Section 179 Tax Deduction For 2025
We gathered up everything you need to know for 2025.
Section 179 tax deduction for 2025: What you need to know.
If you own a small business, the Section 179 deduction is one of the most essential tax codes you need to be familiar with. It lets you deduct all or part of the cost of equipment purchased or financed and put into place before December 31, 2025.
The only stipulation is that the equipment needs to qualify for the deduction. Balboa Capital has all the information you need to know, along with a helpful Section 179 calculator. It’s a good idea to become familiar with this tax incentive to plan for your business’s future regarding capital equipment purchases.
Section 179 limits and information on the Balboa Capital website are for illustrative purposes only; the Section 179 limits and information provided are subject to change by the IRS. Please visit the IRS website or consult a qualified tax professional for confirmation of the current Section 179 limits and information related to your situation.
Section 179 tax deduction limit for 2025.
For 2025, the Section 179 deduction and phase-out limit were increased for inflation. In 2025, the Section 179 deduction limit for qualifying equipment purchases is $1,250,000, and the phase-out threshold is $3,130,000.1
In 2025, bonus depreciation is 40% for equipment placed into service from January 1, 2025, through December 31, 2025.2 Bonus depreciation applies to used equipment, though it must be “first use” by the business purchasing or financing the used equipment.
Source:
1 https://www.irs.gov/pub/irs-drop/rp-24-40.pdf
2 https://www.nolo.com/legal-encyclopedia/50-bonus-depreciation-likely-extended-2014.html
How do I get the deduction?
Section 179 is a tax deduction for businesses that have placed new or used equipment into service within the year purchased or financed. This deduction is not automatic and must be elected. To elect to take the deduction, you’ll need to fill out IRS form 4562.
Make sure this completed form is attached to your tax return. Not all types of equipment qualify; therefore, you should consult your accountant or tax professional before making any purchases.
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