Section 179

What Is Section 179?

Section 179 is a part of the U.S. tax code that allows businesses to deduct the full cost of qualifying equipment, vehicles, and software purchased or financed during the year. Normally, you would have to spread out the deduction over several years through depreciation. But with Section 179, you can deduct the full amount in the same year you buy it.

This can make a big difference for small and medium-sized businesses. It encourages business owners to invest in tools, technology, and vehicles they need without worrying about long-term write-offs.

How It Works

• Buy or finance equipment — It must be purchased and used for business before the end of the tax year.
• Deduct the full amount — For 2025, you can deduct up to $1,220,000, with a spending limit of $3,050,000.
• Bonus depreciation — If you spend more than the limit, bonus depreciation can help you deduct even more.

Example

Let’s say your company purchases $200,000 worth of new equipment in 2025.
Under Section 179, you can deduct the entire $200,000 from your taxable income for that year — potentially saving tens of thousands in taxes depending on your tax rate.

Why It’s Useful

• Lowers your tax bill
• Helps cash flow
• Encourages reinvestment
• Works for new and used equipment

Important Deadlines

To take the Section 179 deduction for 2025:

• The equipment must be purchased and put into use by December 31, 2025.
• You must elect Section 179 on IRS Form 4562 when filing your taxes.

Conclusion

Section 179 is a powerful way for small and mid-sized businesses to save on taxes while investing in growth.

Disclaimer: This information is for general purposes only. Always check with your tax advisor to see how Section 179 applies to your business.

Resources

section179.org