If you’re a business owner planning equipment or technology upgrades, the 2025 update to Section 179 of the IRS tax code is worth your attention. The annual deduction limit has increased from $1 million to $2.5 million, giving small and mid-sized businesses a bigger opportunity to reduce taxable income while reinvesting in growth.
While RCS is not a tax or financial advisor, we believe it’s important to keep our customers informed about opportunities that could impact how you plan investments in your business.
What Is Section 179?
Section 179 allows businesses to deduct the full purchase price of qualifying equipment in the year it’s purchased or financed. Instead of depreciating assets over several years, you may be able to deduct the entire cost right away.
Example:
If your business spends $2 million on qualifying equipment in 2025, you may be able to deduct the full amount in the same year. Depending on your tax rate, this can translate to hundreds of thousands in potential savings, capital you can redirect into operations, staffing, or expansion.
Section 179 Updates for 2025
- Deduction limit: Up to $2.5M in equipment purchases each year (up from $1M)
- Phase-out threshold: Begins once total purchases exceed $4M in a year
- Best fit for: Small and mid-sized businesses that purchase moderate to large amounts of equipment while staying under the $4M cap
What Purchases Qualify for Section 179?
Most tangible business equipment qualifies, including:
- Point-of-Sale (POS) Hardware
- Computers, servers, and networking equipment
- Machinery and production tools
- Office furniture and fixtures
- Vehicles used for business purposes
Why Section 179 Matters for Business Growth
Immediate deductions free up cash flow, allowing businesses to reinvest in:
- Technology upgrades like POS hardware
- Operational efficiency through new machinery or automation
- Expansion initiatives such as new vehicles or infrastructure
- Workforce growth by redirecting savings into staffing and training
For the retail industry, this update makes investing in modern tools more cost-effective.
Smart Strategies to Maximize Section 179
Every business situation is unique, so it’s important to consult your tax advisor. But here are some strategies to consider:
- Plan purchases around the tax year – Buying before year-end may allow you to take the deduction immediately.
- Spread out larger purchases – If you anticipate upgrades in the next few years, map out purchases to avoid exceeding the $4M cap in a single year.
- Leverage bonus depreciation – Section 179 may be combined with bonus depreciation for even greater potential savings.
How RCS Can Support Your Business
While we don’t provide tax advice, RCS can help your business identify technology investments that align with growth goals. Many of our customers leverage Section 179 to upgrade tools that can drive efficiency, improve customer experience, and position your business for long-term success.
Final Takeaway
The new $2.5 million Section 179 deduction is more than just a tax benefit, it’s an opportunity to strengthen your business with smarter investments.
Ask yourself:
- Do you have equipment or technology upgrades planned for this year?
- Have you spoken with your tax advisor about how Section 179 could fit into your strategy?
At RCS, our role is to equip you with the right technology insights so you can work confidently with your financial advisors and make decisions that move your business forward.
