What Does the Tax Cuts and Jobs Act Mean for the Pharmaceutical Industry?

The Tax Cuts and Jobs Act (TCJA) of 2017 is the largest piece of tax reform to be legislated in the U.S. in decades. As such, it will have a wide-reaching effect across all businesses, including those in the pharmaceutical industry. A recent article by John Bentil, published by Pharmaceutical Executive, takes a look at some of the consequences of the TCJA, including the following:

  • Pharmacy businesses will benefit from the flat corporate tax rate of 21%, the participation exemption, and the repeal of the corporate alternative minimum tax. Expect to have more cash on hand as a result!
  • The TCJA includes a wide variety of credits, deductions, and depreciation guidelines that will impact pharmacies and pharmaceutical companies, including the Orphan Drug Credit, the Interest Expense Deduction, the Excessive Compensation Deduction, increased expensing, and other deduction pertaining to domestic production.
  • If your pharmacy company conducts research or makes experimental expenditures, start planning for changes in amortization that will take place after December 31, 2021.
  • For pharmacy companies with international interests, a couple other important items in the TCJA include the Subpart F Provisions and the Base Erosion Provisions.

For more details, read the article in full at Pharmaceutical Executive. Be sure to reach out to you Blackman & Sloop tax advisor with questions.