What Small Business Owners Need to Know About the Section 179 Expensing Cap in 2025

If you’re planning to invest in equipment or business upgrades this year, Section 179 might be your new best friend. It’s one of the most popular tax deductions available to small businesses—and it’s gotten a refresh under the One Big Beautiful Bill.

Here’s what you need to know about how it works, what the expensing cap looks like in 2025, and how to use it strategically.

What Is Section 179?

Section 179 lets you deduct the full purchase price of qualifying equipment and software in the year you put it to use—rather than depreciating it slowly over time.

Unlike bonus depreciation (which we covered here), Section 179 has a cap on how much you can deduct annually. For 2025, that expensing cap is expected to increase, with many projections estimating a cap of around $1.3 million (pending IRS confirmation).

That’s a major win for small and mid-sized businesses.

What Qualifies?

Most tangible business-use equipment and off-the-shelf software purchased or financed during the year will likely qualify.

💼 Typical examples include:

• Equipment and machinery

• Business vehicles (we’ll talk about the GVWR rule in a future post)

• Computers and software

• Office furniture and fixtures

• Improvements to nonresidential property (like security systems)

  
  

The key is that the asset must be used for business at least 50% of the time and be placed in service during the tax year.

Why It Matters

Here’s why this matters for real-world business owners:

• You can reduce your taxable income immediately

• You can use it with financing—meaning you’re deducting the full cost now, even if you’re paying it off over time

• You can combine Section 179 with bonus depreciation in many cases, depending on how much you spend

  
  

It’s a rare case where the IRS essentially rewards you for reinvesting in your business.

Section 179 Expensing Cap (2025)

Here’s the fine print:

• In 2025, the expensing limit is projected to be $1.3 million

• The phase-out threshold is projected at $3 million (spend more than this, and the deduction starts to shrink)

• The deduction cannot exceed your business’s taxable income

  
  

Translation? This is aimed at small to mid-sized businesses. Large capital-intensive companies may bump into the limits, but for most entrepreneurs, the cap is more than enough to make a real impact.

Real-World Example

Let’s say you buy $100,000 worth of qualifying equipment this year. Under Section 179, you may be able to deduct the entire $100,000—which could save you tens of thousands in taxes depending on your bracket.

If you finance that equipment over 5 years, you’re getting the tax benefit now while paying it off gradually.

Pro Tip: Know When to Use Section 179 vs Bonus Depreciation

• Use Section 179 first, especially if you want more control over your deduction timing

• Use bonus depreciation for spending over the Section 179 cap—or for assets not eligible under Section 179

• Talk to your tax professional to find the right combo for your situation

  
  

Final Thoughts

The Section 179 deduction isn’t just a tax code—it’s a strategic planning tool. It lets business owners invest confidently, knowing they can potentially recoup a major portion of the cost at tax time.

If you’re considering buying or financing equipment this year, it’s worth reviewing your options while this deduction is still in full swing.

👉 Want to see how Section 179 could help you this year?Brilliance Funding can help you explore financing options that make the most of your purchase and your tax position. Let’s talk about what fits your goals.

About the Author

   Jared Holmes is the founder of Brilliance Funding Partners, where he helps business owners navigate the commercial lending landscape with confidence. With 9 years of hands-on experience in SBA lending, equipment financing, and working capital solutions, Jared focuses on asking the right questions and delivering financing strategies that make sense for each business. Connect with Jared for a personalized conversation about your options.