Section 179

Equipment purchased in 2025 may qualify for tax deduction

For businesses purchasing equipment, the Section 179 deduction is easy to apply. It gives businesses an incentive to invest in equipment and software to boost efficiency, raise productive capacity, expand products and services, and grow revenue.

Steam roller heavy equipment flattening asphalt

Section 179 Tax Deduction

Tax deduction limit is $1,220,000

Most tangible business equipment qualifies.
Equipment must be purchased and put into use between Jan. 1 and Dec. 31 of the tax year.
You can take full advantage of the deduction when financing equipment.
Submit IRS Form 4562 with your tax filing to claim the deduction.

Consult your tax advisor

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Example

Below is an example of how Section 179 and bonus depreciation could affect business tax deductions.

2025 Example*
Cost of equipment	$100,000
Section 179 deduction	$100,000
Total 1st year tax deduction	$100,000
Tax bracket	35%
Potential tax savings	$35,000
Equipment cost after potential tax savings	$65,000

* This example presents a potential tax scenario based on assumptions that may not apply to your business. Stearns Bank does not offer tax advice. Please consult your tax advisor to determine the tax implications of acquiring equipment for your business.

Section 179 FAQ

What are the Section 179 dollar limits?

The Section 179 annual deduction limit for 2025 is $1,250,000. The highest annual investment limit for qualifying equipment purchases is $4.27 million.

Does the purchase date of my equipment have an impact on my deduction?

Yes. The equipment must be purchased (financed/leased) and put into service between Jan. 1 and Dec. 31 of the current tax year to qualify for the deduction.

How do I know if the property I am purchasing or leasing qualifies for the Section 179 deduction?

Consult IRS guidelines or your tax advisor for a list of equipment that qualifies for Section 179.

How does bonus depreciation work under the new format?

Bonus depreciation has been adjusted to 40% through 2025. Bonus depreciation works in conjunction with the Section 179 deduction. You can take your deduction right off the top and then go back and take depreciation off what is left. So, bonus depreciation is taken after the deduction is used. This may be useful for large businesses spending more than the Section 179 spending limit for that year.

How can I calculate my savings by using Section 179?

Section 179 calculators are available through various resources and websites, including GoodCalculators.com.

Can I buy or lease a vehicle and take the Section 179 deduction?

Generally, a vehicle must have a gross vehicle weight of more than 6,000 pounds. For instance, heavy construction equipment, large passenger vans and tractor trailers are the vehicles that qualify.