ABA Year-End Financial Planning: The Decisions That Close on December 31

Most clinic owners do their tax planning in March, sitting across from a CPA who is describing what already happened. The conversation is informative and almost entirely useless, because every decision that could have changed the outcome closed on December 31.

The useful version of this conversation happens now. Not because filing is urgent, but because the levers are still available, and in 2026 several of them are more valuable than they have been in years.

Worth saying plainly before any of it: this is planning territory rather than tax advice, and every item below is a conversation to have with your CPA. What a finance function does is model the decisions so that conversation is about choices rather than discovery.

Why the calendar is the deadline

Equipment has to be placed in service, not merely ordered, by December 31 to be deductible this year. Retirement plan structures have establishment deadlines that fall before year end. Owner compensation adjustments run through payroll, which means they need to happen while payroll is still running.

A decision deferred into January is a decision made for next year, and the gap between acting in November and acting in February is routinely tens of thousands of dollars for a practice of any size.

The equipment question is unusually favorable right now

The 2026 rules reward capital purchases more than they have in a long time.

The Section 179 deduction limit sits at $2,560,000 for 2026, with the phase-out beginning at $4,090,000. Alongside it, 100% bonus depreciation was permanently restored under the One Big Beautiful Bill Act for qualifying property acquired and placed in service after January 19, 2025, replacing the old step-down schedule entirely.

For a clinic, that covers the things you were probably going to buy eventually. Sensory equipment, clinic furnishings, technology, vehicles within their own limits, and in many cases software and leasehold improvements. Financed purchases generally qualify too, so the deduction does not require paying cash up front.

Two mechanical differences matter when choosing between them. Section 179 cannot create a loss, since it is capped at your business income with the excess carrying forward, while bonus depreciation has no dollar cap and can produce a loss. State conformity also varies, and several states do not follow federal bonus depreciation, which is exactly the kind of detail your CPA should be deciding rather than you.

The trap worth naming: a deduction is not a discount. Buying equipment you did not need to save tax is spending a dollar to avoid roughly thirty cents. The planning question is whether to accelerate purchases you were already going to make.

Owner compensation deserves a real look

The qualified business income deduction was made permanent at 20% under the same legislation, which changes how owners should think about this rather than just confirming the status quo.

For pass-through owners, the interaction between reasonable compensation, the QBI deduction, and depreciation timing is genuinely a multi-year optimization rather than a single-year calculation. Taking too little salary in an S corporation creates an exposure with the IRS, and taking too much can reduce the QBI benefit, and the right point depends on your profit level and entity structure.

This is the single most common thing clinic owners have never modeled. If nobody has run the numbers on your compensation in the last two years, that is the first conversation to schedule, and permanence of the QBI deduction makes a multi-year plan worth building rather than redoing every December.

The problem specific to accrual-basis clinics

Here is the issue that catches ABA practices more than most businesses, and it connects directly to how this field gets paid.

If your books are on accrual, revenue is recognized when the service is delivered rather than when the payer pays. With median days in accounts receivable across medical practices sitting in the forties, a meaningful share of what you will be taxed on for 2026 is money still sitting in AR on December 31.

That is a real cash problem rather than an accounting curiosity. You can owe tax on revenue you have not collected, on services whose wages you already paid, which means the tax bill and the collection arrive in different quarters.

Two implications. Collections work done in November and December has an outsized effect, since converting aging claims before year end improves both your cash position and your ability to pay what you owe on them. And your estimated payments should be sized against what the books say rather than against what the bank shows, because those two numbers diverge most at exactly this time of year.

Worth asking your CPA whether cash-basis accounting is available to you, since eligibility depends on structure and gross receipts and the answer materially changes this picture for some practices.

What to clean up before the books close

Write off genuinely uncollectible claims rather than carrying them, since claims past their filing deadlines are not assets and leaving them inflates both receivables and apparent revenue. Your aging report is where that review starts.

Separate your contractual adjustments from your actual write-offs if your chart of accounts currently combines them, because the distinction affects what your statements say and what your CPA can see.

Reconcile the authorization and billing backlog so that delivered services are actually billed before year end rather than sitting unconverted.

Document the personal expenses running through the business now rather than reconstructing them in March, and confirm your retirement plan contributions and deadlines, since some plan types must be established before December 31 even when funding can happen later.

The March conversation you want to have

The goal is arriving at tax season with nothing left to decide, because the equipment decision was modeled in November, the compensation question was settled before the last payroll run, and the receivables that could be collected were collected.

That version of the meeting is short. The other version is a list of things you could have done, delivered by someone who had no way to tell you in time.

Frequently asked questions about ABA year-end planning

What is the Section 179 limit for 2026?

$2,560,000, with the phase-out beginning at $4,090,000. Section 179 cannot reduce business income below zero, and unused amounts carry forward.

Is 100% bonus depreciation still available?

Yes. It was permanently restored for qualifying property acquired and placed in service after January 19, 2025, with no scheduled phase-down.

When does equipment need to be purchased to deduct it this year?

It must be placed in service by December 31, meaning actually in use rather than merely ordered or paid for.

Why would I owe tax on money I have not collected?

On accrual accounting, revenue is recognized when services are delivered. Claims still in accounts receivable at year end are generally part of recognized revenue even though the cash has not arrived.

When should year-end planning actually happen?

October through early December. By January the decisions that could have changed the outcome have already closed.

If you want your year-end position modeled while the decisions are still open, that is exactly what our financial assessment is built to do.