Section 179 & Bonus Depreciation: What Changed for 2025

If your business is planning to purchase equipment, vehicles, or technology this year, two powerful tax deductions are available that could significantly reduce your taxable income: Section 179 expensing and bonus depreciation. Here is what you need to know for 2025.

Section 179 allows businesses to immediately deduct the full cost of qualifying equipment and software placed in service during the tax year, rather than depreciating it over several years. For 2025, the maximum Section 179 deduction has increased to $2,500,000, with a phase-out beginning at $4,000,000 in qualifying purchases.

Bonus depreciation provides an additional first-year deduction on top of Section 179. A significant legislative development: under recent federal tax legislation, 100% bonus depreciation has been restored for qualifying property acquired after January 19, 2025. This means many businesses can now fully expense eligible asset purchases in the year they are placed in service.

Qualifying property generally includes machinery, equipment, computers, furniture, and certain improvements to non-residential real property. Passenger vehicles are subject to separate annual limitations.

Key planning considerations: time your purchases before December 31, verify the property is placed in service (not just ordered), and make sure your business has sufficient taxable income to benefit — or understand how carryforward rules apply to your situation.

Key Takeaways

• 2025 Section 179 limit: $2,500,000 (phase-out at $4,000,000)
• 100% bonus depreciation restored for property acquired after January 19, 2025
• Applies to new and used qualified property
• SUV limitation: $31,300 for Section 179 on sport utility vehicles
• Coordinate both deductions with your CPA before year-end

Quick Summary