Maximizing Bonus Depreciation at Your Veterinary Hospital

As we approach the end of the year, it’s important to consider 2022 tax planning opportunities. One strategy that many veterinary hospital owners have used in recent years is to generate additional depreciation deductions by purchasing equipment for the hospital. The Tax Cuts and Jobs Act created the opportunity for increased bonus depreciation, allowing hospitals to deduct 100% of the cost of assets placed in service during the year. With supply chain issues delaying the delivery of many items in 2022, please keep in mind that equipment needs to be placed in service by Dec. 31, 2022, in order to benefit from bonus depreciation deductions in the 2022 tax year.

Current bonus depreciation regulations are expected to phase out beginning on Jan. 1, 2023. While 100% bonus depreciation has been allowed in recent years, the bonus depreciation deductions are expected to phase out as follows:

• 80% bonus depreciation for property placed in service in 2023
• 60% bonus depreciation for property placed in service in 2024
• 40% bonus depreciation for property placed in service in 2025
• 20% bonus depreciation for property placed in service in 2026
• 0% bonus depreciation for property placed in service in 2027

Even though bonus depreciation will be limited in future years, Section 179 depreciation deductions are still available moving forward. But maximizing bonus depreciation deductions means making it a priority to place equipment in service before the year is over.

Want more tips on how to improve your hospital’s profitability? Download the Veterinary Guide to Best Practices, Vol. 6, or contact us.