SECTION 179 TAX BENEFITS
Maximize Your Business Potential with Section 179 Deductions
Unlock greater financial flexibility for your business with the Section 179 deduction. A part of the IRS tax code, Section 179 allows businesses to deduct the full purchase price of qualifying equipment bought or financed during the tax year. This significant tax incentive is designed to encourage businesses to invest in themselves by purchasing the equipment they need to grow. Section 179 can be extremely profitable for your business, allowing you to invest in equipment, vehicles, and software while retaining more of your tax dollars.
Section 179 at a Glance for 2025
Deduction Limit in 2025 = $1,250,000
This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2025, the equipment must be financed or purchased and put into service between January 1, 2025 and the end of the day on December 31, 2025.
Spending Cap on Equipment Purchases in 2025 = $3,130,000
This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis.
Bonus Depreciation: 40% for 2025
Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. The Bonus Depreciation is available for both new and used equipment.
What is the Section 179 Deduction
Most people think the Section 179 deduction is some mysterious or complicated tax code. It really isn't, as you will see below.
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It's an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Several years ago, Section 179 was often referred to as the "SUV Tax Loophole" or the "Hummer Deduction" because many businesses have used this tax code to write-off the purchase of qualifying vehicles at the time (like SUV's and Hummers). But that particular benefit of Section 179 has been severely reduced in recent years (see 'Vehicles & Section 179' for current limits on business vehicles.)
However, despite the SUV deduction lessened, Section 179 is more beneficial to small businesses than ever. Today, Section 179 is one of the few government incentives available to small businesses, and has been included in many of the recent Stimulus Acts and Congressional Tax Bills. Although large businesses also benefit from Section 179 or Bonus Depreciation, the original target of this legislation was much needed tax relief for small businesses - and millions of small businesses are actually taking action and getting real benefits.
Here's How Section 179 works:
In the past, business owners were able to write off equipment costs and the cost of depreciation a little at a time. Section 179 changed this, allowing you to write off up to 100% of the purchase price in the year the equipment is placed into service.
This change gives business owners the power they deserve. By using these tools, you're more easily capable of managing and maintaining your bottom line. Section 179 is a great tool to use for your overall business tax plan. We're honored to be able to support you.
Limits of Section 179
Section 179 isn't without its limits. In 2025, there is a dollar-for-dollar phase-out that occurs when you spend $4,380,000 on equipment. Maximum vehicle write-offs for automobiles over 6,000 pounds in GVWR are limited to $31,300. Your 2025 deduction limit is $1,250,000. And you have a bonus depreciation of 40% in 2025.
Who Qualifies for Section 179?
All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2025 should qualify for the Section 179 Deduction.
Most tangible goods used by American businesses, including "off-the-shelf" software and business-use vehicles (restrictions apply) qualify for the Section 179 Deduction.
For basic guidelines on what property is covered under the Section 179 tax code, please refer to list of Section 179 Qualifying Equipment. Also, to qualify for the Section 179 Deduction, the equipment and/or software purchased or financed must be placed into service between January 1, 2025 and December 31, 2025.
For 2025, $1,250,000 of assets can be expensed; that amount phases out dollar for dollar when $3,130,000 of qualified assets are placed in service.
What's the difference between Section 179 and Bonus Depreciation?
Bonus depreciation is offered some years, and some years it isn't. Right now in 2025, it's being offered at 40%.
The most important difference is both new and used equipment qualify for the Section 179 Deduction (as long as the used equipment is "new to you"), while Bonus Depreciation has only covered new equipment only until the most recent tax law passed. In a switch from recent years, the bonus depreciation now includes used equipment.
Bonus Depreciation is useful to very large businesses spending more than the Section 179 Spending Cap (currently $3,130,000) on new capital equipment. Also, businesses with a net loss are still qualified to deduct some of the cost of new equipment and carry-forward the loss.
When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation - unless the business had no taxable profit, because the unprofitable business is allowed to carry the loss forward to future years.
Section 179's "More Than 50 Percent Business-Use" Requirement
The equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction. Simply multiply the cost of the equipment, vehicle(s), and/or software by the percentage of business-use to arrive at the monetary amount eligible for Section 179.
Please see https://www.section179.org/section_179_deduction/ for more information.
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3680 Leharps Dr
Youngstown, OH 44515
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