Section 179 is an IRS tax provision that lets businesses deduct the full purchase price of qualifying equipment or software in the year it's placed in service — instead of depreciating it over several years. For 2024 the deduction limit is $1,220,000.
Under Section 179 of the IRS tax code, a business can elect to expense — rather than depreciate — the cost of certain qualifying property the year it is first used in the business. That means a $50,000 piece of equipment can reduce your taxable income by $50,000 in year one instead of spreading the deduction over five or seven years.
Qualifying property generally includes tangible personal property used more than 50% for business: machinery, equipment, computers, office furniture, most vehicles (with limits), and off-the-shelf software. Real property (land, buildings) does not qualify for Section 179. See IRS Publication 946 for the full property classification list.
For tax year 2024, the IRS set the Section 179 deduction limit at $1,220,000. If your total property purchases exceed $3,050,000, the deduction phases out dollar-for-dollar. The deduction also cannot exceed your business's taxable income for the year — though any disallowed amount carries forward to future years.
You can claim Section 179 on financed equipment — not just equipment you pay for outright. If you finance $100,000 of machinery and your business's net income supports it, you may deduct the full $100,000 in year one even while making monthly payments. That's why many small businesses combine equipment financing with a Section 179 election: the tax savings in year one can meaningfully offset the cost of borrowing. If your business is planning a qualifying purchase, apply with ClearValue Lending to explore equipment financing options — we route to one matched lender partner. Consult a CPA to confirm your Section 179 eligibility before filing.