For many years, the section 179 deduction has benefited businesses both large and small by allowing them to claim accelerated depreciation of their capital expenditures. Independent pharmacies are able to use this deduction when they make capital investments in equipment and systems to improve their pharmacies, including the RxSafe 1800 and the Rx ASP systems. With these systems, you can improve your pharmacy's efficiency, deter thieves, reduce waste and increase patient adherence. The availability of the section 179 deduction allows your pharmacy to enjoy tax benefits when you add these types of systems to your pharmacy as well.
Understanding the section 179 deduction
Because of political wrangling, Congress historically waited until the end of each year to extend the section 179 deduction. In 2016, however, the deduction was made permanent with the passage of the Path Act and was made retroactive so that pharmacies and other businesses could claim the deduction for 2015. The annual deduction limit was raised to $500,000 for purchases made during the year, making it a great benefit for small pharmacies.
This is a tax deduction for small businesses that allows them to deduct the full cost of purchased equipment up to certain limits. It provides a great incentive for businesses to lease or purchase new equipment because of the ability to get the deduction. It can be used for most types of equipment. In order to claim the deduction for 2017, you must purchase or lease the equipment between Jan. 1, 2017, and Dec. 31, 2017.
In 2017, the spending cap on equipment purchases for businesses is $2 million. If your pharmacy spends more than that amount, the amount of the deduction is decreased dollar for dollar. This means that it helps small businesses because larger companies that are able to spend millions of dollars on equipment in a year will be unable to get the deduction once their expenditures surpass $2.5 million.
Once the cap is reached, there is a 50 percent bonus depreciation under section 179 for 2017. For example, if a business spends $650,000 to purchase a single item of new equipment, they will be able to write off $500,000 of the purchase on their taxes as well as to enjoy a bonus depreciation of $75,000 along with the normal depreciation of $15,000 for the year. RxSafe has a section 179 calculator that allows pharmacies to quickly figure their section 179 deduction so that you can easily see the savings that you will receive.
The availability of the section 179 deduction for independent pharmacies can help you to save substantial amounts on your taxes while also being able to get the equipment that you need for your pharmacy. To learn more about the systems that we offer for pharmacies and the section 179 deduction, contact RxSafe today.