Maximize Your Tax Deductions with Section 179 in 2025
The One Big Beautiful Bill Act (OBBB) dramatically increases Section 179 deductions for 2025. Deduct up to $2.5 million in qualifying equipment purchases, effective January 1, 2025.
Immediate Write-Off
Deduct the full purchase price of qualifying equipment
Substantial Savings
Up to $2,500,000 in deductions for 2025
Wide Eligibility
Most business equipment purchases qualify
About Section 179
Understanding the tax code that can save your business thousands in 2025 - now with enhanced limits
What is Section 179?
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. It's an incentive created by the government to encourage businesses to invest in themselves.
2025 Deduction Limit - OBBB Act
The One Big Beautiful Bill Act (OBBB) significantly increases Section 179 limits for 2025. For tax years beginning after December 31, 2024, the maximum deduction is now $2,500,000, up from $1,220,000 in 2024. The spending cap has also increased to $4,000,000, with the deduction phasing out dollar
Qualifying Equipment Includes:
- Machinery and equipment
- Business vehicles (over 6,000 lbs)
- Computers and office equipment
- Software (off-the-shelf)
- Office furniture and fixtures
Section 179 Calculator
Estimate your potential tax savings with our interactive calculator
Bonus Depreciation vs Section 179
Understanding the differences and choosing the right deduction strategy for your business in 2025-2026
The OBBB Act permanently restores 100% bonus depreciation for property acquired and placed in service after January 19, 2025. For property placed in service between January 1-19, 2025, bonus depreciation remains at 40%.
| Feature | Section 179 (2025) | Bonus Depreciation (2025) |
|---|---|---|
| Maximum Deduction | $2,500,000 | Unlimited (100% after Jan 19) |
| Deduction Rate | 100% of cost | 40% (Jan 1-19, 2025) 100% (After Jan 19, 2025) |
| Phase-out Threshold | Begins at $4M, ends at $6.5M | No phase-out |
| Income Limitation | Cannot exceed taxable income | No income limitation |
| Real Property | Qualified improvements only | Yes (including QIP) |
- Equipment purchases under $2.5M
- Used equipment that's new to your business
- Want to selectively choose which assets to expense
- Small to mid-size businesses with limited purchases
- Need immediate cash flow improvement
- Equipment purchases exceed $2.5M
- Purchasing new equipment (not used)
- Have losses or limited taxable income
- Large capital expenditures on real property
- Want to maximize deductions for high-value assets
Section 179 (2026):
- Maximum deduction: $2,560,000 (indexed for inflation)
- Phase-out threshold: $4,090,000 (indexed for inflation)
Bonus Depreciation (2026):
Remains at 100% permanently for qualifying property acquired and placed in service after January 19, 2025, with no expiration date.
You can use both Section 179 and bonus depreciation in the same tax year. A common strategy is to use Section 179 first for specific assets or up to the $2.5M limit, then apply 100% bonus depreciation to remaining qualifying equipment that exceeds the Section 179 limits. Always consult with a tax professional to optimize your deduction strategy.
Frequently Asked Questions
Common questions about Section 179 deductions for 2025
Resources
Helpful tools and information about Section 179 for 2025
Download our complete guide to Section 179 deductions for 2025, including eligibility requirements, qualifying equipment, and filing instructions.
Download PDFUse our detailed checklist to determine if your equipment purchases qualify for Section 179 deductions under the 2025 tax code.
Download ChecklistDownload our detailed worksheet to calculate your potential tax savings with Section 179 deductions for your specific business situation in 2025.
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