WHAT IS SECTION 179?
Section 179 of the IRS tax code permits businesses to deduct the full purchase price of qualifying equipment purchased or financed during the current tax year. That means that if you buy (or lease) a piece of qualifying (new or used) equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
For Coastline Equipment customers that means that qualifying new and used equipment purchases can be used to minimize taxes on hard earned revenue, during a difficult year, and you can add to your fleet helping you replace aging equipment or expand your capabilities.
So, who is eligible for Section 179 and its tax benefits? All businesses that purchase or finance equipment are eligible to use Section 179 to write off their purchases in 2025. There are limitations to the dollar amounts that can be written off, but those details can be found below.
How Can Section 179 Work for Me?
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Deduct New and Used Equipment Purchases
The Section 179 deduction is available on both new and used equipment, with a write-off limit of $2,500,000 for tax year 2025. To qualify, equipment must be purchased, financed, and placed into service between January 19, 2025, and December 31, 2025.
The total amount that can be spent on eligible equipment before the deduction begins to phase out is $4,000,000. Once your company’s purchases exceed this cap, the deduction is reduced on a dollar-for-dollar basis.
This spending cap ensures that Section 179 remains a true small business tax incentive—larger companies that spend more than $4,000,000 on equipment will not qualify for the full deduction.
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100% Bonus Depreciation
Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. The Bonus Depreciation is available for both new and used equipment.
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Write Off Repairs
Regularly scheduled, routine maintenance does not have to be capitalized. Under Internal Revenue Service (IRS) Reg. 1.263(a)-3, you can expense routine maintenance on equipment to keep it in "ordinarily efficient operating condition." Routine maintenance can be performed at any time during a piece of equipment's useful life, but in order to be considered routine, you should reasonably expect that the activity will be performed more than once during the life of the equipment.
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Trading in Equipment Can Help you Save
Trading in a machine has certain tax advantages over selling it. "Let's say you buy a 524 P-Tier Wheel Loader for $200,000, when you purchase the machine, you take an expense deduction and write off the cost of the machine. When you sell it for $95,000 three years later, you will incur a taxable gain. If you take the same 524 P-Tier Wheel Loader and trade it in toward the new one, the tax basis on the new machine is reduced, and there is no taxable gain to pay."
Things to Be Aware of with Section 179
Two Key Tax Benefits
Section 179 provides a deduction on the cost of new and used capital equipment purchases - an investment cap applies. Deduction limit is $2,500,000.
Bonus depreciation can be combined with the Section 179 deduction for additional savings. Bonus depreciation enables you to take additional depreciation on new and used (new to you) capital equipment purchases. Bonus depreciation returns to 100% for property acquired and placed in service after January 19, 2025.
Section 179’s “More Than 50 Percent Business-Use” Requirement
The equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction. Simply multiply the cost of the equipment, vehicle(s), and/or software by the percentage of business-use to arrive at the monetary amount eligible for Section 179.
Consult Your Tax Professional
Coastline Equipment is happy to share high-level information regarding federal tax incentives for businesses. However, when making capital purchases to maximize tax incentives, please be sure to consult your tax professionals to ensure proper use of the tax programs available for new and used equipment purchases.
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