Section 179 Tax Deductions

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. That means that if a business buys (or leases) a piece of qualifying equipment, they can deduct the full purchase price from their gross income. It's an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.

How Does It Work?

When a business buys certain items of equipment, it typically gets to write them off a little at a time through depreciation. In other words, if a company spends $50,000 on a machine, it gets to write off maybe $10,000 a year for five years. Section 179 allows business owners to write off the entire equipment purchase price for the year they buy it.

Are There Limits?

Section 179 has limits – there are caps to the total amount written off ($2,500,000 for 2025), and limits to the total amount of the equipment purchased ($4,000,000 in 2025). The deduction begins to phase out dollar-for-dollar after $3,050,000 is spent by a given business, so this makes it a true small and medium-sized business deduction.

Who Is Eligible?

To qualify for the Section 179 Deduction, the equipment purchased or financed must be placed into service between January 1, 2025 and December 31, 2025.

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