As 2025 draws to a close, business owners are once again evaluating strategies to reduce taxable income and strengthen year-end cash flow. One of the most effective tools available remains the Section 179 tax deduction, and this year, it’s more powerful than ever. Thanks to the updates introduced through the One Big Beautiful Bill Act (OBBBA), Section 179 and bonus depreciation have expanded, giving businesses unprecedented opportunities to reinvest in their operations while maximizing tax efficiency.
Understanding Section 179
Section 179 allows businesses to deduct the full purchase price of qualifying equipment, software, and certain property improvements in the year they are placed in service, rather than depreciating them over several years. This approach accelerates deductions and frees up capital, enabling companies to reinvest those funds into growth, technology, and innovation.
Key 2025 Updates You Should Know
For 2025, the Section 179 deduction limit has increased to $2,500,000, offering greater flexibility for businesses making capital investments. The deduction begins to phase out once total qualifying purchases exceed $4,000,000 and phases out entirely at $6,500,000. Additionally, the IRS has reinstated 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025. For equipment purchased before that date, a 40% bonus depreciation rate applies. These enhancements make 2025 one of the most favorable years in recent memory for businesses planning significant equipment or technology upgrades.
Maximizing the Benefits of Section 179 and Bonus Depreciation
To make the most of these incentives, businesses should apply Section 179 first to fully deduct eligible purchases up to the $2,500,000 limit. Bonus depreciation can then be applied to remaining qualified assets, enabling a 100% deduction on property acquired after January 19, 2025. Unlike Section 179, bonus depreciation is not limited by taxable income, which allows even businesses reporting lower or negative income to take full advantage of these provisions.
Eligible Assets Under Section 179
Qualifying property includes tangible assets such as machinery, office equipment, computers, and off-the-shelf software. It also extends to qualified improvements made to nonresidential real property, such as HVAC systems, roofing, fire protection, alarm systems, and security infrastructure. Both new and used property can qualify as long as it is new to your business and used primarily for business purposes.
Important Deadlines and Compliance
To claim the Section 179 deduction for 2025, all equipment must be both purchased and placed in service by December 31, 2025. It’s critical to plan ahead, particularly for large or custom equipment that may require longer installation lead times. Coordinate closely with your tax advisor to ensure compliance with both federal and state requirements, as not all states conform to federal bonus depreciation rules. Maintaining proper documentation of purchase dates, business use, and asset details is also essential for audit readiness.
Example in Action
If your business invests $3,500,000 in qualifying assets this year, you can deduct $2,500,000 under Section 179 and apply 100% bonus depreciation to the remaining $1,000,000. As a result, the entire $3,500,000 investment can be deducted in 2025, dramatically reducing taxable income and preserving liquidity. In comparison, under 2024 rules, deductions would have been capped at $1,220,000 with only 60% bonus depreciation available, highlighting the significant advantage of acting under the 2025 provisions.
Why It Matters for BCS Clients
For companies in technology, AV integration, security, and healthcare infrastructure, these expanded tax incentives make 2025 an ideal year to upgrade systems and equipment. Whether you’re enhancing your network infrastructure, implementing new software, or upgrading critical operational technology, the enhanced Section 179 deduction and bonus depreciation provisions can help offset costs while driving long-term business value.
Act Before the Deadline
The benefits of Section 179 and bonus depreciation are only available for assets purchased and placed in service by December 31, 2025. Review your capital improvement plans now, consult your tax advisor, and take advantage of these expanded limits while they remain in effect. By acting before year-end, you can strengthen your business operations, enhance productivity, and achieve meaningful tax savings that carry into 2026.