Section 179 Tax Deductions for 2025
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Deduct up to $2,500,000 with Section 179. Finance your commercial truck or equipment before year-end and keep more money in your business.
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New for 2025: Section 179 Deduction Increased to $2,500,000
Section 179 allows a business to deduct up to $2,500,000 of an asset’s purchase price in the year it’s placed in service—rather than depreciating it over several years. This lets business owners frontload their tax savings, reduce 2025 income taxes significantly, and effectively lower the cost of purchasing commercial trucks and equipment.
Putting more money back in your pocket!
How Do I Get The Section 179 Deduction?
Section 179 is an IRS tax deduction designed to help small to mid-sized businesses, like yours, that own and operate commercial vehicles and equipment.
To be eligible for the enhanced 2025 Section 179 deduction (up to $2,500,000), you must purchase commercial vehicles or equipment after January 19, 2025, and place them in service before December 31, 2025.
Section 179 is not an automatic deduction—you have to elect it. To claim your Section 179 tax deduction, you’ll need to complete IRS Form 4562 when filing your 2025 tax return. Your tax advisor can help you maximize your deduction and ensure proper filing.
Section 179 Deduction Limits for 2025
The Section 179 deduction limits have been significantly increased for 2025 under the One Big Beautiful Bill Act:
Maximum Deduction: $2,500,000
The maximum amount you can deduct for qualifying equipment placed in service in 2025 (doubled from the previous $1,250,000 limit).
Spending Cap (Phase-Out Threshold): $4,000,000
If your total equipment purchases exceed $4,000,000 in 2025, your Section 179 deduction begins to phase out dollar-for-dollar. Once you reach $6,500,000 in total purchases, the Section 179 deduction is completely eliminated.
Business Income Limitation:
Your Section 179 deduction cannot exceed your business’s taxable income for the year. Any unused deduction can be carried forward to future tax years.
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Frequently Asked Questions
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What is the Section 179 deduction limit for 2025?
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What types of commercial vehicles and equipment qualify for Section 179?
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Can I use Section 179 if I finance my equipment instead of buying it outright?
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Does my business income affect my Section 179 deduction?
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What's the deadline to take advantage of Section 179 for 2025?
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Can I combine Section 179 with bonus depreciation?
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Do I need to do anything special to claim Section 179, or is it automatic?
Glossary of Dump Truck Financing Terms
Not sure what certain financing terms mean? We’ve put together a quick glossary of the most common dump truck financing terms. Each definition is written in plain language so owner-operators, fleet owners, and trucking companies can better understand their financing options. This helps you compare loan and lease programs with confidence
Section 179 Deduction
A tax code provision that allows businesses to deduct the full purchase price of qualifying equipment and vehicles in the year they’re placed in service, rather than depreciating the cost over several years. For 2025, businesses can deduct up to $2,500,000 on eligible purchases. Section 179 is designed to incentivize business investment in equipment, vehicles, and other tangible property by providing immediate tax relief.
Placed in Service
The date when equipment or a vehicle is ready and available for business use. For Section 179 purposes, equipment must be both purchased and placed in service by December 31, 2025 to qualify for that tax year’s deduction. Simply ordering or paying for equipment isn’t sufficient—it must be delivered, installed (if applicable), and operational in your business before year-end.
Qualifying Equipment
Tangible personal property purchased for business use that’s eligible for Section 179 deduction. This includes commercial trucks, heavy equipment, machinery, computers, office furniture, and other business assets. To qualify, the equipment must be used more than 50% for business purposes and cannot be real property (like buildings or land). Both new and used equipment qualify for Section 179.
Phase-Out Threshold
The total dollar amount of equipment purchases at which the Section 179 deduction begins to reduce. For 2025, the phase-out threshold is $4,000,000. If your business purchases more than $4 million in qualifying equipment during the year, your maximum Section 179 deduction decreases dollar-for-dollar. Once total purchases reach $6,500,000, the Section 179 deduction is completely eliminated for that tax year.
