Section 179 vs. Bonus Depreciation for Med Spa Equipment in 2026

Start with capitalization

A treatment device is not an ordinary supply simply because it is used in patient services. Material property expected to benefit more than one year is generally recorded as a fixed asset for financial reporting and depreciated over its useful life.

Potential med spa fixed assets include:

• lasers and energy-based treatment devices;
• body-contouring and skin-treatment equipment;
• diagnostic or imaging equipment;
• treatment beds and clinical furniture;
• computers, tablets, servers, and network equipment;
• off-the-shelf software;
• reception and office furniture;
• refrigerators and storage equipment;
• leasehold improvements; and
• certain purchased components or attachments.

Repairs, disposable tips, service contracts, training, warranties, freight, installation, and build-out costs require separate analysis. Some costs become part of depreciable basis; others may be currently deductible or amortized.

What “placed in service” means

Depreciation generally begins when property is ready and available for its assigned business use—not necessarily when the order is signed, deposit paid, loan funded, or device delivered in unopened packaging.

For a treatment device, retain:

• purchase agreement and invoice;
• evidence of ownership and financing;
• shipping and installation records;
• required inspection, licensing, or approval documentation;
• training or acceptance records when relevant;
• service activation date;
• first available-for-use date; and
• first treatment date.

A rushed December purchase that cannot legally or operationally be used until the next year may not support a current-year placed-in-service deduction.

Section 179 in 2026

Section 179 allows a taxpayer to elect to expense qualifying property, subject to limits.

For tax years beginning in 2026:

• maximum federal Section 179 expense: $2,560,000;
• phaseout begins when total qualifying property placed in service exceeds $4,090,000; and
• the deduction is generally limited by taxable income from active trades or businesses.

Unused Section 179 expense limited by taxable income may generally carry forward, subject to future rules and facts.

Section 179 often provides asset-by-asset flexibility. A practice may elect it for selected eligible items rather than automatically applying it to an entire class. It can be useful when the owner wants to manage current income while preserving deductions on other property.

Section 179 is not always available. Property type, acquisition from related parties, business use, entity structure, leasing facts, and other restrictions matter.

100% bonus depreciation

The 2025 federal tax law restored a permanent 100% additional first-year depreciation deduction for qualifying property generally acquired and placed in service after January 19, 2025.

Bonus depreciation commonly applies to new or used qualifying property with an applicable recovery period of 20 years or less, subject to detailed rules. Unlike Section 179:

• it is not subject to the same annual dollar cap;
• it is not limited to taxable business income in the same way;
• it may create or increase a tax loss, with use of that loss governed by other rules; and
• the election out generally applies by class of property rather than selecting individual assets within the class.

Acquisition timing deserves attention. IRS guidance explains that property acquired before January 20, 2025 and placed in service in calendar year 2026 may remain subject to the former-law 20% rate, even though newly acquired qualifying property may receive 100%.

Regular depreciation

Accelerating every available deduction is not automatically best. Regular MACRS depreciation spreads basis over the applicable recovery period and convention.

Regular depreciation may be preferable when:

• the practice expects higher taxable income in later years;
• the current deduction would create a loss that provides limited near-term benefit;
• state addback or nonconformity reduces the value of federal acceleration;
• owners expect basis, passive-activity, at-risk, or loss limitations;
• the practice wants smoother book and tax expense;
• the asset may be sold soon, increasing recapture considerations; or
• taxable-income planning includes other deductions and credits.

The tax decision should be made with a multi-year projection rather than at data-entry time.

Section 179, bonus, and regular depreciation compared

Example: financed treatment device

Assume a med spa purchases and owns a qualifying device for $180,000, finances $150,000, pays $30,000 at closing, completes installation, and places it in service in October 2026.

The deduction is not necessarily limited to the $30,000 cash down payment. If the practice owns the property and the financed amount is included in tax basis, the qualifying basis may include the debt-financed purchase price and eligible capitalized costs.

The practice still must evaluate:

• whether the property qualifies;
• whether the seller is related;
• the acquisition and placed-in-service dates;
• business-use percentage;
• whether the arrangement is actually a purchase or lease;
• Section 179 taxable-income capacity;
• bonus elections by property class;
• federal and state results;
• owner-level loss limitations; and
• expected sale or trade-in.

The loan principal is not a second deduction. Interest may be deductible under separate rules, while principal payments reduce the liability.

Lease versus purchase

An operating or finance lease for book purposes does not automatically produce the same tax result. Tax ownership depends on the agreement and facts.

Before signing, compare:

• purchase price and cash down payment;
• financing rate and fees;
• lease payments;
• buyout or residual terms;
• service and maintenance;
• consumable commitments;
• upgrade or return rights;
• tax ownership;
• depreciation eligibility;
• financial-statement presentation;
• total after-tax cash cost; and
• expected utilization and treatment contribution.

Do not let an advertised “tax write-off” replace a capacity and profitability analysis.

