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Thinking about major business purchases? Learn how depreciation and write-offs can help you maximize tax savings and lower your taxable income.
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That $70,000 truck you’re eyeing for your business? It might not just move dirt—it could slash your tax bill too. Strategic asset purchases can mean the difference between a massive tax payment and significant year-end savings. Let’s break down how to make it work for you.
Whether you’re a business owner, freelancer, or real estate investor, the timing and treatment of big purchases can make a massive difference when it comes to your tax return. Tax write-offs, depreciation, and bonus depreciation aren't just accounting terms—they're strategic tools. If you’re planning to make a big purchase before year-end, understanding how to leverage these tools could help you save thousands.
In simple terms, depreciation allows you to spread the cost of a large asset over several years rather than deducting the full amount in the year you buy it. The IRS has specific rules for how long different types of assets can be depreciated.
For example:
This method helps businesses avoid the shock of a massive one-time deduction, and it ensures that the cost of an asset is spread out over its useful life. By doing so, it aligns the deduction with the asset's contribution to your business over time.
For tax purposes, depreciation is a non-cash expense, which means it reduces your taxable income without affecting your actual cash flow. While depreciation reduces the book value of an asset on your financial statements, it doesn’t represent any out-of-pocket expense—making it a valuable tool for tax management.
Watch: What's the Story with Depreciation?
Section 179 is a game-changer for small business owners and self-employed individuals. Instead of spreading out deductions over years, you can write off the entire cost (up to a limit) in the year you place the asset in service.
For 2025, the Section 179 limit is $1,250,000, and it phases out dollar-for-dollar once you’ve purchased over $3,130,000 in qualifying equipment. This means if your total qualifying equipment purchases exceed $3,130,000, the deduction limit decreases dollar-for-dollar. Once your total purchases reach $4,380,000, the deduction is eliminated.
This accelerated depreciation option is incredibly helpful for small businesses looking to minimize their taxable income in the short term and save on taxes for assets they rely on.
Eligible purchases include:
Section 179 has some limitations when it comes to vehicle purchases. For example, passenger vehicles used for business purposes are limited to a $26,200 deduction in 2025. Larger vehicles, such as SUVs and trucks over 6,000 pounds, may qualify for a full Section 179 deduction, making this an especially useful tool for businesses that rely on heavy equipment or vehicles.
Example: You buy a $50,000 piece of equipment in October 2025 and use it for your business. If it qualifies under Section 179, you could deduct the full $50,000 on your 2025 tax return.
This strategy is particularly valuable for small to medium-sized businesses that are looking to reinvest in themselves and reduce their taxable income. Taking advantage of Section 179 deductions helps businesses maintain healthier cash flow by accelerating tax savings.
In addition to Section 179, bonus depreciation allows you to deduct a percentage of the asset’s cost right away. However, this percentage is decreasing over time:
The good news? There’s no cap on how much you can spend to qualify for bonus depreciation, and it applies to new and used property. This means you could buy a brand-new piece of machinery or a second-hand van and still claim the bonus depreciation deduction.
Bonus depreciation is often used alongside Section 179 deductions. You can use Section 179 for a portion of your deduction and then apply bonus depreciation to the remaining balance of your purchase. This strategy maximizes your deductions, providing immediate tax relief.
Example: If you buy $100,000 worth of qualifying assets in 2025, you could write off $40,000 using bonus depreciation—on top of any Section 179 deduction you might use. If the asset qualifies for the full Section 179 deduction, you could potentially deduct the entire $100,000 in the year you purchase it.
For 2025, the ability to use bonus depreciation in combination with Section 179 allows businesses to reduce their tax burden significantly, providing immediate relief for capital-intensive companies.
Meet Rachel, a freelance videographer who upgraded her $3,000 camera gear in November. With Section 179, she wrote off the full cost and saved $900 in taxes — instantly improving her Q1 cash flow. Had she waited until January, she’d be deferring that deduction another year — and possibly missing the 40% bonus depreciation entirely.
This immediate deduction is a huge benefit to someone in a service-based business like Rachel's. Freelancers and small business owners often face irregular income, so accelerating deductions at the right time can smooth out cash flow and reduce the tax impact.
