What is Section 179?

Section 179 is a tax deduction for businesses, including dental practices, that allows business owners to deduct up to the full purchase price of qualified equipment, technology, off-the-shelf software, and other qualifying purchases from their taxes within the same tax year.
This allows businesses to lower their current-year tax liability rather than capitalizing an asset and depreciating it over time in future tax years.

 

What’s Changed About Section 179 in 2022?

The only major updates from the information provided in 2021 are the purchase and deductions limits:

• $2,700,000 equipment purchase limit
• $1,080,000 tax deduction limit

 

Is Bonus Depreciation Going Away?

Bonus depreciation is often associated with Section 179 and is generally taken once the Section 179 limit has been reached.
Since 2017 under the Tax Cuts and Jobs Act (the Act), businesses have been benefiting from a provision which has allowed 100% bonus deprecation on qualified assets. This benefit, however, is expected to begin phasing out starting as soon as the end of 2022.
Under the Act, qualified assets acquired and placed in service after September 27, 2017 and before January 1, 2023 are entitled to take 100% bonus deprecation. After 2023, bonus depreciation available is expected to drop as follows:

• 80% for property placed in service in 2023
• 60% for property placed in service in 2024
• 40% for property placed in service in 2025
• 20% for property placed in service in 2026
• 0% for property placed in service in 2027 and later years

Businesses will continue to have the benefit of Section 179 which is expected to be fully available in future tax years.

What Purchases Qualify for a Section 179 Deduction?

Qualifying purchases for dental practices include, but are not limited to:

• Dental practice equipment, like chairs and X-ray machines
• Software and technology, such as servers, computers, accounting, and dental software
• Office furniture
• Heating/AC systems
• Air ventilation systems
• Security systems
• Roofs
• Qualified Improvement Property

See the IRS guidelines for a comprehensive list of qualifying purchases.
 

Can The Deduction be Taken on Pre-Owned Equipment?

Yes. The equipment and other items you purchase can be pre-owned, used, or refurbished. The items simply must be “new to you” and your practice.

 

What’s The Deadline to Claim Section 179 on 2022 Taxes?

Equipment must be purchased, received, and put into use by December 31^st to qualify for a Section 179 tax deduction.
At Atlas, the very last day to order in-stock equipment and receive it in 2022 is December 20^th, 2022. 

 

Final Thoughts

Section 179 deductions are just one of the tax strategies you can use to free up cash flow, pay less in taxes, and upgrade your practice’s capabilities. Be sure to consult with a tax professional to see if taking the Section 179 deduction is appropriate for your practice and tax situation.