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IRS Section 179 Can Provide Benefits for Capital Equipment Investments

Posted on Sep 15, 2022 by Brandon Russell

A person next to a Helmer refrigerator

As we approach the fall and winter months, ensuring vaccine clinics, pharmacies, physician’s offices, and other healthcare sites are equipped with the resources needed to serve patients is an important step in improving patient outcomes and supporting overall public health. 

Making investments in capital equipment, such as professional medical-grade cold storage equipment, provides safe and effective storage for medications, vaccines, and patient samples that require cold storage. It can also provide some advantageous tax benefits under the right circumstances. 

In 1958, the United States Congress enacted the Small Business Tax Revision Act to empower small businesses to invest in themselves while enjoying financial benefits.  

One component of this legislation was the inclusion of Section 179 into the federal tax code, which allows businesses to deduct the cost of certain equipment as an expense when placed in service. Over the last 65 years, minor changes to the maximum deduction amounts have fluctuated, and in 2017, with the ratification of the Tax Cuts and Jobs Act (TCJA), the limit was capped at $1 million. 

This means up to $1 million of equipment purchased and put into service in 2022 can be depreciated in 2022 instead of deprecated over time.  

For example, let’s say a physician’s office purchases three new vaccine freezers at a total cost of $15,000. The office plans to use these refrigerators for five years before replacing them with newer models. If the practice’s finance team uses straight-line depreciation, the office would be able to claim deductions of $3,000 per year over the next five years on their tax returns.

By taking advantage of the benefits of Section 179, the practice could deduct the entire $15,000 cost of the freezers as an expense in the first year they are placed in service, freeing up cash to be invested elsewhere in the practice. 

Whether replacing older medical-grade equipment or investing in medical-grade equipment for the first time, taking advantage of Section 179 in 2022 and upgrading now may provide some financial benefit. 

As with all financial matters, there are requirements and guidelines to follow to take full advantage of the benefits of Section 179. For example, there is an equipment purchase limit of $2.7 million that applies to this deduction. Licensed tax and financial experts should be consulted for guidance based on individual situations before any decisions are made. 

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The benefits of Section 179 apply to all businesses that purchase equipment during tax year 2022 as long as the equipment is placed in service before December 31, 2022. Equipment from Helmer Scientific is Section 179 qualified. 

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Brandon Russell

Written by Brandon Russell

Brandon Russell is a senior marketing manager, covering the vaccine and pharmacy segments. He has more than five years of marketing experience.

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