How Arizona Businesses Can Use Section 179 Before the Year-End Rush
As the year winds down, many Arizona business owners are taking a closer look at their tax strategies. One of the most powerful tools available is Section 179 of the IRS tax code, which allows businesses to deduct the full purchase price of qualifying equipment or software in the year it’s placed in service.
Instead of depreciating assets over several years, Section 179 provides an immediate tax break, freeing up cash flow and making it easier to reinvest in growth. But there’s a catch: purchases must be completed and in service by December 31. That makes the final quarter of the year the most critical time to act.
What Section 179 Covers
Section 179 applies to a wide range of business property, including:
● New and used equipment (machinery, vehicles, tools).
● Off-the-shelf software.
● Office furniture and fixtures.
● Computers and technology.
● Certain improvements to nonresidential property (HVAC, roofing, security systems and fire protection).
For tax year 2025, businesses can deduct up to $2,500,000 under Section 179, with a phase-out beginning at $4,000,000 in purchases. Plus, 100% bonus depreciation applies to qualifying assets, making this an even more powerful tax strategy.
Why Year-End Planning Matters
December often brings a flurry of last-minute equipment purchases. Unfortunately, waiting until the very end of the year can create problems:
- Supply Chain Delays: Backorders or shipping slowdowns could prevent your equipment from being placed in service before December 31.
- Installation Requirements: For property to qualify, it must be ready and usable, not sitting in a warehouse. Complex installations can take weeks.
- Cash Flow Strain: Rushing into purchases without planning can create unnecessary financial stress.
By starting now, Phoenix businesses can make smarter purchasing decisions, spread out cash flow and ensure everything is operational before the deadline.
Scenarios Where Section 179 Shines
Growing Companies Needing Equipment
A construction firm adding vehicles or heavy machinery can deduct the cost this year rather than stretching it over a decade. This creates immediate tax savings to offset growth-related expenses.
Technology Upgrades
If your business relies on outdated computers or servers, upgrading now not only improves productivity but also allows you to take a full deduction under Section 179.
Professional Services
Law firms, medical practices or accounting offices often overlook Section 179. New furniture, software and even HVAC systems in office spaces qualify.
Fleet Expansion
Company vehicles over 6,000 pounds gross vehicle weight (like trucks and SUVs used primarily for business) may qualify for larger deductions.
How to Plan Strategically
To maximize Section 179 benefits, attempt to follow these steps before the year-end rush:
- Review Your Taxable Income
Section 179 deductions are limited to taxable income. Work with your CPA to project year-end numbers and determine how much you can realistically deduct. - Prioritize Business Needs
Don’t buy equipment just for the deduction. Focus on assets that will add value to your operations in 2025 and beyond. - Consider Financing
Section 179 allows you to deduct the full purchase price even if you finance the equipment. That means you can spread payments out while enjoying immediate tax benefits. - Confirm Eligibility
Make sure the property qualifies and is placed in service by December 31. Keep detailed records of purchase and installation. - Coordinate with Bonus Depreciation
If you exceed Section 179 limits, bonus depreciation may provide additional deductions. This is where professional business tax preparation guidance is essential.
FAQs About Section 179
Q: Can used equipment qualify?
Yes, as long as it’s new to your business.
Q: Do vehicles qualify?
Yes, though passenger vehicles have special limits. Larger vehicles may qualify for full deductions.
Q: What happens if I spend more than the Section 179 limit?
You can still benefit from bonus depreciation on qualifying assets.
Q: Do I have to pay cash?
No. Financing is allowed, and you can still deduct the full purchase price this year.
Risks of Waiting Too Long
Many Phoenix, Scottsdale and Tempe businesses wait until mid-December to think about Section 179, only to find:
- Equipment isn’t available.
- Installers are booked until next year.
- Their CPA doesn’t have time for strategic planning.
Waiting until the last minute can mean missing out on thousands of dollars in deductions. By acting now, you can take advantage of Section 179 with less stress and better results.
Maximize Your Section 179 Deduction With Our Phoenix Business Accounting and CPA Services
At H&H Accounting Services, we help Arizona businesses strategically plan Section 179 purchases to maximize deductions while staying cash-flow smart. From calculating your taxable income to coordinating with financing and bonus depreciation, we ensure your equipment purchases pay off at tax time.
Contact us at H&H Accounting Services today by calling (480) 561-5805 and schedule a year-end tax planning consultation.
