Small Business Tax
Section 179: How to Deduct Equipment Purchases the Year You Buy
Normally you deduct equipment slowly over years. Section 179 lets you deduct it all now, a powerful tool if you use it deliberately.
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01What Section 179 Does
It lets you deduct the full cost of qualifying equipment in the year you put it into service, instead of depreciating it over its useful life. That front-loaded deduction can meaningfully lower a profitable year's taxes.
02What qualifies for Section 179?
Business equipment, machinery, computers, off-the-shelf software, and certain vehicles generally qualify. It must be used more than half the time for business. See the IRS Publication 946 for specifics.
03The Limits
There's an annual dollar cap and a spending threshold above which the deduction phases out. It's built for small and mid-sized businesses, not massive capital programs.
04Section 179 vs. Bonus Depreciation
Bonus depreciation is a related tool with its own rules. Sometimes they're used together. Which comes first affects the outcome, so it's worth planning.
05Using It Strategically
Because it's optional, you can time purchases and elect it in years when the deduction helps most. Don't buy equipment just for the write-off. But if you need it, timing matters.
Common questions
What does Section 179 let me deduct?
The full cost of qualifying equipment in the year you put it into service, instead of depreciating it over its useful life. In a profitable year that front-loaded deduction can lower the tax bill meaningfully.
What kind of purchases qualify?
Business equipment, machinery, computers, off-the-shelf software and certain vehicles, provided the item is used more than half the time for business. IRS Publication 946 has the specifics.
Should I buy equipment just for the deduction?
No. The deduction is optional, so the right use is to time purchases you already need into the years when the write-off helps most, and to plan how it sits alongside bonus depreciation.
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