Imagine buying a new piece of equipment today and deducting the entire cost on your 2025 tax return—not over years, but right now, freeing up cash to reinvest this year. Thanks to the One Big Beautiful Bill Act (OBBBA), 2025 brings dramatic boosts in expensing rules that reward businesses for investing smart today.

Here’s how to use both Section 179 and Bonus Depreciation—plus savvy strategies like cost segregation—to keep more cash in your business where it belongs.

What Changed in 2025

Section 179 Expensing: Doubled and Enhanced

Now permanently allows up to $2.5 million as an immediate write-off for qualifying assets, up from the previous ~$1.25 million.
Phase-out only begins when capital purchases exceed $4 million.
Eligible property includes tangible business assets—like machinery, software, and building improvements (HVAC, roofing, security, etc.)—that qualify even if bonus depreciation doesn’t apply.

Bonus Depreciation: Fully Restored and Permanent

Fresh from OBBBA, 100% bonus depreciation is now permanently restored for qualified property placed in service after January 19, 2025.
Applies to most tangible personal property, including both new and used assets, along with Qualified Improvement Property (QIP).
Optionally, businesses can elect only 40% depreciation for assets in their run year—useful for managing spikes in profit.

Depreciation vs Section 179 — Side-by-Side

A smart approach: apply Section 179 first—especially for improvements or selectively chosen assets—then apply bonus depreciation to the rest for maximum write-off flexibility.

Why This Matters for Small Businesses

Rapid tax relief: Capital-intensive businesses (construction, tech, retail) can deduct equipment, upgrades, or infrastructure fully in the current year.
Flexibility: Tailor which assets to expense with Section 179—while enjoying broader expensing under bonus depreciation.
Cash flow boost: Immediate deductions enhance liquidity, funding growth or debt reduction.
Planning peace of mind: Permanent rules mean more stability and less scramble with expiring tax provisions.

Smart Tax Planning Tips for 2025

Time your purchases: To qualify for 100% bonus depreciation, ensure the asset is acquired and placed in service after January 19, 2025.
Stack Section 179 + Bonus: Use Section 179 first for select assets (e.g., improvements), then deduct the rest via bonus depreciation.
Consider cost segregation: If you own commercial real estate, a cost segregation study can reclassify long-lived assets into shorter-lived categories, accelerating deductions, especially effective combined with bonus depreciation.
Plan for state conformity: Many states don’t follow federal bonus depreciation—Section 179 may yield better state tax alignment.
Elect intentionally: You can elect not to take bonus depreciation or choose only 40% in the first year to manage taxable income thoughtfully.

1. What’s the 2025 Section 179 limit?
- Up to $2.5 million, with a phase-out starting at $4 million in purchases.
2. Is 100% bonus depreciation back for good?
- Yes, permanently restored for property placed into service after January 19, 2025.
3. Can bonus depreciation be used on used assets?
- Yes, both new and used qualify if not previously owned or used by you.
4. Should I do Section 179 or bonus depreciation first?
- Apply Section 179 first (for selective assets or real property), then bonus depreciation for the rest for maximum deduction strategy.
5. What’s cost segregation and why use it?
- It’s an engineering-based study that reclassifies building components to shorten depreciation schedules—amplifying deductions for real estate investments.
6. What if my state doesn’t follow bonus depreciation?
- Some states require depreciation add-backs—so Section 179 might better align with your state return strategy.

2025 offers unprecedented expensing power for small businesses—unleash Section 179 and 100% bonus depreciation to maximize deductions and reinvest in growth. But the landscape is complex—and timing matters.

Want a personalized 2025 depreciation strategy to optimize your tax and cash flow? Schedule a FREE consultation - simply choose a slot that works for you!

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Depreciation & Section 179 Explained for 2025 — How Small Biz Owners Can Expense Smarter