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Section 179 Tax Deduction

Section 179 of the US tax code allows businesses to deduct the full purchase price of qualifying equipment, vehicles, or software that is purchased or financed within the tax year. In other words, if you acquire eligible equipment, you can write off the entire cost against your taxable income for that year. This deduction encourages businesses to invest in themselves by making it more affordable to purchase the tools and equipment they need to grow.

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What’s New in 2025

  • Section 179 deduction limit: $2,500,000.
  • The phase-out threshold begins at $4,000,000 for qualifying purchases. Above this, the deduction reduces dollar-for-dollar.
  • Bonus depreciation has been restored to 100% for qualified property acquired and placed in service after January 19, 2025.

What This Means for You

  • If you finance or buy qualifying equipment or software in 2025, you may deduct up to $2,500,000 of the cost in the same tax year.
  • The total you can deduct starts to shrink once your purchases exceed $4,000,000. Once purchases hit $6,500,000, the Section 179 deduction is phased out completely.
  • Bonus depreciation allows you to deduct 100% of the cost (new or used qualifying property) for property placed in service after the cutoff date.
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How This Can Benefit You

  • You can achieve major tax savings by expensing large equipment purchases immediately instead of spreading them out over several years.
  • Often, the tax savings from Section 179 plus bonus depreciation can exceed your first-year payments, boosting cash flow.
  • This can make equipment purchases more affordable now, rather than delaying them due to cost or budget concerns.

Reminder: Check with your accountant for IRS guidelines.

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