As we approach the end of the year, Fisher’s wants to share a timely opportunity for your business to save significantly on taxes while upgrading your infrastructure, via the Section 179 deduction.
Why this matters to you
Under current tax law, for the 2025 tax year, businesses can deduct the full cost of qualifying equipment (rather than depreciating it over many years) if the equipment is purchased, installed, and placed into service by December 31, 2025.
Here are some of the key rules and advantages:
- The deduction limit is up to $2,500,000 on qualifying purchases.
- The deduction begins to phase out dollar-for-dollar when total qualifying purchases exceed $4,000,000.
- Bonus depreciation (100%) can also apply for qualifying property (after Section 179 is applied) to further accelerate deductions.
- Qualifying property includes computer hardware, servers, tech equipment, office equipment, software (off-the-shelf), and more, as long as it is used more than 50% for business purposes.
- The property must be placed in service (i.e. ready for use) in 2025 to claim the deduction in that tax year.
- If your deduction exceeds your taxable business income for the year, the unused portion can often carry forward to future years.
KEY CLARIFICATIONS YOU SHOULD KNOW
Leased equipment and ownership – what matters. One question we often hear: “Does leased gear qualify?” The simple rule: For the deduction to apply, you must effectively own the equipment — which means you’re taking on both the benefits and the liability of ownership.
- Leases with a $1 buy-out (where you essentially purchase the gear at the end for $1) do qualify.
- Fair Market Value (FMV) leases do not qualify for this deduction.
“Placed in service” means operational. To count for the 2025 tax year, the hardware must be both delivered and in use by December 31, 2025. Merely purchasing or ordering it isn’t enough — it must be up and running in your business. If it’s installed or becomes available after year-end, the deduction must be taken in 2026 instead.
We’re not your tax advisors. While we provide this overview to help you plan, every business is unique. The tax rules are complex, and you should always rely on your own tax professional for guidance.
What you should consider doing now
Because the deadline is fast approaching, here’s how to take advantage of this deduction:
- Decide what hardware or technology your business needs (e.g. copiers, servers, PCs, networking gear, storage, peripherals).
- Place your order early, with delivery, setup, and “in-service” before December 31.
- Document everything , invoices, proof of purchase, installation or deployment dates, and business-use percentages.
- Coordinate with your tax advisor to ensure your planned purchases qualify, to elect the deduction on IRS Form 4562, and integrate it properly with depreciation or bonus depreciation.
Sample benefit illustration
Let’s say your business purchases $100,000 of qualifying hardware. If your effective tax rate is 30%, that means:
- You could deduct the full $100,000 (assuming you’re under the limits).
- That yields a tax savings of approximately $30,000.
- Effectively, your net cost for the hardware would be around $70,000 (before factoring any bonus depreciation or state taxes).
The real payoff is the ability to reinvest the tax savings back into your operations, technology, or growth initiatives, rather than tying up capital in multiyear depreciation schedules.
Why Fisher is your ideal partner for this
- We stock and support the latest hardware and configurations that qualify under Section 179.
- We can help you plan order lead times to ensure delivery and deployment before year end.
- In many cases, the tax savings more than offset the cost of the hardware, making it nearly a zero-net (or greatly reduced) cost investment in your future infrastructure.
If you’re interested, let’s schedule a quick call this week or early next week to review what hardware would most benefit your business and map out a plan to get you in service before year’s end.
Time is of the essence, December 31 is the firm cutoff. Let’s make sure you don’t miss this opportunity.