What is the Section 179 Tax Deduction?
Section 179 allows businesses to immediately write off the full value of qualifying business equipment, such as forklifts and other material-handling machinery, that is purchased and put into service within the 2025 tax year. This deduction is designed to encourage business owners to invest in new equipment and used equipment offering an incentive to upgrade or expand their fleet, particularly with year-end purchases.
What Purchases Qualify for Section 179 Deduction?
- Automobiles
- Office Furniture
- Office Equipment
- Signs (if movable)
- Machinery and Equipment (Forklifts)
- Tractors
- Trucks
- Computers
What Are the Limits for Section 179 Deductions? (Since: One Big Beautiful Bill Act (OBBBA) of 2025)
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Deduction limit: Up to $2,500,000
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Phase-out threshold: Begins after $4,000,000 in total purchases
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Deduction reduces dollar-for-dollar once you exceed $4M
Bonus Depreciation (2025)
In addition to Section 179, bonus depreciation offers another way to maximize savings:
- 100% bonus depreciation for assets placed in service on or after January 19, 2025
- 40% bonus depreciation for assets placed in service before January 19, 2025
- Applies to both new and used equipment
- Can be used after reaching Section 179’s $2.5M deduction limit
Recent Year Comparisons
| Year | Deduction Limit | Phase-Out Threshold |
|---|---|---|
| 2025 (OBBBA) | $2,500,000 | $4,000,000 |
| 2024 | $1,220,000 | $3,050,000 |
| 2023 | $1,160,000 | $2,890,000 |
Note: Section 179 applies whether equipment is purchased outright or financed.
Calculate your savings using the Section 179 Tax Deduction Calculator
Understanding Bonus Depreciation Deductions:
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Bonus depreciation is 40% in 2025 and applies to both new and used equipment.
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This allows businesses to deduct a portion of the equipment cost beyond the Section 179 spending limit.
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Bonus depreciation will continue to decrease as follows:
| Year Equipment is Placed in Service | % Depreciation |
|---|---|
| 2024 | 60% |
| 2025 (before Jan 19) |
40% |
| 2025 (on/after Jan 19) |
100% |
*Equipment must be purchased or financed AND put into service or delivered by midnight on December 31, 2025, to qualify for the 2025 deduction.
How to Claim the Deduction:
- Fill out the IRS Form 4562 and attach it to your tax return.
- Select the Section 179 deduction option when filing for the relevant tax year. (see instructions here)
Contact us today for help with your equipment purchase before year-end.
Toyota Material Handling Solutions does not provide tax, legal or accounting advice. Dealers and customers are encouraged to speak with their own tax adviser and professionals. Equipment must be placed into service by December 31, 2025.