Business Income Limitation
A rule stating that your Section 179 deduction cannot exceed your business’s net taxable income for the year. If your business has $300,000 in taxable income, your maximum Section 179 deduction is limited to $300,000—even though the overall limit is $2,500,000. Any unused Section 179 deduction can be carried forward to future tax years when you have sufficient income to use it.
IRS Form 4562
The official IRS form titled “Depreciation and Amortization” used to elect the Section 179 deduction. Business owners must complete and file Form 4562 with their tax return to claim Section 179. The form requires you to list all qualifying equipment purchases, their costs, and the amount you’re electing to deduct under Section 179.
Bonus Depreciation
An additional tax deduction that allows businesses to immediately deduct a percentage of the cost of eligible property in the first year. For 2025, bonus depreciation is 60% and phases down annually. Bonus depreciation can be combined with Section 179 for maximum first-year tax savings. Unlike Section 179, bonus depreciation has no dollar limits and no phase-out thresholds based on total purchases.
GVWR (Gross Vehicle Weight Rating)
The maximum operating weight of a vehicle as specified by the manufacturer, including the vehicle itself, passengers, cargo, and fuel. For Section 179 purposes, vehicles over 6,000 lbs GVWR may qualify, though certain limitations apply. Heavy commercial trucks over 14,000 lbs GVWR typically qualify for the full Section 179 deduction without special restrictions.
Listed Property
Certain types of property that the IRS subjects to special recordkeeping requirements because they can easily be used for personal purposes. Listed property includes passenger vehicles, computers, and other assets that might be used outside of business. To claim Section 179 on listed property, you must prove business use exceeds 50% through detailed logs and documentation.
Section 179 Election
The formal decision to use the Section 179 deduction instead of standard depreciation. The election is made by completing IRS Form 4562 when filing your business tax return. Once you elect Section 179 for a specific piece of equipment, you cannot later change to standard depreciation for that asset. The election must be made on a timely filed tax return (including extensions).
Carryforward
The ability to move unused Section 179 deductions to future tax years. If your business income limitation prevents you from using your full Section 179 deduction in 2025, the unused amount carries forward indefinitely until you have sufficient taxable income to use it. Carryforward provisions ensure you don’t permanently lose the benefit of Section 179 deductions.
Taxable Income
For Section 179 purposes, this refers to your business’s net income before the Section 179 deduction is applied. It’s calculated as your gross business income minus ordinary business expenses. Section 179 cannot create or increase a net operating loss, which is why the deduction is limited to your taxable income for the year.
Equipment Financing
A loan or lease used to purchase commercial vehicles or equipment. Section 179 deductions can be claimed on financed equipment in the year it’s placed in service, even though you’re making payments over time. You don’t need to own the equipment outright or pay cash to claim the full Section 179 deduction—financing qualifies.
One Big Beautiful Bill Act (OBBB)
Federal legislation signed into law on July 4, 2025 that doubled the Section 179 deduction limit from $1,250,000 to $2,500,000 and increased the phase-out threshold from $3,130,000 to $4,000,000. The enhanced limits apply to qualifying equipment purchased and placed in service after January 19, 2025.
Capital Expenditure (CapEx)
Money spent to acquire or upgrade physical assets like equipment, vehicles, or machinery. Section 179 allows businesses to treat capital expenditures as ordinary business expenses in the year of purchase, rather than capitalizing and depreciating them over multiple years. This provides immediate tax relief instead of spreading deductions over 5-7 years.
Depreciation
The standard method of deducting the cost of business assets over their useful life, typically 5-7 years for vehicles and equipment. Section 179 is an alternative to depreciation that allows you to deduct the entire cost immediately. If you don’t elect Section 179, you’ll depreciate the asset using Modified Accelerated Cost Recovery System (MACRS) schedules.
Heavy Vehicle Exception
A provision that allows certain heavy vehicles (over 6,000 lbs GVWR) to qualify for enhanced Section 179 treatment. Commercial trucks, vans, and SUVs over 6,000 lbs used primarily for business can potentially qualify for the full $2,500,000 deduction. However, vehicles between 6,000-14,000 lbs may have specific dollar caps depending on vehicle type and classification.
