Resource

Section 179 Tax Deduction: Everything you need to know

Take advantage of the Section 179 tax deduction to save on commercial trucks and vans. Learn how your business can deduct on qualifying vehicle purchases in 2025.
Published: September 1, 2025
Last updated:
November 20, 2025
​
Section 179 Tax Deduction: Everything you need to know

What is Section 179 and how can I use the tax credit?

Section 179 lets businesses deduct the full purchase price of qualifying equipment or vehicles purchased, leased, or financed during the tax year. Instead of spreading the write-off over several years through depreciation, you can deduct the entire cost up front.

Example: Buy a $50,000 truck → deduct $50,000 this year (instead of $10,000/year over 5 years).

This incentive encourages small and medium businesses to invest in equipment now—not later.

Quick Reference: 2025 Section 179 Limits

Type Limit
Max Deduction (2025) $2,500,000 (phased out above $4,000,000)
Bonus Depreciation (2025) 100% (applies after Section 179)
New & Used Vocational Trucks and Vans Qualifies for 100% Section 179 deduction
New & Used Heavy SUVs & Trucks (6,000-14,000 lbs. GVW) $31,300 max Section 179 deduction
New & Used Cars, Light Trucks & SUVs (Under 6,000 lbs GVW) $20,400 max Section 179 deduction
Business‐Use Requirement > 50% business use; deduction limited to % of business use

Three Vehicle Categories Under Section 179

1. Vocational Trucks and Vans or Vehicles Over 14,000 lb. (100% Section 179 Deduction)

These vehicles generally have no personal‑use function and typically qualify for the full Section 179 deduction.

Qualifying examples include:

  • Heavy trucks over 14,000 lb. GVWR
  • Delivery trucks with minimal passenger seating
  • Cargo vans with permanent commercial modifications (e.g., enclosed cargo area, no seating behind driver)

    • 2. Heavy SUVs & Trucks 6,000-14,000 lbs. GVW ($31,300 maximum Section 179 Deduction)

    SUVs, trucks, and vans in this weight class have a special $31,300 Section 179 cap for 2025. The remaining cost above $31,300 may qualify for bonus depreciation in 2025.

    3. Cars, Light Trucks & SUVs Under 6,000 lbs GVW ($20,400 maximum Section 179 deduction)

    Traditional passenger vehicles face a first‑year deduction cap of $20,400 (2025 estimate, until IRS releases official limits) when used 100% for business.

    Section 179 Qualified Financing Benefits

    Section 179 does not require an upfront cash payment. Both purchases and non-tax capital leases can qualify, provided they meet the 50% business-use threshold and other IRS criteria.

    Financing allows you to:

  • Claim the full eligible deduction in 2025
  • Spread payments over multiple years
  • Improve cash flow while gaining immediate tax savings

    • What Is the Maximum Section 179 Deduction for 2025?

    For 2025, businesses can deduct up to $2,500,000 in qualifying purchases. This represents the total amount you can write off immediately, provided your equipment meets these key criteria:

  • Placed in service during the 2025 tax year
  • Used for business purposes more than 50% of the time
  • Qualifies under IRS guidelines

    • Spending Cap and Phase-Out Rules

    The Section 179 deduction begins to phase out when your equipment purchases exceed $4,000,000:

  • Dollar-for-dollar reduction above $4,000,000
  • Complete phase-out at $6,500,000
  • Additional purchases may still qualify for bonus depreciation

    • How Do Carryover & Limitations Work?

    Your Section 179 deduction cannot exceed your business’s net taxable income. However, if your Section 179 election exceeds your taxable business income in a given year, you can choose a partial Section 179 election. Any unused portion of the deduction carries forward to subsequent tax years, allowing you to apply it once you have sufficient income. This means if you can’t fully utilize Section 179 in the current year, you retain the remaining deduction for future use—ensuring you never lose the benefit.

    Example: How Does Section 179 Generate Tax Savings?

    This example illustrates how Section 179 can dramatically reduce your after-tax equipment costs. For a $2,750,000 purchase:

    Detail Calculation
    Vehicle Purchases (total investment) $2,750,000
    First Year Write Off (max in '25) $2,500,000
    100% Bonus First Year Depreciation via HR1 $250,000
    Total First Year Deduction ($2.5M+ $250K) $2,750,000
    Tax Savings (assumes 35% tax rate) $962,500
    Equipment Cost After Tax Savings $1,787,500

    Note: Qualifying property must be placed into service by December 31, 2025

    How Do I Make the Section 179 Election in 2025?

    File IRS Form 4562 with your tax return:

  • List qualifying property
  • Specify amount to expense
  • Include business-use percentage
  • Document vehicle information if applicable

    • Disclaimer: This guide provides general information about Section 179 and is not tax advice. Always consult qualified tax professionals regarding your specific circumstances.

    About Hengehold Trucks

    Founded in 1948, Hengehold Trucks is Northern California’s most trusted source for pre-owned commercial vehicles, rentals, service, and professional upfitting. Family-owned and based in Palo Alto, we’ve built our reputation on trust, straightforward pricing, and the best-maintained fleet in the region. For over 75 years, contractors, businesses, and public agencies have relied on us to keep their operations moving—with work-ready trucks, expert service, and support you can count on.

    Print
    ​