How The New Tax Bill Will Affect Gym Owners

You opened your gym because you love seeing members hit new personal bests, not because you wanted to keep up with Washington’s latest tax jargon.

The 2025 tax bill just changed a handful of rules that hit your bottom line directly, and we’ve done the heavy lifting for you.

Let’s walk through how the new tax bill will affect gym owners, and more importantly, how you can make the most of it.

The 20% QBI Deduction

One of the biggest wins in the 2025 tax bill for gym owners is the permanent Qualified Business Income (QBI) deduction. This deduction allows many owners of LLCs, partnerships, sole proprietorships, and S corporations to deduct up to 20% of their taxable business income.

If your gym’s profit for the year is $200,000, you could potentially deduct $40,000 before you even start calculating income tax. That is real money you can keep in the business to buy new equipment, hire staff, or simply improve cash flow.

The best part is that with the deduction made permanent, you can now plan around it. Income phase-outs apply for high-income earners. It’s worth sitting down with your CPA early in the year and running a projection of your expected profit, so you know how much the deduction will be worth and what you need to do to qualify.

Tip: If you are tipping into the phase-out range, managing your profit for the year can save thousands of dollars. That means delaying income, accelerating expenses, or getting more money into pretax buckets like IRAs, HSAs, and 401ks.

Section 179 & Bonus Depreciation For Equipment Purchases

Buying new treadmills or redoing your spin room? Thanks to the new law’s higher Section 179 limits and the return of 100% bonus depreciation, you can often deduct the full cost in the year you buy, instead of depreciating over five or seven years. That means you can lower your tax bill right when you’re spending cash, exactly when you need the break most.

If you’ve been eyeing a big equipment order, talk to your CPA about whether it makes sense to bring it forward into 2025. Keep the invoices, delivery notes, and installation dates handy, as you will need to show that the equipment was placed in service before year-end to qualify for the deduction.

This is a large opportunity for new facilities and those buying existing locations. Depreciation should, in most instances, generate a large loss in the first year of operations that may significantly reduce your taxable income and offset income from other locations, investments, and even wages. At The Fitness CPA, we specialize in helping new locations strategize to maximize their tax savings, so if this is you, reach out.

Depreciation rules have changed nearly every year for the past 10+ years, and sometimes retroactively. This permanent change is a welcome reprieve and provides clarity in the tax code that allows club, gym, and fitness boutique owners to plan out for multiple years.

Deductions For Overtime

One of the quieter but very real changes in the 2025 tax bill affects how overtime is treated. In short, there are now special deductions that can help your employees keep more of what they earn, but only if you are tracking and reporting everything correctly. While most gyms do not see a lot of overtime, it does happen.

Hourly employees can now deduct the extra portion of their overtime pay, the bump above their regular hourly rate, up to certain limits ($12,500 for single filers and $25,000 for married couples filing jointly). Like the tip deduction, this one phases out at higher incomes.

In practice, this means that if your staff regularly works more than 40 hours a week, they may get a tax break on that extra pay. The key for you as an owner is to make sure your timekeeping and payroll records are accurate so your team can claim the deduction correctly.

Maximize Tax Deductions For Your Gym

Imagine you buy $60,000 of new machines this year. Under the new depreciation rules, you may be able to deduct the whole $60,000 instead of depreciating the equipment over several years. That’s a real cash-flow difference, not just a paper one. Combine that with a full 20% QBI deduction on your profit, and you’ve given yourself some breathing room to invest in new programs, staff training, or marketing.

Tax changes don’t have to be scary. With a little planning, they can actually work in your favor. At The Fitness CPA, we spend all day helping gyms, franchises, and fitness centers do exactly this kind of planning.

Want to know if your gym can take full advantage of the tax changes?

Book a meeting with our team, and we’ll get right back to you.

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Eric Killian

CPA & Founder | Accountant, husband, father, mountaineer.
Fitness is such a big part of who I am. Maintaining a healthy lifestyle, eating well (mostly paleo), hiking, backpacking, mountaineering, practicing yoga and Crossfit are all important cornerstones of life. But I love ice cream and cookies too much to say no!
I love helping owners make sense of their business and finding ways to grow it. It’s an honor to help you see situations, scenarios and opportunities from all sides so you can make informed decisions.

Profitability, Taxes