While providers are closely watching to see how the One Big Beautiful Bill Act’s Medicaid provisions affect their bottom lines, they may not be aware the bill offers “significant” opportunity heading into tax season.
For planning and cashflow purposes, OBBBA includes four key measures that will directly affect skilled nursing providers, according to CLA’s 40th Annual SNF Cost Comparison and Industry Trends Report.
“OBBBA creates one of the most significant tax planning windows we’ve seen in years for skilled nursing operators and owners,” Tim Dierker, signing director at CLA, told McKnight’s Long-Term Care News. “It isn’t just about rate changes — it’s about unlocking after-tax cash flow that can be reinvested directly into quality care and modernization.”
Among the changes that will directly benefit skilled nursing are:
A permanent qualified business income deduction
Most skilled nursing organizations are structured as pass-throughs such as LLCs, partnerships, and S-corporations, and that’s allowed many to qualify for a business income dedication. OBBBA made the 20% Qualified Business Income deduction permanent, and CLA experts said that effectively lowers the tax rate on operating profits for these entities.
But the deduction can be limited for some healthcare organizations under a specified service trade or business. It can reduce or eliminate the dedication for some businesses if taxable income passes certain thresholds.
Still, Dierker and colleagues Courtney Trelstad, principal, and Stephen Taylor, principal and senior living and care segment leader, said the new permanence matters.
“It gives owners long-term planning certainty and improves after-tax liquidity — dollars that can be redeployed into staff retention, technology or facility improvements rather than
being lost to tax,” Trelstad added. “For family-owned and closely held operators, this stability is a major advantage.”
100% bonus depreciation
OBBBA also restored and permanently extended 100% bonus depreciation for qualified property, allowing full expensing of new and used equipment and assets acquired and placed in service after Jan. 19, 2025.
That depreciation allows operators to expense equipment, furniture and fixtures, and land improvements in the year they’re placed in service.
“That’s huge for an asset-intensive business like skilled nursing,” Trelstad said. “It accelerates cash flow, makes modernization financially practical, and supports reinvestment in care environments without waiting years to recoup the tax benefit.”
Because of depreciation’s date and timeline terms, the CLA team recommended operators consider conducting a cost-segregation study to break out longer-life assets and take advantage of the tax change.
Interest deduction reform
OBBBA removes depreciation and amortization from a formula used to calculate an interest-deduction limit. That likely means operators can deduct more of their interest expense, effectively reducing the cost of capital and making it “more feasible to finance acquisitions, renovations or recapitalizations,” the CLA team said in their email.
“For multi-facility operators or real-estate-aligned structures, this change directly strengthens balance sheets.”
Combined impact
“OBBBA gives skilled nursing operators a rare moment of tax clarity and opportunity,” Dierker said. “The permanent 20% QBI deduction, 100% bonus depreciation, and expanded interest deductibility combine to improve after-tax cash flow, lower borrowing costs and reward reinvestment. For an industry that’s both capital- and labor-intensive, those provisions don’t just lower taxes — they strengthen the ability to modernize, invest in quality and grow.
But, he warned, it’s also a time to work strategically and work with tax and consulting teams to maximize benefits.
One caveat
CLA’s annual report notes that OBBBA may affect nonprofit SNF operators with employees paid more than $1 million. They’ll face expanded excise tax on that compensation, which could lead to a reconsideration of executive compensation strategies for tax-exempt organizations.
The business planning law firm Partridge Snow & Hahn noted the 21% excise tax has previously applied only to the top five highest-paid employees earning over $1 million annually. OBBBA applied the tax to all current and former employees who receive compensation exceeding the threshold in a taxable year.
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