Expensing equipment for doctors, dentists, and pharmacists

What is it?

Clinical equipment is a large, recurring cost for dentists, physicians, and pharmacists, and the default treatment spreads its deduction across many years. Two elections change that. Section 179 lets a practice expense the full cost of qualifying equipment in the year it is placed in service, up to an annual dollar limit and subject to a phase-out for very large purchases. Bonus depreciation then applies to the remainder of qualifying property, so between the two, most of a purchase can be deducted in year one.

The phrase that matters is placed in service, not paid for or ordered. Equipment deducts in the year it is installed and ready for use, which is why a chair or an imaging unit delivered in late December behaves very differently from one delivered in early January. The figures below adjust every year and are the tax-year-2025 amounts.

Because the deduction lands where the income is, the value of the timing depends on the practice's profit in the year of purchase. Buying into a high-income year captures the deduction at a higher rate; buying into a loss year wastes much of it, since Section 179 cannot create a loss.

Who does it apply to?

Dental, medical, and pharmacy practice owners making meaningful equipment purchases — operatory chairs, imaging, CAD/CAM, lab and cold-chain machines, dispensing automation.

Owners with enough current-year profit to absorb a large first-year deduction at a worthwhile rate.

Practices planning a build-out or a fit-out where equipment and improvements land in the same year.

Who does it not work for?

• A practice with little or no taxable income in the purchase year, where Section 179 cannot create a loss and bonus depreciation may be worth more spread out.
• Equipment used half the time or less for the business, which falls outside the elections and can trigger recapture.
• An owner buying equipment mainly for the deduction rather than because the practice needs it — the deduction never exceeds the cash spent.

What does the IRS look at?

• Whether the equipment was genuinely placed in service in the year claimed, not merely ordered or invoiced.
• Business-use percentage, and recapture where business use later drops below half.
• Whether the property qualifies for the election claimed, and whether the practice had income to support a Section 179 deduction.
• Consistency between the fixed-asset schedule, the depreciation claimed, and the equipment actually on site.

What does it cost to fund, and when does the window close?

This is a capital-outlay strategy: the deduction follows real spending on real equipment, so it needs cash or financing in place. The timing decision — this December or next January — is where a CFO and the tax planner work together, matching the purchase to the year with the income to use it.

The professional work is a CPA modelling the Section 179 and bonus stack against the practice's actual profit, and confirming the placed-in-service date. For a building fit-out, a cost segregation study can extend the same acceleration to the improvements.

Related strategies

• §168Immediate expensing of equipmentCapital outlay
• §168Accelerating depreciation on buildingsCapital outlay
• §401Solo 401(k), SEP, defined benefit and cash balance plansCapital outlay

Common questions

Can I deduct a whole imaging machine in one year?

Often most of it. Section 179 expenses qualifying equipment up to an annual dollar limit that adjusts each year, and bonus depreciation applies to the remainder, provided the machine is placed in service during that year and the practice has enough taxable income to absorb a Section 179 deduction. Both elections are made on Form 4562 filed with the practice return. A CPA confirms the deductible amount against your actual numbers before the return is filed.

Does it matter if the equipment arrives in December or January?

It can matter a great deal. Equipment is deducted in the year it is placed in service, meaning installed and ready for use, rather than the year it was ordered, invoiced, or paid for, so a delivery that slips past year-end moves the entire deduction into the next tax year and a different income picture. Keep the delivery and installation records that fix that date, because the placed-in-service date is what an examiner asks you to prove.

What if my practice had a low-income year?

Section 179 cannot create a loss, so an election larger than the practice income is disallowed for that year and carried forward instead of reducing tax now. In that situation, claiming regular depreciation and spreading the deduction, or timing the purchase into a stronger year, is usually worth more. A CPA models both paths against projected profit before the equipment is ordered, which is the only point at which the timing can still be changed.

Mena Hemaia, CPA, CIA

Chief Executive Officer, Accountack — West Palm Beach, Florida

If you want to know which of these apply to your business specifically, that is a conversation about your actual numbers — not a seminar example.

Book a free discovery call+1 (561) 232-3387

Or start with the Free Cash Clarity Audit — A no-cost review of where your business stands and what a planning engagement would target — the firm's own named starting point.

20 minutes with an Accountack advisor. If a technical review is worth your time, the next step is a workshop with Mena — and if there is nothing material to do, he will say so.