Section 179 Expensing Jumps to $2.5 Million: What Businesses Should Know
Part of our 2025 Tax Law Changes guide — the complete breakdown of the One Big Beautiful Bill Act.
Business clients buying equipment got a much bigger immediate write-off. Recent legislation sharply increased the Section 179 expensing limits — a meaningful change for any business investing in machinery, vehicles, software, or other qualifying property.
What Section 179 does
Section 179 lets a business elect to deduct the full cost of qualifying property in the year it’s placed in service, rather than depreciating it over years — subject to an annual dollar cap and a phase-out once purchases exceed a spending threshold.
What changed
The maximum Section 179 deduction was raised to approximately $2.5 million, with the phase-out beginning at a substantially higher spending level (around $4 million), both indexed for inflation. Confirm the exact figures for the year in question.
Section 179 vs. bonus depreciation
- Section 179 is elective, per-asset, capped, and limited to business taxable income (it can’t create a loss).
- Bonus depreciation (also restored to 100%) applies automatically unless you elect out and has no income limit.
- Many businesses use 179 first for targeted assets, then bonus for the rest — model both.
Watch the special rules for vehicles (including SUV caps) and for real-property improvements.
Keep up with the changes
Every new provision brings client questions. Stay current with CPE — browse the catalog, get a full year with Unlimited Access, or compare all plans. Review your state’s rules on our CPE requirements page.
This article is general information for tax and accounting professionals and is not tax or legal advice. Dollar thresholds are indexed and provisions have effective dates and phase-outs — confirm current figures and eligibility with the IRS or qualified counsel before acting or advising clients.
