Maximizing Your Tax Savings | Section 179 & Bonus Depreciation

Unlock immediate tax benefits by taking full advantage of Section 179 expensing and bonus depreciation this year. Many business owners leave thousands—or even tens of thousands—of dollars on the table by overlooking these powerful deductions.

Section 179 Expensing

Section 179 allows businesses to deduct the full purchase price of qualifying equipment and software in the year of purchase, rather than depreciating it over several years. For 2025, the maximum Section 179 deduction is $1,220,000, with a phase-out threshold beginning at $3,050,000 in total equipment purchases.

Qualifying property includes machinery, equipment, computers, software, office furniture, certain vehicles, and qualified improvement property for retail, restaurant, and leasehold spaces.

Bonus Depreciation

Bonus depreciation provides additional first-year deductions beyond Section 179. Under current law, the bonus depreciation percentage has been phasing down: 100% through 2022, 80% in 2023, 60% in 2024, and 40% in 2025. However, recent legislation may have restored 100% bonus depreciation—check with your CPA for current rules.

Unlike Section 179, bonus depreciation has no dollar limit and can create or increase a net operating loss.

Vehicles: Special Considerations

Heavy SUVs, trucks, and vans with gross vehicle weight ratings exceeding 6,000 pounds qualify for enhanced deductions. Section 179 allows up to $30,500 for heavy SUVs, while heavier vehicles may qualify for unlimited Section 179 treatment. Passenger vehicles have more limited deductions due to luxury auto caps.

Strategic Timing

Equipment must be placed in service by December 31st to qualify for current-year deductions. "Placed in service" means the equipment is ready and available for use—not just ordered or paid for. Plan your purchases with this deadline in mind.

However, if you expect higher income in future years, deferring purchases might provide greater tax benefit. Your CPA can model the optimal timing based on your specific projections.