Veterinarians and the New US Tax Law

by easyDVM

Tax reform is likely to have significant consequences for veterinarians. Not only does the reform bill contain several provisions impacting individual rates of income tax, but it also contains provisions that affect how veterinarians manage their accounts and expenses. Let’s take a look at the details of tax reform and discuss how each provision is likely to affect veterinary businesses.

New Pass-through Tax Provisions

The new tax reform allows certain pass-through businesses to deduct up to 20 percent of their qualifying business income. However, some “specialized service” businesses, including veterinarians, cannot use this benefit unless their taxable income is under a defined threshold. The new individual threshold is $157,500 and the threshold for joint filers is $315,000.

The aim of the new pass-through provisions is to prevent high earners from converting their salaries to income that is eligible for the deduction. However, critics have complained that the rules surrounding pass-through tax deductions are unclear. Doctors, veterinarians, lawyers and people working in the financial industry are all excluded from claiming pass-through tax deductions, whereas high earners working in professions such as architecture are not.

Fair or not, the new rules surrounding pass-throughs prevent veterinarians from claiming a 20 percent deduction on their business income, unless their income is less than $157,000 per year. Veterinarians must be aware of this rule, as it can make a significant difference to the amount of tax they need to pay.

New Cash Accounting Provisions

The tax reform allows veterinarians to use the cash method of accounting as long as their annual gross receipts do not exceed $25 million for the three years immediately before the current tax year. This limit of $25 million represents an increase compared to the previous threshold.

New Expenses Provisions

Veterinarians can now deduct new and used equipment as expenses for five years. The tax reform increases the total permitted amount of expenses to $1 million. Veterinarians can now also claim deductions for improvements to non-residential properties, including maintaining the roof or adding heating, ventilation, air conditioning, security, fire protection and alarm systems. However, from 2022, the 100 percent allowance will decrease by 20 percent per year.

New Individual Tax Provisions

As well as understanding the new tax provisions that will affect their businesses, veterinarians also need to become familiar with provisions that will affect them as individuals. The seven income tax brackets have all been modified as follows:

  • Income under $9,525 ($19,050 for joint returns): tax rate of 10 percent
  • Income between $9,525 and $38,700 ($19,050 and $77,400 for joint returns): tax rate of 12 percent
  • Income between $38,700 and $82,500 ($77,400 and $165,000 for joint returns): tax rate of 22 percent
  • Income between $82,500 and $157,500 ($165,000 and $315,000 for joint returns): tax rate of 24 percent
  • Income between $157,500 and $200,000 ($315,000 and $400,000 for joint returns): tax rate of 32 percent
  • Income between $200,000 and $500,000 ($400,000 and $600,000 for joint returns): tax rate of 35 percent
  • Income over $500,000 ($600,000 for joint returns): tax rate of 37 percent

As the top individual income tax rate has decreased from 39.6 percent to just 37 percent, owners of the largest veterinary businesses will pay less tax as a result of the reform.


The tax reform makes some important changes to tax for veterinarians, most notably by excluding them from using the pass-through benefit. By familiarizing themselves with these changes, veterinary business owners can plan their budgets to ensure the financial health of their businesses.

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Is Buying a Veterinary Franchise a Good Idea?

by easyDVM

When most veterinarians decide they want to manage their own veterinary practice, they either start a new practice or take over an existing one. However, there is another option, which is to purchase or join a veterinary clinic franchise. If you want to open a veterinary practice but need some help, buying a veterinary franchise could be good for you.

Advantages of Buying a Veterinary Franchise

Buying a veterinary franchise is often easier than starting a veterinary practice from scratch. Franchisors usually provide a lot of support for new veterinary clinic owners, which can help you get your business up and running as quickly as possible. You can draw on the experience of people who know what is involved in starting a new veterinary clinic.

Buying a veterinary franchise often involves lower start-up costs than beginning a traditional practice. If you do not have the necessary capital to start a veterinary practice, and you do not want to or are not able to go into debt to finance your own startup, then buying a veterinary franchise could be an affordable option for you. With the support provided by the franchisor, you can quickly begin to make a profit and build a sustainable income for yourself and your employees. Many franchisors provide estimates of how much you can expect to earn after you purchase a veterinary franchise and how you can expect your revenue to grow over time.

Disadvantages of Buying a Veterinary Franchise

Although buying a veterinary franchise is a good option for many veterinarians, you need to consider a few potential disadvantages. In most cases, buying a veterinary franchise does not give you quite as much control as starting your own practice. Before you decide to purchase a franchise, it is important to find out everything you can about the franchise model. Read all documentation that the franchisor provides so you can be clear about how much control you will have over the way you run your veterinary practice if you decide to buy into the franchise. Do not hesitate to ask the franchisor to explain any terms that are not clear.

Is Buying a Veterinary Franchise Right For You?

There is no single right answer to the question, “Should I buy a veterinary franchise?” Every veterinarian has different goals, aspirations and needs, all of which can influence your decision. If you want to focus on providing the best quality of care for your animal patients, while the franchisor helps you out with managing the business side of running your veterinary practice, then you may choose to join a franchise model. On the other hand, if you want to retain full control over your business, then you may prefer to go it alone.

How to Decide Whether to Buy a Veterinary Franchise

Whatever choice you ultimately make for your veterinary career, it is important to get advice from other people who have been through the same process. Network with other veterinarians to find out about their experiences of the franchise model and get recommendations for franchisors that provide the most support to their franchisees. Most importantly, be sure to set out your career goals and make a plan to achieve them, and then ask yourself whether buying a veterinary franchise can successfully fit into that plan.