If you’re thinking about upgrading your equipment, investing in property improvements, or buying new software for your business, now’s a good time to take a closer look at the tax rules that apply. Thanks to changes passed in 2025, the way businesses handle bonus depreciation and Section 179 deductions is shifting (for the better, mostly) but timing matters.

Here’s what’s changing, and how to make the most of it before the year is over.

What Changed with Bonus Depreciation and Section 179?

Under the Tax Cuts and Jobs Act of 2017, bonus depreciation allowed businesses to deduct 100% of the cost of qualifying assets right away instead of spreading the expense out over several years. But that rule was set to phase out starting in 2023, decreasing each year until it disappeared completely in 2027. Section 179, a similar but slightly different deduction rule, also had annual caps that made it less useful for larger purchases.

Then, in mid-2025, Congress passed a major tax package, that extended and expanded these deductions:

• Bonus depreciation is now permanent. As of January 20, 2025, businesses can again write off 100% of the cost of qualifying assets in the year they’re placed in service.
• Section 179 deduction limits increased. The new expensing cap is around $2.5 million, with a phase-out threshold of roughly $4 million. That’s a significant jump, especially for businesses making large capital investments.

Together, these changes offer an opportunity to improve cash flow, lower your taxable income, and make smarter decisions about when to buy and deploy new assets.

What That Means for Your Business

If you’ve got major purchases coming up, like machinery, computer systems, vehicles, or even office renovations, those expenses may be fully deductible under the new rules. But timing and documentation still play a big role in what you can claim.

For example, if you signed a contract before January 19, 2025, but the asset is placed in service later, it may not qualify for full bonus depreciation. The IRS generally uses the “binding contract” date to determine which set of rules applies. That small detail could mean the difference between writing off the entire cost in one year or spreading it out over several.

So if you’re planning to make a purchase, it may be worth reviewing the timing and structure of your agreements to ensure you’re getting the full benefit.

How to Take Advantage of the Updated Rules

Revisit your 2025 spending plans
If you were holding off on buying equipment or investing in upgrades because of uncertain tax rules, now’s the time to revisit those plans. The expanded deductions make large investments more affordable in after-tax dollars.

Make sure assets are placed in service on time
To qualify for bonus depreciation, the asset must not only be purchased. It also needs to be in use by the end of your tax year. Ordering something in December doesn’t count if it’s still in the box come January.

Use Section 179 to your advantage
Section 179 is still a great option for businesses that want more control over which assets are expensed in which year. You can choose which purchases to deduct and which to depreciate over time, which can be helpful if you want to manage taxable income more precisely. Just remember that Section 179 can’t create a business loss—you need to have enough taxable income to use it.

Consider a cost segregation study
If you’ve recently bought or renovated a building, a cost segregation study can help you identify components that qualify for faster depreciation or immediate expensing. It’s a more technical move, but one that can uncover big savings if real estate is part of your business strategy.

Check your contracts and delivery dates
If you entered into purchase agreements before the cutoff date or received partial deliveries, double-check how the timing affects depreciation. In some cases, it may be worth renegotiating contracts or adjusting delivery timelines to maximize your deduction.

What Comes Next

The updated rules for bonus depreciation and Section 179 aren’t set to expire in 2026 like many other tax breaks. For now, they’re here to stay, giving businesses more flexibility in how and when they deduct major purchases.

Still, it’s smart to treat these opportunities as part of your annual planning, not something to think about only at tax time.

Final Thoughts

Big tax changes like these don’t happen often, and when they do, there’s a window to act. The expanded rules around bonus depreciation and Section 179 can help businesses reduce their tax bills, reinvest in growth, and better manage cash flow.

But the benefits aren’t automatic. You need to track the timing, understand how the rules apply to your purchases, and get the documentation right. If you’re not sure how to apply the changes to your business, this is a good time to check in with your accountant or tax advisor.

And if you need a second set of eyes, The Holtz Group is here to help. We work with businesses across industries to make sure they’re not just compliant, but taking advantage of every smart opportunity available.