Section 179 Tax Deduction

Special Tax Incentive Helps Medical Providers, Practitioners Save Money, Buy Needed Equipment

FreedomPACS PACS Cloud Qualified Tax Deduction

Section 179 of the IRS Tax Code allows businesses to deduct the full price of qualifying equipment bought or financed (not leased) during the tax year from their gross income.

Health facilities, practitioners and service providers that take this deduction keep more of their capital while buying the equipment and software they need to keep pace with advances in medical technology.

To qualify, items must be used at least 51 percent for business, and can include:

  • Computers
  • Health equipment, machines or systems
  • Mobile technology and devices
  • Medical software
  • Laboratory equipment
  • Furniture for offices of facilities

How Does the Program Work?

Example 1

Example 2

Cost of Qualified Equipment:

$50,000 $25,000

Tax Savings* on Purchase with Section 179 Deduction:
(Assuming 35% tax bracket: cost of equipment x 0.35)

$17,500 $8,750

Net Cost of Equipment:

$32,500 $16,250

2014 Limits

Although the 2014 deduction limit of $25,000 (plus an inflation adjustment) and purchasing limit of $200,000 are lower than in past years, the medical industry still benefits.

This easy-to-use tax incentive—also open to sole proprietors and independent contractors—enables businesses to claim the full deduction (purchase price/value) upfront instead of spreading it out over the “useful life” of the item. The useful life of most business items* is five, seven or 10 years.

For example, in 2014, a medical facility spends $10,000 in qualifying lab equipment, with a useful life of 10 years. The medical facility’s 2014 Section 179 deduction* on the equipment is $10,000 (the full purchase price). Compare that to the deduction using a standard depreciation method (MACRS)*: $1,000 in 2014 and in each of the following nine tax years.

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*Always contact your tax advisor to verify tax or accounting issues or visit for specific details.