Tax Optimizer

2025

Section 179 Expensing (2025)

Category: Depreciation b7 Status: active

Eligibility

  • C corporations
  • S corporations
  • Partnerships
  • Sole proprietors
  • Placed-in-service requirement in tax year; business use > 50%.

Computation

Immediate deduction up to annual dollar limit; phased out dollar-for-dollar above investment threshold.

  • 2025 max deduction: $1,250,000
  • 2025 phase-out threshold: $3,150,000
  • SUV cap may apply (IRC §280F)

Documentation & Audit-Readiness

  • Invoices with placed-in-service dates
  • Depreciation schedules
  • Business-use logs if mixed-use
  • Proof of placed-in-service
  • Asset qualification details
  • Aggregation rules if related parties
  • Retain records for at least 3 years after filing; longer if assets subject to recapture

Interactions & Ordering

  • Apply §179 before §168(k) bonus depreciation.
  • Stackable with: Bonus depreciation (if §179 not fully used)
  • Basis: §179 reduces basis dollar-for-dollar before MACRS/bonus.

References