As Q4 approaches, med spa owners face a crucial window of opportunity to optimize their tax position for 2025. With recent legislative changes creating new deductions and benefits, now is the time to take proactive steps that can significantly impact your bottom line.
In a recent conversation on the American Med Spa Association’s Medical Spa Insider podcast, Liguori Accounting founder Nick Liguori, CPA, shared critical insights on navigating the complex tax landscape facing aesthetic practice owners. “It’s hard to believe we’re already in Q4 here and into the fall and starting to think about the end of year and tax season which will be right around the corner,” Nick noted. “There’s a lot of changes this year with the tax law and the bill that passed this summer.”
Whether you’ve had a record-breaking year or faced some of the industry’s recent headwinds, strategic tax planning can help you keep more of what you’ve earned and position your practice for future success.
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1. Establish Your Baseline: The Safe Harbor Strategy
Before making any year-end decisions, you need to understand your minimum tax obligation. This is where the “safe harbor” rule becomes your friend.
What is Safe Harbor?
Nick explains: “Basically what it means is that you want to take your total tax due from the prior year and either 100% of that or 110% depending on your income level is the safe harbor that you need to pay for your four quarterly estimated taxes.”
For example, if your total tax liability last year was $50,000 and you’re at the 100% threshold, you would pay $12,500 per quarter ($50,000 ÷ 4) to avoid underpayment penalties.
The Important Caveat
However, if your income is significantly lower this year, you’re not locked into that prior year amount. “The part two of the safe harbor is the lesser of if your current year tax is going to be lower than that safe harbor amount, that 100% of the current year tax is that minimum threshold,” Nick clarifies.
This flexibility is particularly important for med spa owners who may have experienced fluctuating revenue in 2024 and 2025.
Action Step: Review your prior year tax return and calculate your safe harbor payments. Then work with your accounting team to project your current year tax liability and adjust accordingly. At Liguori Accounting, we provide year-round tax planning and projections to help you stay ahead of these obligations.
2. Maximize Equipment Deductions with 100% Bonus Depreciation
This is where med spa owners can make the most dramatic impact on their 2025 tax bill—if they act before December 31st.
The Big Change
“With the new bill that passed this summer, bonus depreciation was extended and brought back up to 100%,” Nick explained. “So you can claim 100% deduction on new equipment purchased in the year that it was purchased.”
This means if you purchase a $150,000 laser system in December 2025, you could potentially deduct the entire $150,000 from your 2025 taxable income—assuming the equipment is received and placed in service before year-end.
Strategic Timing Matters
Nick cautions: “Do not buy a laser just to save on taxes. If it’s a purchase you’re going to make or need to make for your business and it’s going to improve your business overall, then great. And the timing of that matters.”
If you’re planning a major equipment purchase for early 2026, consider accelerating it to December 2025 to capture the tax benefit this year—especially if you’re having a profitable year and could use the deduction.
Your Depreciation Options
You actually have three ways to depreciate equipment:
- 100% Bonus Depreciation – Take the entire deduction in year one
- Section 179 – Take any portion you choose in year one (e.g., $75,000) and depreciate the remainder over five years
- Standard Depreciation – Spread the deduction over five years using a declining balance method
“There’s flexibility there,” Nick notes. This allows you to optimize not just for this year, but for your expected income in future years as well.
Action Step: Review your equipment needs for the next 6-12 months. If you’re planning purchases and having a strong year, consider moving those purchases into Q4 2025. Our team can help you model different depreciation scenarios to determine the optimal approach.
3. Navigate the Vehicle Deduction Minefield
The vehicle deduction is one of the most misunderstood—and potentially risky—areas in med spa taxation.
The Reality Check
“There’s a lot of misinformation out there about that,” Nick warns. “For a med spa, like from the IRS’s standpoint, you have to be using that vehicle for business purposes. So as a med spa owner, how much travel is really involved in the day-to-day?”
The key points to understand:
- Commuting doesn’t count – Your drive from home to your med spa is personal commuting, not business travel
- Multiple locations help – If you have multiple practices and drive between them, that’s legitimate business use
- Employee benefits are taxable – If your business purchases a vehicle for an employee’s personal use, it becomes taxable compensation
“If you’re just using it to commute, that’s not really business use, it’s personal use,” Nick explains. “The business could do that, but then it becomes an employee benefit and now it’s taxable to the employee.”
Action Step: Before making any vehicle purchase decision, document your legitimate business use. If you can’t demonstrate significant business travel beyond commuting, this deduction may not be worth the audit risk.
4. Take Advantage of New Personal Tax Benefits
The 2025 tax legislation created significant opportunities on the personal tax side that many med spa owners may overlook.
The SALT Cap Has Been Lifted
One of the biggest changes: “The salt deduction—that’s state and local income taxes, real estate taxes or state taxes—that cap was previously at $10,000 which has been lifted,” Nick revealed.
