Take Advantage of Section 179 Deductions

For the 2025 tax year, the Section 179 deduction limit has been increased to $2.5 million, with a phase-out threshold of $4 million. This means businesses can immediately deduct the full purchase price of up to $2.5 million in eligible new and used equipment placed in service during 2025. 

• Deduction limit: Up to $2.5 million.
• Spending cap: The deduction begins to phase out dollar-for-dollar for businesses that purchase more than $4 million in qualifying equipment.
• Bonus depreciation: The One Big Beautiful Bill Act of 2025 (OBBBA) reinstated the 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025. 

• Immediate deduction: The Section 179 deduction allows businesses to expense the cost of qualified property in the year it is put into service, instead of depreciating it over many years.
• Qualifying property: This includes new and used equipment, “off-the-shelf” computer software, business vehicles, office furniture, machinery, and certain real property improvements.
• “Placed in service” requirement: To qualify for the deduction in 2025, the property must be purchased or financed and then placed into service between January 1, 2025, and December 31, 2025.
• Business use requirement: The asset must be used for business purposes more than 50% of the time. The deduction amount is based on the percentage of business use.
• Coordination with bonus depreciation: The Section 179 deduction is generally taken first. Bonus depreciation can be used to deduct the remaining cost of assets after the Section 179 limit has been reached. 

• Heavy vehicles: For SUVs, trucks, and vans with a GVWR over 6,000 pounds but not more than 14,000 pounds, the deduction is capped at $31,300.
• Light vehicles: The deduction for passenger vehicles with a GVWR of 6,000 pounds or less is limited to $12,200.