How Section 179 Helps You Save on CNC Machines and Equipment

How Section 179 Helps You Save on CNC Machines and Equipment

What is Section 179?

Section 179 is a tax rule that helps businesses save money. Instead of waiting years to deduct the cost of new equipment, you can subtract the whole cost from your taxes the same year you buy it. This means you pay less tax right away and keep more money in your pocket.

What's New in 2025?

Starting January 19, 2025, there are new, bigger limits: You can deduct up to $2.5 million on equipment bought in 2025. Once your equipment spending hits $4 million, the deduction slowly decreases until it goes away completely. On top of Section 179, you can also claim 100% bonus depreciation on any equipment costs not fully deducted by Section 179.

What Equipment Qualifies?

• Capital Equipment (Cutting Tools, CNC Machines, Saws 
• Automated equipment (like robots Software, and conveyors
• Building improvements connected to production (like ventilation or safety systems)
• Used equipment, as long as it's new to your business

Simple Example of Tax Savings
Here's how it might look if you bought a $250,000 CNC machine:

• Machine Cost: $250,000 Section
• 179 Savings: At a 32% tax rate, you save $80,000
• Tariff Cost (25%): $62,500
• Your Net Gain: $17,500 extra after paying tariffs

This shows how powerful Section 179 can be.  It helps offset costs like tariffs, giving you more money to run your shop.

What is Bonus Depreciation?

Bonus depreciation is another tax tool that lets you deduct equipment costs quickly. After you apply Section 179, you can use bonus depreciation on any remaining cost. In 2025, bonus depreciation is 100%. That means you can immediately write off the entire leftover cost instead of spreading deductions over several years.

Four Easy Steps to Make Section 179 Work for You

• Buy Early: Get equipment ordered and in use before the end of 2025.
• Combine Purchases: Bundle smaller items like tools and software with your larger equipment purchase to maximize your deduction.
• Use Financing: Machinery Finance Resources (MFR) can quickly approve up to $750,000 in financing. This helps you conserve cash.
• Keep Records: Save invoices, delivery receipts, installation dates, and any related paperwork to prove your deduction.

Common Questions

• Can I use Section 179 on used equipment?
  Yes, as long as the equipment is new to your shop.
• What happens if I buy more than $4 million worth of equipment?
  The deduction starts to shrink dollar-for-dollar after $4 million, eventually disappearing.
• Can I combine Section 179 with bonus depreciation?
  Yes, you can first use Section 179, then apply bonus depreciation to any remaining costs.
  
  

Bottom Line

Using Section 179 in 2025 can significantly lower your taxes, giving you extra money for your business. Planning now can ensure you maximize these savings.

This article is educational only. Always consult your tax advisor for personal advice.