Buying equipment? Maximize tax savings with Section 179

Smart equipment buyers know that timing is everything—and Section 179 makes NOW the perfect time to invest. Instead of waiting years to see the benefits, you can take full advantage of your purchase before year-end and keep more money working for your business. With the July 2025 bill approval (named the One Big Beautiful Bill Act or OBBB Act), you can save money now, rather than spreading the savings over several years. In this article, we'll move through Section 179, bonus depreciation, and how your options have increased this year. 

Simplified Guide to Section 179

Many businesses use Section 179 as part of their year-end planning—buying or upgrading equipment they already plan to use next year to lock in savings now. Reviewing your projected income and tax obligations with a CPA can reveal how much to invest before December 31. The important thing to note is the OBBB Act allows buyers to deduct the cost of this year’s purchase as long as it is in a new owner's possession and ready to work prior to 2026.

Section 179 encourages businesses to write off the cost of new or used heavy machinery  purchased and ready to work within the tax year and imposes a cap on the amount of money that can be deducted. Rather than spreading depreciation over multiple years, you can deduct the full cost (up to $2.5M) right away—boosting your cash flow and unlocking instant tax advantages.

Qualifying Equipment

• Tangible business property (machinery, vehicles, computers, etc.)
  
  

• Must be used more than 50% for business
  
  

• Excludes buying of land or buildings (but can utilize for improvements)
  
  

• This also includes used equipment like iron found at purplewave.com

Why Is This Important? 

• Businesses can claim the cost of the equipment up to a certain amount on this year’s taxes.

• You're responsible for choosing to use it and can deduct up to $2,500,000 - keep in mind these must be qualifying purchases. 

• Businesses can claim a deduction for new or used equipment, allowing profitable businesses to increase their cash flow. 

• Because Section 179 begins phasing out dollar-for-dollar once total qualifying equipment purchases exceed $4 million, the deduction gradually shrinks until it reaches zero at $6.5 million in spending. In other words, when a business purchases more than $6.5 million in qualifying equipment, it completely loses the ability to use the Section 179 deduction for that tax year.

• There are other rules to follow when it comes to business vehicles that can be viewed at https://www.section179.org/section_179_deduction/ 

 

Bonus Depreciation - How Is It Different? 

As you've navigated through several articles and web pages trying to make sense of the new opportunities you have this year, the term bonus depreciation has probably shown up several times. It's important to note that this is not the same as the Section 179 opportunity. 

Bonus Depreciation, effective as of January 19, 2025, is now 100 percent. Historically, businesses could claim a tax deduction on a portion of the equipment cost during the first year it was in service, and the remaining amount would be deducted over additional years. 

With this change, businesses can claim 100 percent of their equipment transactions in the year they put it into service, allowing them to write off the entire cost that year, and drastically increasing their tax savings. 

One key takeaway is that the equipment can't just be purchased and then claim the bonus 

depreciation at tax time; it has to have been put into service by the end of the calendar year. 

How to Maximize Your Deduction Before Year-End 

• With the Section 179 and bonus depreciation updates, equipment buyers can reduce taxes by purchasing new or used equipment that can be put to work before the end of the year, thereby maximizing tax deductions. 

• Expect to see an increase in the number of buyers online looking for equipment. 

• Sellers could see higher returns due to aggressive bidding.  

How Can Businesses Take Advantage? 

• Discover equipment needs for your business. Review any equipment purchases on or after January 19 to determine if it was put into service. 

• Review all of the tax laws surrounding Section 179 and bonus depreciation, and consult your tax advisor for suggestions and to confirm eligibility requirements. 

• Ensure you keep detailed records of all purchases to maximize tax savings this year. 

If you're planning on a large equipment purchase this year, now's the time to put it into action. Browse current listings of heavy equipment, trucks, and farm machinery ready to be put into service before year-end. Make sure you're speaking with your tax advisor and taking full advantage of Section 179 and Bonus Depreciation!

Note: While Section 179 and bonus depreciation may provide significant advantages for many people, Purple Wave Auction encourages you to speak with your tax advisor to understand how these new laws apply to your business. Purple Wave has provided this information for educational purposes only, and it should not be considered tax or legal advice.