Section 179 Property
A tax term for tangible personal property purchased for use in a trade or business that qualifies for Section 179 expensing. This includes machinery, equipment, vehicles, computers, and off-the-shelf software. Real property (buildings, land) and property used primarily outside the US do not qualify as Section 179 property.
SUV Exception
A specific Section 179 rule for sport utility vehicles. SUVs with GVWR between 6,000-14,000 lbs are subject to a $31,300 Section 179 deduction cap (as of 2025), even though the overall limit is $2,500,000. This prevents abuse of the deduction for luxury vehicles. Heavy-duty commercial trucks and vans over 14,000 lbs are not subject to this cap.
Active Business Income
Income generated from active participation in a trade or business, as opposed to passive income from investments or rental properties. For Section 179 purposes, only active business income counts toward the income limitation. This ensures Section 179 benefits businesses actively engaged in commerce, not passive investors.
Equipment Lease
A financing arrangement where a business pays to use equipment without owning it outright. For Section 179 purposes, certain types of leases (capital leases or leases with purchase options) may allow the lessee to claim Section 179 deductions. Operating leases typically do not qualify. Consult your tax advisor to determine if your lease structure qualifies.
First-Year Expensing
Another term for Section 179 deduction, referring to the ability to expense (deduct) the full cost of qualifying property in the first year it’s placed in service. First-year expensing provides immediate tax relief instead of spreading deductions over multiple years through depreciation.
De Minimis Safe Harbor
A separate tax provision that allows businesses to immediately expense items costing $2,500 or less per item (or $5,000 for businesses with applicable financial statements). While similar in effect to Section 179, the de minimis safe harbor has different rules and doesn’t count against your Section 179 limit. Many businesses use both provisions to maximize first-year deductions.
Modified Accelerated Cost Recovery System (MACRS)
The standard depreciation method required by the IRS for most business assets if you don’t elect Section 179. MACRS assigns recovery periods (typically 5-7 years for vehicles and equipment) and prescribes annual depreciation percentages. Section 179 allows you to bypass MACRS by deducting the full cost immediately.
Section 179 Recapture
A tax consequence that occurs if you sell or convert Section 179 property to personal use before the end of its recovery period. If business use drops below 50%, you may have to “recapture” (pay back) part of the Section 179 deduction as ordinary income. Recapture rules prevent taxpayers from claiming large deductions and then immediately removing assets from business use.
Tax Year
The 12-month period used for calculating annual tax returns. For most businesses, this is the calendar year (January 1 – December 31). Equipment must be placed in service during your tax year to claim Section 179 for that year. If you have a fiscal year that differs from the calendar year, your Section 179 deadline follows your fiscal year-end.
Qualified Business Income (QBI)
Your net business income that may be eligible for the qualified business income deduction (Section 199A). Section 179 deductions reduce your QBI, which can affect your eligibility for other tax benefits. Tax planning should consider the interplay between Section 179 and QBI deductions to optimize overall tax savings.
Commercial Vehicle
A vehicle used primarily for business purposes rather than personal transportation. For Section 179, commercial vehicles include trucks, vans, trailers, and specialty vehicles used in trade or business activities. To qualify for Section 179, commercial vehicles must be used more than 50% for business, and certain weight and classification requirements may apply.
Asset Class
IRS classifications that determine the recovery period for depreciating property. Common asset classes include 5-year property (cars, trucks, computers) and 7-year property (office furniture, machinery). Understanding asset classes helps determine standard depreciation schedules if you don’t elect Section 179, though Section 179 allows immediate expensing regardless of asset class.
Final Regulations
Official IRS rules and guidance that clarify how Section 179 and other tax provisions should be applied. The IRS periodically updates Section 179 regulations to reflect legislative changes, such as the 2025 limit increases under the One Big Beautiful Bill Act. Businesses should follow final regulations (not just the tax code) to ensure proper compliance.
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