If your small business uses heavy machinery such as trucks or forklifts, you should know how Section 179 deductions work. This section of the tax code permits businesses to deduct 100% of the purchase price of equipment from your annual income the same year it was put into service. Learn more about it to see if you qualify.
What Is Section 179 Deduction?
Section 179 is a tax deduction that empowers businesses improve their cash flow with immediate tax benefits. Business owners can write off the full cost of equipment purchased for the business if and only if:
- It’s used for business at least 50% of the time.
- It’s put into service the same tax year you’re claiming the deduction.
This tax break helps small business owners expand operations and upgrade equipment when they need to without worrying about their working capital.
What Is the Section 179 Limit in 2025?
In 2025, business owners can deduct up to $2.5 million of the purchase price of qualifying equipment.
Let’s say you bought 3 new forklifts for $100,000. Since $100,000 is well below that $2.5 million limit, you are eligible to deduct $100K in full from your 2025 taxable income.
That $2.5 million deduction starts to phase out when the total cost of qualifying equipment exceeds $4 million. In those cases, the Section 179 limit decreases dollar-for-dollar.
For instance, if you buy $4,300,000-worth of equipment, your Section 179 limit would drop by the $300,000 you exceeded. Your new deduction limit for that tax year would be $2.2 million instead of the outlined $2.5 million.
How Do Section 179 Forklift Tax Deductions Work?
Aside from the phase-out rules, there are some stipulations that businesses must meet in order to be eligible for Section 179 tax benefits:
1. Business Uses Only
First and foremost, the forklift must be used for business at least 50% of the time to qualify for Section 179 forklift tax deductions. You cannot write off equipment bought for personal use.
Additionally, if you use the forklift for business less than 100% of the time, you can only deduct the business portion.
For example, if you buy a $60,000 forklift and use it for business 80% of the time and for personal projects the remaining 20% of time, you can only deduct 80% of the purchase price. On a $60,000 machine, that limits you to $48,000 off of your taxable business income.
2. Same-Year Limits
In order to claim Section 179 deductions on your 2025 taxes, the equipment must have been purchased and put to use before the end of 2025. If you purchased the equipment in 2025, but didn’t use it until 2026, you’ll have to wait to claim the tax breaks until 2026 taxes.
3. Income Limitations
Section 179 deductions are limited to a company’s annual taxable income. In other words, your company can’t deduct more than you made during that tax year.
If that happens to you, don’t worry. You don’t lose the tax savings. You can choose a partial election plan. The unused portion of your deduction carries over to the next tax year or years when you have sufficient income to claim it.
Section 179 Example
Let’s take a look at an example to get a better idea of how this forklift tax incentive impacts your bottom line.
Let’s say you bought a $1,180,000 forklift. Given it meets all criteria, you can subtract that full amount from your taxable income. Assuming a 35% tax bracket, Section 179 would save you $413,000 in savings. That’s $413,000 that stays within the walls of your business. In this example, the total investment cost drops from $1,180,000 to $767,000.
Do All Vehicles Qualify for Section 179 Forklift Tax Deductions?
All business equipment, new or used, qualifies for Section 179 forklift tax deductions. (As long as they meet the standards outlined in the “How Do Section 179 Forklift Tax Deductions Work?” section.)
Read more about these incentives on Section 179.org, and always consult with your accountant or financial advisor for legal advice on how to use them.
If you ‘re in the market for new equipment, we can help you compare pricing and availability of the vehicles you need from dealers in your area.
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