What is the Section 179 limit for 2025?

For 2025, the Section 179 deduction limit is $1,250,000 with a phase-out beginning at $3,130,000 in total equipment purchases. The deduction is limited to your taxable business income — you can't create a loss with Section 179.

Can I deduct my work truck under Section 179?

Yes, if the vehicle has a GVWR over 6,000 pounds and is used more than 50% for business. Trucks like the Ford F-250, Chevy Silverado 2500HD, and Ram 2500 qualify. For vehicles over 14,000 lbs GVWR, there is no luxury auto limit. For SUVs between 6,001-14,000 lbs, Section 179 is capped at $30,500.

What is the passive activity trap with equipment deductions?

If equipment is used in a passive activity — a rental property or business where you don't materially participate — the depreciation gets suspended under Section 469. You claim it on paper but it doesn't reduce your current tax. Always confirm the asset ties to your active trade or business.

Bonus Depreciation & Section 179 for Contractors: Trucks, Equipment & Tools

A contractor walks into a dealership in November and buys a $90,000 service truck. Their CPA says "great, you'll get a deduction." But what kind of deduction? This year? Over five years? Does it offset active income, or does it get trapped? The answer depends on things most contractors never discuss with their tax advisor until it's too late.

Section 179: Choose What to Expense

Section 179 lets you deduct the full cost of qualifying equipment in the year you place it in service. For 2025, the cap is $1,250,000 — more than enough for any trade contractor's annual purchases.

Qualifying assets: vehicles, tools, machinery, office equipment, computers, software, and certain building improvements (HVAC, roofing, fire protection, alarm/security systems).

Critical constraint: §179 cannot create a net loss. Your deduction is limited to taxable business income. If your business nets $200K and you buy $300K in equipment, you can only expense $200K this year.

Bonus Depreciation: The Automatic Deduction

Bonus depreciation applies automatically to qualifying assets and can create a net operating loss (unlike §179). The rate is declining:

2023: 80% · 2024: 60% · 2025: 40% · 2026: 20% · 2027: 0%

For 2025, §179 and bonus depreciation together can still get you to 100% first-year expensing if your taxable income supports it.

Vehicle Rules: GVWR Is Everything

Under 6,000 lbs GVWR

Luxury auto limits apply. Max first-year deduction ~$20,400 for 2025, regardless of vehicle cost.

6,001–14,000 lbs GVWR — The Sweet Spot

Bypasses luxury limits. A $90,000 F-250 can be fully expensed. SUV §179 cap is $30,500; bonus depreciation handles the rest. Common qualifying vehicles: F-250/F-350, Silverado/Sierra 2500HD/3500HD, Ram 2500/3500, full-size work vans.

Over 14,000 lbs GVWR

No limits at all. Full §179 and bonus depreciation on box trucks, large service vehicles.

Business use must exceed 50%. If it drops below 50%, there's a recapture event. Keep a usage log.

The Passive Activity Trap

This is the part nobody talks about until it's too late. You buy a $300K excavator for a side project — a land development deal you're invested in but don't manage day-to-day. You claim §179. But the deduction gets suspended under §469 because the activity is passive.

Passive losses can only offset passive income. Your $300K deduction doesn't reduce your tax bill by a single dollar.

Before you buy anything over $20K, confirm with your tax advisor that the asset ties to an active trade or business where you materially participate. This one question can save you from claiming a phantom deduction.

Timing the Purchase

§179 and bonus depreciation require the asset be "placed in service" during the tax year — delivered and ready for use, not just ordered. A truck ordered in November but delivered in January goes on next year's return.

Planning opportunity: if your income is low this year and expected higher next year, delaying the purchase to January generates a larger benefit. This is the kind of analysis a fractional CFO runs before you sign the check.

A Real Scenario

Electrical contractor, $6M revenue, $400K net income. Purchases this year: two service vans ($110K), diagnostic equipment ($35K), office buildout ($25K). Total: $170K.

Full §179 expensing at 45% combined rate: $76,500 in tax savings this year instead of $15,300/year over five years.

Stack with an accountable plan, PTET election, and retirement contributions, and the total picture looks very different from a return filed by a CPA who only sees numbers in February.