Can You Deduct Biohacking Devices as a Business Expense? What the IRS Looks For
Biohacking is a growing segment in the longevity industry, and one that clinics tend to invest heavily in.
New tools and technologies are entering the market at a rapid pace, and many clinics waste no time jumping on the next new trend. In this industry, differentiation is the name of the game, and providing what clients are looking for adds massive value to the bottom line.
But can biohacking devices be deducted as a business expense?
For its part, the IRS cares little for trends or what qualifies as the next big thing. That said, most devices are deductible if they are an “ordinary and necessary” aspect of your business offering and are legitimately connected to operations.
Today, we’ll look at how the IRS evaluates these items and provide some tips on what you can do to maximize the deduction value and minimize the potential for an audit.
What Constitutes “Ordinary and Necessary”?
The IRS defines an ordinary expense as one that is common to your industry. Necessary expenses are perhaps not common, but are appropriate and aligned with your business.
Context matters a lot in this regard.
For example, a red light therapy bed supports patient wellness and may be used as part of a general wellness protocol. Wearable health trackers given to patients may also qualify, as they can be an aspect of metabolic optimization therapy.
Those same devices used by you at home for personal wellness are harder to justify.
What the IRS looks at is how the device is used, who uses it, and whether it supports revenue generation.
In any case, proper documentation is required to support your claim.
What Biohacking Devices are Most Likely Deductible?
If a device is clearly an aspect of your business model, it may qualify as a deductible asset.
Here are a few examples of generally accepted devices:
Red light therapy systems
Infrared saunas
Cold plunge tubs
Cryotherapy chambers
Hyperbaric oxygen chambers
HRV monitoring systems
Glucose monitoring systems
Body composition scanners
Sleep tracking equipment (if used in patient programs)
If the equipment is set up in the clinic, used directly with patients, included in treatment protocols, and tied to verifiable business revenue, you have a strong case for a deduction.
Beware these blurry lines.
Clinic owners may raise red flags when lines between personal and business use are blurred.
The problem is that many biohacking devices are also marketed for personal wellness, athletic performance enhancement, and lifestyle optimization. If you have mixed-use assets—for example, if you have an infrared sauna at home and are trying to deduct it as research—your deductions may be questioned.
Other areas you’ll want to be aware of include deducting wearables used for yourself or family, claiming supplements or consumer wellness products as clinic expenses, purchasing equipment without documented patient use, or deducting costs for devices that are never integrated into clinical operations.
Documentation is More Important Than the Device Itself
Clinic technology doesn’t automatically qualify as a deduction just because it’s health-related. The IRS is more concerned with substantiation.
The better you can back up your decisions with documentation, the easier it will be for them to accept.
Here are a few things you should keep and/or create as backup:
Invoices for device purchases
Documented business purpose
Documented clinical protocols
Patient usage records related to the device
Revenue associated with the device or service
Let’s say you advertise a device as part of a membership, track its use, and bill for it. In that case, your deduction is likely defensible. Without proof, your position is weak.
Other documentation that can help include marketing materials, training manuals, and maintenance records.
Section 179 and Equipment Depreciation
Under IRS Section 179, equipment can be expensed immediately in the year it is placed in service. The IRS places limits on this, but if the purchase amount exceeds those thresholds, you may apply bonus depreciation for the remaining amount.
For clinics that have invested heavily in high-cost equipment like hyperbaric chambers or cryo systems, this can provide meaningful tax savings.
Working with a CPA familiar with the longevity industry is helpful here, as the IRS considers several factors, including business profitability, the timing of the purchase, the percentage of business use, and equipment classification.
What Constitutes “Reasonableness”?
Even a legitimate business purchase can invite a close look if the expense seems excessive relative to the business’s size and revenue.
For example, an established longevity clinic generating $10 million in annual revenue might reasonably purchase diagnostic equipment, but a new wellness clinic with minimal revenue might face questions.
What it boils down to is whether the purchase aligns with reality. As long as you have the documentation to back up your assumptions, you should be in a defensible position.
A Word About Employee Wellness Programs
Some clinics assume that all wellness equipment is deductible if employees benefit from it. However, the reality is more nuanced.
Informal personal use is a tax risk, and equipment for employees’ personal use, even if it’s part of a business-led program, may be treated differently. In this case, unless it’s tied to a legitimate revenue-generating business purpose, it may be viewed as a benefit rather than a business expense.
Documentation should include the business rationale for the purchase, details on how the program is structured, eligibility policies, and administration documentation.
What About Equipment Used for Demonstrations or Marketing?
If you primarily use a piece of equipment to demonstrate or market a service (such as taking it to trade shows, creating educational videos, or demonstrating a device for consultation purposes), you may have a legitimate business use case.
As always, documentation is essential. You should be able to show how the equipment contributes to education, marketing, or revenue generation.
The Bottom Line
Biohacking devices can be deductible if they are connected to a legitimate business purpose. Before claiming these expenses, be sure you have the appropriate documentation to support your claim.
Reviewing your assumptions with a qualified CPA can help you avoid IRS scrutiny: book a consultation with a Growise expert today to learn how we can help.