New Legislation Places Medical Device Tax on Two-Year Hold

By nearly a three-to-one majority, the U.S. House of Representatives passed a bill (HR 2029) that places a two-year moratorium on the 2.3% federal excise tax on medical device sales. The legislation, which was subsequently approved by the Senate, also permanently addresses the Section 179 expense depreciation, which is likely to help incentivize purchases of dental products and equipment. The dental industry had lobbied against the tax — which is a funding mechanism for health care reform — because it places a disproportionate burden on the industry without bringing significant benefits in the form of increased dental coverage under the Affordable Care Act.

The upshot for dentists and practice owners is that, at least in the short term, manufacturers will not have to pass along the cost of the excise tax, as it will not apply to sales of dental devices and equipment over the next two years.

The legislation, part of a $1.1 trillion spending deal passed by Congress and signed into law by President Obama in mid-December, includes a package of tax breaks for individuals and businesses expected to total $680 billion over 10 years.