and practice management systems.
- Qualified improvement property (QIP): Certain improvements to nonresidential real property that the practice leases, including HVAC systems, fire protection and alarm systems, security systems, and interior improvements. QIP qualifies for both Section 179 and 100% bonus depreciation.
Land, buildings, and most structural improvements do not qualify. An improvement qualifies as QIP only if it is an improvement to the interior of the nonresidential building and is not an enlargement of the building, an elevator or escalator, or part of the internal structural framework.
How to time a device purchase to maximize the deduction
The Section 179 deduction and bonus depreciation apply in the tax year the property is placed in service, not the year it is ordered or paid for. Placed in service means the equipment is in a condition or state of readiness and availability for a specifically assigned function. For a laser device, that typically means installed, calibrated, and ready for patient use.
A device ordered in November, paid in December, but not delivered and installed until January qualifies in the following tax year. A device delivered in December and installed and tested before December 31 qualifies in the current year. The distinction matters if you are managing taxable income in a specific year.
Do not rush a year-end equipment purchase solely for the tax deduction without confirming two things with the vendor: the delivery and installation timeline, and whether the device can realistically be placed in service before December 31. Vendors sometimes overestimate installation speed. A device that sits in the box over the holiday week does not meet the placed-in-service standard.
"The maximum aggregate cost a taxpayer may elect to expense (Code Section 179(b)(1)) cannot exceed $2,560,000.", Rev. Proc. 2025-32, Section 4.24
Lease vs. outright purchase: how the deduction changes
The device financing structure determines whether Section 179 and bonus depreciation apply.
An outright purchase or loan-financed purchase qualifies fully. The practice takes ownership of the asset and can claim the full Section 179 or bonus depreciation deduction in the year of purchase, even if the loan is not fully paid off. The entire cost basis is deductible, not just the principal paid during the year.
An operating lease, where the leasing company retains ownership and the practice pays for the right to use the device, does not qualify for Section 179 or bonus depreciation. The lease payments are deductible as a business expense, but the practice cannot take the full equipment cost as an immediate deduction.
A capital lease or finance lease, where the practice has the option or obligation to take ownership, may qualify depending on the lease structure. The IRS tests whether the arrangement is more like ownership (Section 179 applies) or rental (it does not). Common indicators of ownership include a bargain purchase option at lease end and a lease term exceeding the equipment's useful life. Have your CPA review the specific lease documents before assuming the deduction applies.
How this shows up in the books after the equipment purchase
When a medical spa purchases equipment, the bookkeeping entry records the item as a fixed asset on the balance sheet, not as an immediate expense. The asset is then depreciated over its useful life according to the depreciation method elected.
The Section 179 or bonus depreciation election does not change the initial purchase entry. It changes how the depreciation is calculated and when it flows through to the income statement.
In QuickBooks Online, the correct workflow is:
- 1Record the equipment purchase as a fixed asset using the appropriate asset account (Laser Equipment, Medical Equipment, or similar).
- 2Set up the fixed asset in your depreciation schedule with the purchase date, cost, and depreciation method.
- 3Confirm the placed-in-service date. The equipment must be installed, calibrated, and ready for patient use before December 31 to claim the deduction in the current tax year.
- 4Apply the Section 179 election as a depreciation entry in the same year, which moves the full cost (or the elected amount) from the asset account to a depreciation expense account.
- 5The result: the asset shows on the balance sheet at cost, with accumulated depreciation equal to the full cost in year one, netting to zero book value. The income statement shows the full depreciation expense in year one.
- 6Provide the fixed-asset schedule and placed-in-service documentation to your CPA for Form 4562.
Worked example: $200,000 laser purchase, 37% bracket
Equipment cost: $200,000
Default MACRS five-year depreciation, year 1: ~$40,000 deduction
Year-1 tax savings at 37% bracket: $14,800
Section 179 + 100% bonus depreciation, year 1: $200,000 full deduction
Year-1 tax savings at 37% bracket: $74,000
Year-1 cash-flow benefit of the election: $59,200
The equipment generates the same revenue under either treatment. The election accelerates the deduction into year one, which matters most when taxable income is high this year and uncertain next year.
Common mistake: rushing a December purchase that never gets placed in service
A laser ordered December 12, paid December 18, delivered December 29, and still sitting in its crate on January 3 does not qualify for the current-year Section 179 deduction. Placed in service means installed, calibrated, and ready for patient use. Not delivered. Not paid for. Not invoiced. Owners chasing a year-end deduction sometimes close a purchase the vendor cannot realistically install before December 31 and lose the deduction they were trying to capture. Confirm the installation timeline in writing before signing.
This entry is what your CPA needs to see when preparing Form 4562 to claim the deduction on the tax return.
Clean fixed asset records with correct placed-in-service dates, cost basis, and depreciation elections are required. Books that lump equipment purchases into operating expenses or skip the fixed asset entry entirely create problems at tax time that cost more to fix than to set up correctly from the start.
Clean fixed asset records before year end.
We handle the equipment purchase entries in QuickBooks, the fixed asset schedule, and the depreciation elections so your CPA sees clean, organized records at year end rather than a shoebox of receipts.
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