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What is Tax Code Section 179
Section 179 is a powerful tax incentive that allows businesses to write off the full purchase price of qualifying equipment in the same year it’s placed into service — instead of depreciating it slowly over several years.
Most importantly:
You can take the Section 179 deduction even if you FINANCE the equipment.
Your business gets the full tax deduction upfront, while your out-of-pocket costs remain low through monthly payments.
This combination (full deduction + small payments) is the main reason Section 179 drives so many year-end equipment purchases.
Does Financed Equipment Qualify for Section 179?
Yes — as long as:
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The equipment is placed into service during the tax year, and
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It is used more than 50% for business, and
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It is acquired by purchase (not leased from an unrelated third party where ownership does not transfer)
Then it qualifies for Section 179 even if you financed 100% of the purchase.
âś” Example
A business finances $75,000 of equipment over 60 months.
They may still be able to deduct the full $75,000 in the year they put it into service, even though they only made a couple of monthly payments.
This is why many businesses use Section 179 + equipment financing as a strategy to:
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Preserve cash
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Reduce taxable income
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Upgrade equipment before year-end
Advantages of Tax Code 179
The main Advantage of Financing or leasing equipment is that you can deduct the full amount of the equipment and/or software, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottom-line friendly deduction. In many cases, the tax savings from the deduction will make your bank account larger than if you never financed the equipment in the first place.
Understanding Section 179 Tax Deductions for 2025
For small business owners, Section 179 is one of the most relevant passages of the tax code. Simply put, this section of the tax code allows you to deduct part of all of the cost of equipment that you purchase or finance prior to December 31, 2025.
However, there are some complexities to Section 179 that small business owners must understand. Keep in mind that not all equipment will qualify for deduction. Here are a few guidelines to help you consider your own Section 179 tax deductions
How Much Can you Deduct? (2025 Limits)
For tax year 2025:
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Section 179 deduction limit: $1,220,000
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Phase-out threshold begins at: $3,050,000
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Full deduction eliminated when purchases exceed: $4,270,000
Most small and mid-sized businesses fall well below these thresholds and qualify for the full deduction.
How to Get This Tax Deduction
The Section 179 tax deduction is available to businesses that have placed either new equipment or used equipment into service within the year that they purchased it, or within the year that they leased it.
However, it is crucial for business owners to know that this dedication is not automatic. You must proactively opt-in. To do so, it is mandatory to complete Part 1 of IRS form 4562. Fill out this form and file it with your business tax returns.
Also, keep in mind that not all types of equipment qualify. If you have any questions about qualifying equipment, we recommend talking with your business accountant, who can provide further guidance.
What Types of Equipment Qualify?
Section 179 covers most equipment used in normal business operations, including:
Tangible business equipment such as:
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Agricultural spray drones & farm equipment
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Manufacturing and industrial equipment
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Landscaping equipment
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Trailers, trucks, and heavy machinery
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Office furniture, computers, and technology
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Diagnostic devices and business software
Off-the-Shelf Software
Software that is commercially available and not custom-coded qualifies.
Equipment You Own (Not Lease Without Ownership)
As long as you will own the equipment (financed or cash purchase), it may qualify.
Equipment Financing and Section 179
One of the most common questions about Section 179 is whether or not you can claim a tax deduction for equipment that you have financed. The short answer is yes, Section 179 can work with equipment financing, just so long as the equipment in question meets the eligibility guidelines set forth by the IRS.
Equipment Leasing and Section 179
Did you know? Your tax savings may exceed your finance costs on a five year “lease to own” financing plan. The total of your first-year payments are likely LESS than your tax savings!
It is time to take advantage of your Section 179 tax credit. If your deduction creates an operating loss you may even be able to carry back the loss to generate a refund from prior years. This is a big change that many business owners are not taking advantage of – and it’s a mistake! Don’t miss out on this opportunity to purchase valuable equipment at a reduced cost to you.
Real-World Example: Using Section 179 with Financing
Equipment Cost: $100,000
Estimated Tax Savings (example): $24,000
Monthly Payment: ~$2,200/mo (example)
Your business receives:
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$100,000 deduction this year
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Low monthly payment spread over time
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Immediate use of the equipment
This creates a situation where:
The tax savings can be larger than your first year’s payments — meaning the equipment may effectively pay for itself in Year 1.
Why Businesses Use Section 179 at Year-End
Section 179 is a use-it-or-lose-it deduction:
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Equipment must be purchased and
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Placed into service by December 31
This creates urgency for many businesses to complete purchases and financing approvals before year-end.
Which Businesses Benefit Most?
Section 179 is ideal for businesses that:
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Want to reduce taxable income
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Want to preserve cash flow through financing
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Need to upgrade to newer, more productive equipment
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Have seasonal income and want to maximize deductions
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Want to invest in drones, trailers, vehicles, machinery, software, or tools
Need Financing or Prequalification?
Get options, payment estimates, or approvals quickly:
👉 Apply Here
Alternatively, if you’re a vendor and want to share Section 179 resources with your customers, BNC Finance provides:
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Co-branded materials
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Payment calculators
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QR code application links
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End-of-year financing promotions
đź“Ś Important Note
While Section 179 is extremely business-friendly, always consult your CPA for tax advice specific to your situation.
Section 179 Equipment Lease Example Video
Section 179 Example Video Here is an example of a business owner using tax code section 179. Steve is the…
Watch VideoAnother important note for business owners: If you qualify for deferred payment equipment financing, you can take advantage of Tax Code 179 without any upfront costs. This allows you to purchase equipment without payments for three to six months while reducing your taxable income by the amount of the equipment cost. Here is the article of the program you can reference.
More Questions About Equipment Financing?
If you have any further questions about equipment financing, deferred payment programs, or other ways to make your equipment purchases more affordable, we welcome you to contact BNC Finance.
This information is intended strictly for informational purposes and is not meant to constitute tax, legal, investment, or accounting advice. Consult with your business accountant, attorney, or tax preparer before making any business decisions or before moving forward with business financing.
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