Josh, a real estate professional, purchased a $70,000 truck in December 2025 for his business. Because the vehicle was used exclusively for business and placed in service before year-end, he was able to combine Section 179 and bonus depreciation to write off nearly the entire cost that year. His tax advisor estimated a $25,000 reduction in taxes — a major cash flow win that let him invest more in property deals in Q1 2026.
In Josh’s case, he was able to take full advantage of both Section 179 and bonus depreciation because he placed the truck in service by December 31st. This allowed him to maximize his deductions and reduce his taxable income for the year.
Real estate professionals can benefit from bonus depreciation in several ways, such as writing off the cost of improvements to properties they own or the purchase of real estate-related equipment. It’s a tool that’s often underutilized by property investors, but it can provide substantial savings when leveraged correctly.
Here’s a quick breakdown showing potential savings based on a $100,000 purchase:
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As you can see, Section 179 is by far the most effective tool for larger purchases when looking to reduce taxable income in the short term. However, bonus depreciation also provides significant tax relief, especially for businesses that need to invest heavily in assets before year-end.
Whether you’re claiming Section 179 or bonus depreciation, proper documentation is crucial:
For vehicles and other dual-use items, be extra careful. You may need mileage logs or usage reports. Without accurate records, you risk losing out on the deductions you’re entitled to.
1) Placing assets into service too late. Buying something in December but not using it until January = no 2025 write-off. This is a common mistake businesses make, thinking that a purchase alone qualifies for a deduction.
2) Misclassifying personal assets as business. The IRS watches this closely—especially with vehicles. If you’re using a vehicle for personal and business purposes, you can only deduct the portion used for business.
3) Over-relying on Section 179 if you're in AMT territory. Alternative Minimum Tax (AMT) rules can disallow or reduce your deductions. If you're subject to AMT, you may need to rethink your strategy.
Too many business owners buy equipment in December thinking they’ll get a full deduction, but forget the asset must be in use by year-end. Timing and documentation are everything.
Bonus depreciation and Section 179 are often the biggest opportunities for tax savings that business owners overlook. But without proper planning, these benefits can be lost.
Smart tax planning means looking at purchases through a strategic lens. If you’re planning a large purchase before year-end, talk to your CPA or financial advisor about the best way to deduct it. Taking advantage of accelerated depreciation can provide significant tax savings, but it requires careful planning and timing.
With the right timing and guidance, your year-end investments could lower your taxable income and set you up for a stronger financial start next year.
At Vincere Tax, we specialize in helping business owners, freelancers, and investors navigate complex tax strategies, including depreciation and write-offs. If you're planning a major purchase or need expert advice on how to leverage tax deductions for your business, we’re here to help!
Schedule a consultation with our team today and start saving smarter this tax season. Let’s maximize your deductions and minimize your tax liability—so you can focus on growing your business.
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Depreciation allows you to deduct the cost of a business asset over its useful life. It helps reduce your taxable income by spreading out the expense of the asset, thus lowering your overall tax liability.
Section 179 allows you to deduct the full cost of a qualifying asset in the year it's purchased, up to a certain limit. Bonus depreciation, on the other hand, allows for a larger deduction (usually 100%) in the first year, but it's subject to phase-out rules starting in 2023.
Yes, you can deduct the business portion of the use. If you use an asset for both personal and business purposes, you'll need to calculate the percentage of time it's used for business and apply that percentage to the depreciation or deduction.
Yes, the Section 179 deduction has an annual limit. For 2025, the deduction limit is set at $1.17 million, with a phase-out threshold of $2.59 million for total equipment purchases.
While it's possible to handle depreciation and write-offs yourself, working with a tax professional ensures you’re maximizing deductions and staying compliant with tax laws. They can help you navigate complex rules and optimize your savings.
Being audited is comparable to being struck by lightning. You don't want to practice pole vaulting in a thunderstorm just because it's unlikely. Making sure your books are accurate and your taxes are filed on time is one of the best ways to keep your head down during tax season. Check out Vincere's take on tax season!
This post is just for informational purposes and is not meant to be legal, business, or tax advice. Regarding the matters discussed in this post, each individual should consult his or her own attorney, business advisor, or tax advisor. Vincere accepts no responsibility for actions taken in reliance on the information contained in this document.
For business tax planning articles, our tax resources provides valuable insights into how you can reduce your tax liability now, and in the future.
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