Book depreciation and tax depreciation

Management financial statements may depreciate equipment over its expected useful life even when the tax return deducts all qualifying basis in year one. The difference creates a book-to-tax schedule.

For management, the owner should still see the economic cost of the device over the periods it generates revenue. Otherwise, a location can appear unusually profitable after the tax write-off while ignoring the continuing economic use, debt service, maintenance, and replacement need.

Maintain a fixed asset register with:

• asset description and serial number;
• legal owner and location;
• vendor;
• purchase and acquisition date;
• placed-in-service date;
• total basis and component costs;
• financing;
• book useful life and method;
• tax class and method;
• Section 179 and bonus elections;
• accumulated depreciation;
• service contract;
• disposition date and proceeds; and
• supporting documents.

State conformity

Federal acceleration does not guarantee the same state deduction. A state may:

• fully conform;
• cap Section 179 at a lower amount;
• disallow or reduce bonus depreciation;
• require an addback and later subtraction;
• use a different basis schedule; or
• treat pass-through owners differently.

For a multi-state practice or owner, model each relevant jurisdiction. The federal return can show a large deduction while state taxable income remains significantly higher.

Recapture and disposition

Accelerated deductions reduce tax basis. When equipment is sold, traded, converted to personal use, or falls below required business-use thresholds, gain, depreciation recapture, or Section 179 recapture may apply.

Before replacing a device, estimate:

• current adjusted tax basis;
• expected sale or trade-in value;
• debt payoff;
• recapture and gain;
• state adjustment;
• cash received or required; and
• deduction on the replacement.

The difference between trade-in value and loan balance is not the taxable gain calculation.

Purchase review checklist

1. Identify the purchasing and using legal entity.
2. Confirm whether the arrangement is a purchase, financed purchase, or lease.
3. Obtain the executed agreement, invoice, financing schedule, and vendor statement.
4. Separate equipment, software, installation, freight, training, warranty, consumables, and service.
5. Confirm acquisition date under applicable rules.
6. Document when the asset became ready and available for use.
7. Confirm business-use percentage and related-party status.
8. Forecast federal and state taxable income for at least the current and next several years.
9. Compare Section 179, bonus, election-out, and regular depreciation.
10. Consider loss, basis, at-risk, passive, interest, and state limitations.
11. Evaluate cash flow, debt service, utilization, treatment margin, and replacement risk.
12. Add the asset to the book and tax fixed-asset registers.

Common mistakes

• Deducting a deposit before the device is placed in service
• Assuming delivery alone proves placed-in-service status
• Expensing equipment to medical supplies
• Deducting both the purchase basis and loan principal payments
• Treating a lease as a purchase without reviewing tax ownership
• Ignoring acquisition-date rules for bonus depreciation
• Applying Section 179 without taxable-income capacity
• Taking 100% bonus without evaluating the election by property class
• Ignoring state addbacks or nonconformity
• Forgetting related-party restrictions
• Omitting installation, freight, and other basis costs
• Failing to track business-use changes or disposal
• Buying an underutilized device mainly for a deduction
• Recording the tax deduction as the management-book economic cost

Frequently asked questions

Does used med spa equipment qualify?

Qualifying used property can be eligible for Section 179 or bonus depreciation if statutory requirements are met, including related-party and prior-use restrictions. Review the transaction rather than relying on the vendor description.

Can a med spa deduct equipment purchased with a loan?

Potentially. If the practice owns the property, financed cost may be included in basis. The loan principal is not separately deductible, and the arrangement, eligibility, placed-in-service date, and limitations still matter.

Does software qualify?

Certain off-the-shelf software may qualify for Section 179 and other depreciation treatment. Custom development, implementation, subscriptions, and bundled device software may require different analysis.

Does the practice have to take 100% bonus depreciation?

Bonus generally applies automatically to eligible property unless the taxpayer makes a valid election out for the relevant class. The decision should be made with the tax preparer and documented on the return.

Can Section 179 create a tax loss?

Section 179 is generally limited by taxable income from active trades or businesses, while unused amounts may carry forward. Bonus depreciation is not subject to the same limitation, although use of any resulting loss may be restricted by other rules.

Should the practice buy equipment in December for the deduction?

Only if the purchase is operationally sound and the asset can be properly placed in service. Price, financing, demand, provider capacity, service terms, state tax, and future cash flow matter more than the deduction alone.

Bottom line

The best depreciation method is the one that fits the asset, acquisition timing, current and future taxable income, state rules, and the practice’s cash plan. Decide before the return is filed, but do not let tax acceleration substitute for equipment economics.

Jenny Gao, CPA, EA

Founder of Balance Partners. Florida-licensed CPA and IRS Enrolled Agent with more than a decade of accounting and tax experience. Jenny writes and reviews every guide on this site. About Jenny

This article is general educational information for U.S. business owners and is not accounting, tax, legal, payroll or financial advice for your situation. Rules change and vary by entity, state and facts. Balance Partners, LLC does not provide audit, review or other attest services. Last reviewed July 29, 2026.