Seeking - and finding - tax breaks for your practice

December 17, 2013

Tax breaks for medical practices are out there – but you have to ask

Constructing a new medical facility or hiring new employees can become more feasible if physicians take advantage of the many federal, state and local incentives available to help developers – including physicians – substantially reduce taxes and slash their building, equipment and hiring costs.

The trick is to know where to look, whom to talk to and when to act. Some programs have specific deadlines. Others, limited funding.

"Incentives are only granted as long as there's money for them," said Carol Kokinis-Graves, a senior estate tax analyst in the Chicago area. "You don’t want to go through the process only to discover the money is gone."

There was a time when few doctors thought to ask for incentives, and not many incentives were offered as municipalities looked primarily to lure manufacturing and high-tech companies.

Some local and state medical associations hoped to change that and conducted studies showing the economic impact private medical practices have on an area. A 2008 study by the Medical Association of Georgia, delivered to the state legislature, found that practices accounted for more than 180,000 jobs, $10 billion in wages and nearly $20 billion in economic activity in the state that year.

"As we put this study forth to legislators, we said, 'Yes, doctors make communities healthy,' " said Donald Palmisano, Jr., CEO of the medical association. "But in some rural areas, they're also the largest employer."

Thanks to such studies, governments now recognize physicians' economic benefits.

Location, location, location

In some instances, medical practices can get state and federal incentives just by locating in certain areas and hiring certain people. Check your state's economic development department website for a list of available incentives, forms to fill out, and phone numbers and contacts to call to get them.

There are many programs for doctors who want to practice in rural areas. Medical offices are especially desired in rural communities, and the U.S. Department of Agriculture has a loan program and grants for developments in these areas. Several states and the federal government have loan forgiveness programs for physicians practicing in designated underserved areas for a specified period.

Abatements are available

Often, you won’t have to venture further than city hall to obtain an incentive package.

"We have to off er tax abatements," said John Brezik, a councilman and plan commission president in Hobart, Indiana. "It’s the only way we can compete."

Hobart recently offered a 10-year tax abatement, which features a graduated income tax scale over 10 years, to a physician who plans to build a $3 million multi-offi ce facility that will be anchored by his expanding medical practice.

"Kansas physicians looking to build practices can apply for industrial revenue bonds in the city or county in which they're building," said Roger Hamm, deputy director of property valuation at the Kansas Department of Revenue. The bonds finance up to 100% of a practice’s land, building and equipment and make the business eligible for a 100% property tax exemption for up to 10 years and a sales tax exemption for labor and materials purchased for the new facility.

"This program has been around for quite awhile," Hamm said. "It's for any business, whether a doctor, dentist or manufacturer."

But for any incentive, the first step is always the same – you have to ask what's available.

Based on:, August 5, 2013, Karen Caffarini, staff writer. Copyright © 2013 American Medical Association. All rights reserved. Used with permission.

Please note:

By clicking "continue" below you will be taken away from the AMA Insurance Agency, Inc. website.

Do you wish to leave this site?

cancel Continue