This is huge for med spa owners in high-tax states or those with significant real estate holdings. Previously, you could only deduct $10,000 in state taxes and property taxes combined. Now, there’s no cap.
Maximize Itemized Deductions
With the SALT cap removed, many more med spa owners will benefit from itemizing deductions rather than taking the standard deduction. The key itemized deductions include:
- State and local income taxes (no longer capped)
- Real estate taxes (no longer capped)
- Mortgage interest
- Charitable contributions
Strategic Timing
“There’s an opportunity to potentially bunch—like group charitable donations into this year,” Nick suggests. “Make sure you make that payment before the end of the year because that’s basically deducted the year you make the payments.”
If you’re close to the itemization threshold, consider:
- Prepaying your January property tax payment in December
- Making a full year’s worth of charitable contributions before December 31st
- Bunching deductions into alternating years to maximize benefit
Action Step: Calculate whether you’ll exceed the standard deduction this year. If you’re close, consider accelerating deductible payments into 2025.
5. Optimize Retirement Contributions
Retirement planning offers a powerful triple benefit: reducing current taxes, building wealth, and securing your future.
The Flexible Deadline
Unlike most tax strategies that must be completed by December 31st, retirement contributions have more flexibility. “Make sure you’re making your contributions to retirement accounts,” Nick advises. “That is something you can actually do into next year. As long as you make those contributions prior to the filing deadline, they are counted towards the current year.”
Strategic Compensation Planning
For med spa owners with S-corporation or MSO structures, there’s significant opportunity to optimize: “There’s opportunities to sort of shift business income to personal income and then contribute to retirement planning.”
This requires careful coordination between:
- Your W-2 compensation from your business
- Business profit distributions
- Retirement plan contributions
- Overall tax optimization
Contribution Limits for 2025
Depending on your retirement plan type, contribution limits vary significantly. Common plans for med spa owners include:
- Solo 401(k) – Allows high contribution limits for owner-only businesses
- SEP IRA – Simpler administration, employer contributions only
- 401(k) with profit sharing – Maximum flexibility for businesses with employees
Action Step: Meet with both your tax advisor and financial planner before year-end to plan your compensation and retirement strategy. Even though you have until the filing deadline to make contributions, planning now ensures you’re setting aside the right amount.
Red Flags to Avoid: What Triggers IRS Attention
Understanding what catches the IRS’s eye can help you stay compliant while still taking legitimate deductions.
High-Risk Areas for Med Spas
According to Nick, the IRS uses industry codes to benchmark your return against similar businesses. Areas that commonly trigger scrutiny include:
- Employee Misclassification
“The misclassification of employee versus contractor—I know that’s a common one in the industry, like an injector or an aesthetician. How are they being classified and being paid—is it as a W2 employee or a 1099?”
The test is simple: “That really comes down to what is their employment status. Are they exclusively working for you or are they actually part-time and working other places as well?”
“The penalties on that are fairly steep, so that’s one you want to make sure you have correct from a compliance standpoint.”
- Excessive Vehicle Deductions
As discussed earlier, the IRS looks closely at auto expenses, especially for businesses where significant travel isn’t typical.
- Disproportionate Expenses
“Meals and travel are ones where it’s common,” Nick notes. “If those are extraordinarily high, that can be a red flag.”
Other watch areas:
- Office expenses significantly out of line with industry norms
- Large miscellaneous expense categories that aren’t properly classified
- Personal expenses mixed with business expenses
Action Step: Review your expense categories against industry benchmarks. If anything seems unusually high, ensure you have proper documentation to support the business purpose.
Special Consideration: MSO Structure Opportunities
For med spa owners operating under a Management Services Organization (MSO) structure, proper setup and maintenance creates unique tax advantages.
Why MSO Structure Matters for Taxes
“The big one is the qualified business income deduction,” Nick explains. “For a medical entity that falls under specified service business, that qualified business deduction phases out and is limited. For an MSO though, that limitation isn’t in place.”
This is because medical services and management services are treated differently by the IRS. The management company may not face the same limitations on this valuable 20% deduction that the medical practice does.
The Compliance Imperative
However, Nick emphasizes that proper setup is crucial: “Starting on the right foot with that is really important from a compliance standpoint. The bookkeeping, accounting, tax side of it is really important too, where you need to have your books set up properly and the funds are flowing properly.”
“When we get clients coming to us where they’re two or three years into their MSO and they haven’t really handled the books properly, you wish you had that set up properly because there’s opportunities there for tax savings and it creates a big headache that can definitely be avoided.”
Action Step: If you have an MSO structure, ensure your books properly track the separation between entities and that management fees are reasonable and properly documented. If you’re considering an MSO structure, consult with professionals experienced in medical aesthetics before implementing.
