Preface: “I am indeed rich, since my income is superior to my expenses, and my expense is equal to my wishes.” – Edward Gibbon
OBBB Act: What the New Section 179 Expensing Limits Mean for Your Business
On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act into law. Among many tax changes, one major update affects Section 179 expensing—a valuable tool for small and mid-sized businesses to write off equipment and property purchases.
What Is Section 179 Expensing?
Section 179 lets businesses deduct the cost of certain equipment, vehicles, and property right away, instead of depreciating it over many years. This makes it a powerful way to lower taxable income in the year you make a big investment.
Qualifying property generally includes:
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- New or used equipment
- Business vehicles (with some limits, like SUVs)
- Office furniture
- Computers and software
- Certain types of real property improvements
What Changed Under the OBBB Act?
Before the law, businesses could expense up to $1,250,000 in 2025, with deductions starting to phase out after $3,130,000 of total purchases.
The OBBB Act doubles those amounts starting in 2025:
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- New Section 179 Deduction Limit: $2.5 million
- New Investment Cap: $4 million
These amounts will also be adjusted for inflation every year going forward.
The rules for SUVs didn’t change. For 2025, the maximum Section 179 deduction for an SUV is still $31,300.
Why This Matters
This change makes it much easier for businesses to deduct large investments. Whether you’re buying farm equipment, upgrading your factory machinery, or investing in technology, you may now expense the full cost up front.
Examples
Example 1 – A Small Business Upgrade
ABC Landscaping buys $150,000 of new trucks and mowers in 2025.
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- Before the law: Still fully deductible, because the old $1.25 million limit was plenty.
- After the law: No change for them, but more room for growth if they expand further.
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Example 2 – A Growing Manufacturer
XYZ Manufacturing spends $3.5 million on new machinery in 2025.
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- Before the law: They would have hit the $3.13 million investment cap, and their deduction would start phasing out.
- After the law: With the new $4 million cap, they can deduct the entire $3.5 million under Section 179. This could save them over $700,000 in taxes (assuming a 20% tax rate).
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Key Takeaway
The OBBB Act permanently raises Section 179 expensing limits, giving businesses greater ability to deduct equipment purchases up front. This is especially helpful for companies making multi-million-dollar investments.
Planning Note: If you’re considering large purchases of equipment or property, now is the time to plan ahead. The new limits make Section 179 one of the most powerful tax tools available for business growth.