Take Advantage of Section 179 to Maximize Your Year-End Business Tax Savings
Sec 179 of the U.S. Internal Revenue Code allows businesses to deduct the full purchase price of qualifying equipment and software in the year they are placed in service rather than depreciating them over several years. This accelerated depreciation method encourages smaller businesses to invest in themselves by purchasing equipment, vehicles, and software.
For qualified property placed in service after 2024 the maximum section 179 deduction is $2,500,000 which begins to phase out when total equipment cost exceeds $4,000,000.
What qualifies under Section 179?
To qualify, property must be used for business purposes more than 50% of the time. Personal use property, land improvements and most real estate do not apply. However, certain Qualified interior improvements to non-residential buildings are eligible including:
- Roof replacements
- Drywall, ceilings, interior doors
- HVAC, electrical, and plumbing (Non-structural)
- Fire and alarm systems
What is excluded under Section 179?
These improvements must be made after the building is placed in service and must not involve structural changes. The following are excluded from Sec 179:
- Land
- Additions and expansions
- Elevator/escalators
- Improvements to rental properties unless treated as active business
To claim the deduction businesses must file Form 4562 detailing asset, cost and business use percentage.
Sec 179 is a great opportunity for business owners to take advantage of but there are limits and exceptions that you must be aware of. In addition to Section 179, Bonus Depreciation is back to 100% for tax years 2025. We’re here to help you navigate these opportunities, plan strategically, and ensure full compliance with regulations. Contact us with any questions.
