With monthly fluctuations in the market from policies such as tariffs, Section 179 expensing can help businesses capture IT savings for purchases such as servers, desktops, software, IT services and networking equipment.
“A lot of equipment and software is absolutely deductible,” says Marty Patton, Sales Manager at Blue Technologies, Inc. “In 2024, the limit was $1.22 million. For 2025, it’s $1.25 million. That’s a sizeable increase from year to year that gives businesses the capacity to write off more equipment.”
Smart Business spoke with Patton about the Section 179 deduction — what it covers and how businesses can leverage the opportunity to its fullest.
What is section 179 and what does it enable a business to do?
Section 179 gives companies the option to deduct the full cost of technology purchases made in a given year. It means being able to deduct the full cost of that qualifying purchase rather than depreciating those costs over the course of up to five years.
For example, if a company were to purchase 100 multi-function devices in a calendar year, they could write off that entire amount for that same tax year — for up to $1.25 million dollars — instead of depreciating it over time.
Something else that businesses could do with their technology spend ahead of the new calendar year and still have that outlay qualify for the Section 179 deduction is to spend on any purchase that has to do with cloud storage hardware or hosting hardware.
Among the qualified purchases are hardware, which would include servers, networks, firewalls, copiers, and phone systems. Also eligible is hardware associated with managing cloud services such as disaster recovery and hosting backups.
How can companies determine the best way to leverage the deduction when planning their IT spend?
Companies can talk with their outsource IT representatives or technology consultants for insights on the lifecycle of their technology equipment and how those are performing in day-to-day operations. If there is old or outdated equipment that is still active, it might be working well at the moment but it also might be considered a point of vulnerability within the company’s broader cybersecurity initiatives.
It’s worthwhile to talk with an IT specialist about the company’s IT roadmap, which would highlight what the company is looking to replace, add or upgrade. In doing that, there can be discussions around the offsets that exist with Section 179 and what equipment, software or services can be purchased before the end of the year and immediately deducted. It’s also a good idea to include in the conversation the company’s finance department, their CFO or controller, to discuss how Section 179 can be applied to the business’s technology goals.
By working in tandem with IT experts, companies can get informed recommendations on what equipment in their fleet is reaching end-of-life and how to fill in any technology gaps that might exist across the company’s footprint.
How might the involvement of a CPA ensure companies use Section 179 to its fullest?
Some IT service companies employ a CPA who can help businesses better understand the terms of Section 179, and what needs to be done once the equipment is purchased in order for it to qualify. That’s important because not only does a company need to make the purchases by a certain date, but they then need to place the equipment into service during the tax year and use it for business purposes more than 50 percent of the time.
By working in tandem with a CPA and an IT expert, companies can both accomplish their technology and save a significant amount of money doing so. ●
INSIGHTS Technology is brought to you by Blue Technologies, Inc.
