How the new 2025 Section 179 and bonus depreciation helps equipment buyers
If you’ve been thinking about buying a skid steer, excavator, or other heavy gear, recent tax changes create a real opportunity to improve your cash flow in the year you place equipment into service. Two items matter most right now: a restoration of full bonus depreciation for qualifying equipment and higher limits for Section 179 expensing, both of which are part of the One Big Beautiful Bill Act. Both options allow you to allocate more of the equipment cost to year-one tax deductions, which reduces your taxable income and can lower the actual after-tax cost of purchasing equipment this year. (1,2)
What this practically means for you
Timing matters. To qualify for the biggest tax break, you usually need to have the machine placed into service in the eligible tax year. Ordering alone is not enough. Discuss with your dealer and CPA early to confirm delivery and in-service timing.
Used machines are more attractive. The restored bonus depreciation typically covers both qualifying used equipment and new machines. That changes the math on late-model used gear, making it worth comparing closely with new units.
Expect market shifts. When tax incentives like these hit the headlines, dealer inventories and demand for used equipment can move quickly. If many buyers rush to place orders before year-end, you could see longer lead times or price movement. Planning ahead can protect you from that squeeze.
Get the supply before the demand soars. Got a machine in mind? Check out our used equipment deals on our hitlist.
Say you buy a $120,000 excavator and your marginal federal tax rate is 24%. Two scenarios show the difference:
If you can deduct the full $120,000 in year one through Section 179 or 100 percent bonus depreciation, the immediate federal tax reduction in year one is: $120,000 × 24% = $28,800 in tax savings.
If, instead, you depreciate the machine evenly over five years (straight line), the year-one deduction would be:$120,000 ÷ 5 = $24,000.That year-one tax reduction at 24 percent would be:$24,000 × 24% = $5,760
So the additional tax benefit you’d see in year one by expensing the full cost now instead of depreciating over five years is: $28,800 - $5,760 = $23,040.
Remember, this is a simplified illustration. Your state tax rules, trade-ins, financing interest, and how you use the machine affect the final number. Always run these numbers with your accountant.
If you and your CPA have already done the math, and you’re ready to shop, find the machine that’s right for you.
Talk to your CPA now about whether full expensing or Section 179 is the right approach for your tax situation.
Confirm with your dealer the delivery and placed-into-service timeline.
Consider late-model used machines; bonus depreciation can change their appeal.
Evaluate financing options. Even with a big first-year deduction, financing can help preserve cash flow.
Model resale value and replacement cost. If you sell a unit later, consider how quickly you could replace it if the market tightens.
How can we help?
If you need help planning a purchase, our sales team can provide current inventory and any necessary lead times. Contact us to schedule a planning call or to get a modeled after-tax example for the machines you’re considering.
And one last note: tax law changes periodically. This is a planning opportunity, but not a permanent guarantee. Confirm specifics with your tax advisor before acting.