New for 2025: Tips and Overtime Tax Benefits
The 2025 tax legislation includes benefits specifically for employees that med spa owners should understand and implement properly.
Non-Taxable Tips
“Pay on tips—the first $25,000 of tips received is non-taxable, which is great from the employee side,” Nick explains. “But it is something to make sure you’re tracking it properly and getting that reported through payroll correctly so the employees are getting the benefit of that.”
Overtime Exemption
There’s also an amount of overtime pay that’s exempt from taxation: $12,500 for single filers and $25,000 for married filing joint, and phase out rules apply based on adjusted gross income.
Action Step: Verify with your payroll company that they’re properly classifying and reporting tips and overtime to ensure your employees receive these tax benefits. This is not only good for employee morale but also ensures compliance.
The Current Audit Environment
Understanding the broader enforcement landscape can help you assess risk appropriately.
What’s the Current Audit Risk?
While audit rates have been generally lower since COVID, Nick notes: “As a business owner, there’s always inherently slightly more audit risk than if you’re just a W2 employee and all your income is reported on a W2 or 1099s, just because it can be much more easily processed on the IRS’s side.”
“When it comes to business returns and business owners, there’s just that extra complexity which is inherently a little bit higher audit risk.”
However, he adds: “I don’t think overall now this year versus last there’s any significant difference in the likelihood of audits for a business owner.”
The Bottom Line on Risk
This doesn’t mean you should be overly conservative—it means you should be strategic and well-documented. Take every legitimate deduction you’re entitled to, but ensure you can support it with proper records.
Your Year-End Tax Planning Timeline
Here’s a practical timeline for the remaining months of 2025:
November
- Review YTD profit and loss statements
- Calculate projected 2025 tax liability
- Identify potential equipment purchases
- Assess itemized deduction opportunities
- Plan retirement contributions
December (First Two Weeks)
- Finalize equipment purchases if beneficial
- Make charitable contributions
- Prepay January property taxes if itemizing
- Accelerate any other deductible expenses into 2025
December (Final Two Weeks)
- Ensure all equipment is received and placed in service
- Confirm all deductible payments have cleared the bank
- Review employee classifications
- Prepare Q4 estimated tax payment (due January 15, 2026)
January-April 2026
- Make retirement contributions (up to filing deadline)
- Organize documentation for tax preparation
- Work with your CPA on final tax planning opportunities
- File returns timely
Why Year-Round Tax Planning Matters
Nick emphasizes that effective tax management isn’t a once-a-year event: “We work with our clients in a way that is more year-round and proactive. We’re constantly doing tax planning and tax projections for our clients, which I would recommend for anyone, any business owner to be doing.”
He continues: “Once April 15th has passed, it’s time to start thinking about the coming year or the year that you’re in and what you can do to optimize for the current year and plan for your situation.”
The Liguori Accounting Approach
At Liguori Accounting, we don’t just prepare tax returns—we provide comprehensive, proactive tax planning services that include:
- Quarterly tax projections based on current financial results
- Optimization of owner compensation strategies
- Review and adjustment of estimated tax payments
- Maximization of business deductions
- Long-term tax structure planning
As Nick puts it: “As a business owner, it’s important to focus on where your skill sets are and outsource the things that aren’t in your wheelhouse.”
Take Action Now
The strategies outlined here represent significant opportunities to reduce your 2025 tax liability, but many require action before December 31st. Don’t wait until tax season to think about taxes.
Your Next Steps:
- Schedule a tax planning session – Review your current year projections and identify opportunities
- Assess your equipment needs – Determine if accelerating purchases makes sense
- Calculate itemized deductions – See if you can benefit from prepaying deductible expenses
- Review your entity structure – Ensure your MSO or S-corp is set up optimally
- Plan retirement contributions – Coordinate compensation and retirement strategies
At Liguori Accounting, we specialize in helping medical aesthetic practice owners navigate the complex intersection of healthcare regulations, business operations, and tax strategy. Our team understands the unique challenges of the med spa industry and provides tailored solutions that optimize your financial position while ensuring full compliance.
Ready to optimize your year-end tax position?
Contact Liguori Accounting today to schedule a tax planning consultation. We serve med spa owners nationwide with proactive, year-round accounting and tax services designed specifically for the aesthetic industry.
📞 Visit www.liguoricpa.com to learn more about our services
📧 Follow us on Instagram @medspataxaccountants for ongoing tax tips and industry insights
Liguori Accounting provides outsourced accounting services to medical aesthetic practice owners nationwide. Our comprehensive approach combines bookkeeping, CFO services, and tax planning to give you complete financial clarity and peace of mind. Learn more about our tax services and how we help med spa owners thrive.
Note: This article provides general tax information and should not be considered specific tax advice. Tax laws are complex and vary based on individual circumstances. Always consult with a qualified tax professional before making tax-related decisions.
