How to Take Advantage of This Powerful Tax Deduction

There are a few constants in the small-business world every fall: pumpkin spice everything, a sudden panic about Q4 goals, and that wonderful realization that Section 179 is still here, waiting to make your accountant smile and your tax bill smaller.

And every year around this time, I write an article about this, essentially saying “Don’t sleep on Section 179!” Yet, despite my best efforts, many business owners do. They get so wrapped up in finishing jobs, chasing invoices, or planning for the holiday season that they forget one of the simplest, most powerful tax-saving moves available.

So let’s fix that.

A quick Section 179 refresher (and why it’s so good!)

Section 179 lets you deduct the full purchase price of qualifying business equipment bought and put into use during the year. No slow, multi-year depreciation schedules. Just one big, clean, satisfying deduction right off the top of your taxable income. Boom.

For 2025, the limits have been generously raised mid-year as well: you can now take up to $2.5 million in deductions, with spending capped at $4 million before the benefit starts phasing out. The deduction also covers most tangible business equipment: from production machinery to office equipment to computers, many vehicles, furniture and fixtures, signage, and even some software. New or used qualify as well – it just has to be new to you. And these numbers are for your total equipment spend, and not just one piece. So if you buy a used bulldozer, a new sign for your building, and three computers for the office, you can add up their purchase prices and deduct it all.

If you’re a growing business that needs equipment anyway, it’s basically a “why wouldn’t you?” scenario.

The year-end magic trick

Now, all this being said, there’s another layer to Section 179 that really comes into its own this time of year: financing the equipment and then taking the deduction.

You can finance the qualifying equipment and still take the entire full purchase price deduction this year. This rings true even if you only make a payment or two this year. That’s why this time of year is so special.

Say you finance $100,000 in qualifying equipment between now and year’s end. You’ll make maybe two payments before 12/31. Yet you can deduct the full $100,000 for tax year 2025. If your effective tax rate is 30%, that’s a $30,000 reduction in your taxes. That’s right – you made a whopping two payments, yet saved $30k on your 2025 taxes. That’s a massive win for your bank account and your 2025 numbers.

And if you’re in a state that follows the federal expensing model on your state taxes, your savings could get even sweeter, as you’ll do the same thing there.

I do understand the counter argument: “well, if you take the whole deduction now, then there’s no depreciation the following years”. To which I say “So what? Money now is worth more than money later.” Given the choice, smart businesses always take the money now.

Why this matters in 2025

We’re in a weird year economically – inflation has bounced around, supply chains are mostly healed, but prices on durable goods haven’t really come down. The Fed didn’t cut rates as much as people hoped, and many businesses are still playing catch-up on expansion projects they delayed in 2023 and 2024.

In that environment, Section 179 is less of a “bonus” and more of a strategy. It helps you preserve cash, reduce taxes, and modernize equipment without overextending.

To me, it’s one of the few pieces of the tax code that is 100% pro-business. It rewards investment, productivity, and forward thinking, exactly the behaviors that keep small and mid-sized companies alive and our economy moving.

So yes, it’s still worth shouting about. It’s why I bang out one of these articles annually.

Use it—don’t lose it

One last thought: the clock is ticking. You can’t just order something on December 27th and hope it counts – the equipment must be purchased and placed in service before midnight 12/31. That means delivered, unwrapped, installed, plugged in, booted up, whatever…  

Also, the deduction only works if you have taxable income to deduct from – Section 179 cannot be used if you have a loss (nor can it create a loss).

But those are pretty straightforward, easily-met rules. Add in that almost anything your business could use will likely qualify for the deduction, and you have a scenario that most companies can take advantage of. So if you’ve read this far, definitely look into this.

Ok, time for my end-of-the-article-let’s-keep-Dan-out-of-trouble disclaimer: always talk to your accountant or tax professional before making any financial decisions or tax-related purchases. Using Section 179 is smart, but going through your accountant is even smarter!