What is the Section 179 Tax Deduction?

Section 179 allows businesses to 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 tax year. This deduction is designed to encourage business owners to invest in new 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?

Deduction limit: Up to $1,250,000 in qualifying equipment purchases.

Spending cap before phase-out: $3,050,000 (capital purchase limit).

  • The deduction begins to phase out dollar-for-dollar after $3,050,000 in total equipment purchases.

For comparison:

  • 2024 limit was $1,220,000 with a $3,050,000 phase-out.

  • 2023 limit was $1,160,000 with a $2,890,000 phase-out.

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:

  • Bonus depreciation is 40% in 2025 and applies to both new and used equipment.

  • This allows businesses to deduct a portion of the equipment cost beyond the Section 179 spending limit.

  • Bonus depreciation will continue to decrease as follows:

Year Equipment is Placed in Service % Depreciation
2024 60%
2025 40%
2026 20%
2027 and later years 0%

*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.

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.