What is Section 179?
Section 179 of the US IRS tax code allows businesses like pharmacies to fully depreciate the price of qualifying equipment or software purchased during the tax year in which the purchase was made. In other words, it’s a federal incentive to encourage small- to mid-sized businesses to invest in themselves by accelerating the depreciation of assets.
Rather than depreciating a portion of capital purchases over several successive years, Section 179 allows businesses to recognize depreciation for the entire qualified purchase(s) in the current tax year.
What qualifies?
Businesses that purchase, finance or lease equipment can take the Section 179 deduction to recognize depreciation, and most goods, including software, that are used for business purposes more than 50% of the time may qualify.
Here is a calculator that can help you estimate tax savings for a given purchase. Always be sure to consult your tax advisor to clarify the considerations and ramifications for your particular business.
What’s unique about 2022?
The bonus depreciation amount remains at 100% on eligible equipment purchases made before 2023, but is currently set to decrease by 20% each year thereafter:
- 80% for purchases in 2023
- 60% for purchases in 2024
- 40% for purchases in 2025
- 20% for purchases in 2026
What now?
Consult with your tax advisor about your pharmacy’s particular financial situation.
If you’ve been considering a capital purchase like a scripClip will-call system to improve operational efficiency, customer experiences and business profitability, and believe you can take advantage of a Section 179 deduction, it could be the perfect time to act between now and the end of the year.