A Smart Way to Save on Equipment: Section 179 Explained

If you're planning to buy or finance business equipment this year, there's a powerful tax incentive you should know about: the Section 179 tax deduction.

Section 179 allows businesses to deduct the full purchase price of qualifying equipment—whether it’s bought outright or financed—within the same tax year. And with equipment costs rising, these tax savings can significantly offset your investment.

Want to see your potential savings? A Section 179 tax deduction calculator makes it easy to estimate what you could save based on your equipment spend. In this post, we’ll walk you through how the deduction works, who qualifies, and how to use a calculator to plan your next purchase or financing deal.

What Is the Section 179 Deduction?

Section 179 is a U.S. tax code provision designed to encourage small and mid-sized businesses to invest in themselves. It lets you deduct the full cost of qualifying equipment (up to an annual limit) rather than depreciating it over several years.

2025 Deduction Limits:

  • Maximum deduction: $1,220,000

  • Spending cap on equipment purchases: $3,050,000

  • Applies to new and used equipment used for business

  • Equipment must be placed in service during the 2025 tax year

How Does Section 179 Work? A Simple Example

Let’s say your business finances a new packaging line for $150,000. Here's how the math could work:

Step

Amount

Equipment cost

$150,000

Section 179 deduction

$150,000

Estimated tax rate (example)

24%

Estimated tax savings

$36,000

 

You’d save roughly $36,000 on your tax bill, bringing your net equipment cost to about $114,000.

 

✅ Tip: Even if you finance the equipment and only make one payment in 2025, you can still deduct the full $150,000 if it’s placed in service that year.

 

Who Qualifies for Section 179?

Most small and mid-sized businesses across industries can take advantage of this deduction if they meet a few key criteria:

✔ Business Use Requirement:

The equipment must be used for business more than 50% of the time.

✔ Eligible Equipment Categories:

  • Commercial machinery and vehicles

  • Office furniture and fixtures

  • Computers and software

  • Medical, manufacturing, and construction equipment

  • Food service and retail tools

💡 Bonus depreciation may also apply for purchases beyond the Section 179 limit.

 

Can You Use Section 179 on Financed Equipment?

Yes—and this is a major advantage. Even if you don’t buy the equipment outright, you can still deduct the full cost in the same tax year as long as:

  • The equipment qualifies under IRS rules

  • It’s placed into service before year-end

  • You’ve made at least one payment during the year

This makes equipment financing even more attractive. You get the gear you need now, preserve working capital, and reduce your tax liability—all at once.

 

How to Use a Section 179 Tax Deduction Calculator

A Section 179 tax deduction calculator is a simple online tool that helps you estimate your tax savings in just a few clicks.

Here’s how to use it:

  1. Enter your equipment cost – Input the total value of the purchase or financing deal.

  2. Adjust for tax rate – Use your estimated business tax rate (e.g., 22%, 24%, etc.).

  3. View estimated savings – The calculator will show your estimated tax deduction and after-tax cost.

👉 Try our free calculator here: https://info.financialpc.com/section-179-calculator

 

Tips to Maximize Your Section 179 Deduction

If you're planning to invest in equipment this year, follow these best practices to get the most from Section 179:

  • Make purchases or finalize financing before December 31, 2025

  • Ensure equipment is delivered and in use before year-end

  • Work with a tax advisor to confirm your eligibility and deduction amount

  • Combine with bonus depreciation if you exceed the Section 179 limit

 

Section 179 + Equipment Financing = Smarter Investments

The Section 179 tax deduction gives businesses a powerful incentive to invest, and when paired with financing, it becomes even more valuable.

You get immediate access to the equipment you need while preserving cash flow, and then turn that investment into a substantial tax benefit. It’s a win-win for your balance sheet and your growth strategy.

 

📞 Ready to Estimate Your Equipment Tax Savings?

Use our Section 179 tax deduction calculator to see how much you could save this year—or connect with our team to build a personalized financing and tax strategy.

 

📞 Talk to a financing expert at (603) 696-7076