Understanding Section 179: A Simple Guide for Business Owners

Understanding Section 179: A Simple Guide for Business Owners

If you’re a small or medium-sized business looking to upgrade equipment, technology, or tools, Section 179 could help you save money. This part of the U.S. tax code lets businesses deduct the full cost of qualifying equipment in the year it’s purchased rather than spreading that cost out over several years.

At TVFCU, we know smart financial decisions fuel strong businesses. Here’s a clear, easy-to-understand breakdown of how Section 179 works and how it might benefit your company.

What Is Section 179?

Think of Section 179 as a tax benefit that lets your business write off equipment immediately. Instead of waiting years to slowly deduct depreciation, you can take the entire deduction up front.

This can:

• Improve cash flow
• Reduce your tax bill for the year
• Make it easier to invest in new tools, machinery, or technology

Always talk to your tax professional or attorney to see if Section 179 is right for your situation.

What Types of Purchases Qualify?

Many business-related items may qualify for a Section 179 deduction. Common examples include:

• Machinery and manufacturing equipment
• Business vehicles
• Certain Real estate related improvements

To qualify, the item must:

• Be purchased and put into use during the tax year
• Be used more than 50% for business purposes

Understanding Section 179 Limits

Section 179 is designed to help small and medium-sized businesses—not large corporations. Because of that, it has annual limits:

• Maximum deduction: Around $1 million
• Spending cap: Deductions begin to phase out once total equipment spending exceeds roughly $2.5 million

If your business spends more than that, the deduction gradually decreases.

Bonus Depreciation: An Extra Benefit

Even if you hit the Section 179 limit, you may still qualify for bonus depreciation, which allows you to deduct more of the cost of large purchases. This combination can help maximize your tax savings and give your business more financial room to grow.

How Section 179 Helps Your Business Grow

By lowering the cost of buying equipment, Section 179 encourages businesses to reinvest in themselves. These savings can support:

• Expansion
• Modernization
• Increased efficiency
• Better long-term financial stability

Before making any decisions, be sure to consult your attorney or tax advisor to see if these deductions apply to your specific situation.

Ready to Invest in Your Business? TVFCU Can Help.

If you’re considering financing new equipment or vehicles for your business, our team is here to support you. Reach out to TVFCU’s Business Services Department to explore your loan options and find the right fit for your goals.

Contact TVFCU Business Services:

• Learn more: https://www.tvfcu.com/business
• Request a consultation: https://www.tvfcu.com/contact-us

Let’s work together to help your business grow.

This information is provided for general informational purposes only and should not be considered tax, legal, or financial advice. Please consult your accountant or qualified tax professional for guidance specific to your situation.