Section 179 in 2025 gives farmers and small businesses a powerful way to turn year‑end equipment purchases into immediate tax deductions, and 100% bonus depreciation adds even more punch for qualifying assets placed in service this year.
As 2025 wraps up, many farms and businesses are asking whether it still makes sense to upgrade equipment before year‑end. Section 179 and bonus depreciation can let eligible buyers write off a large portion, or even all, of qualifying equipment in the same year it is put to work, instead of spreading deductions over many years. That can lower a 2025 tax bill while helping operations move into next season with newer, more efficient machines.
For 2025, the maximum Section 179 deduction is $2,500,000, with the deduction beginning to phase out once total qualifying purchases for the year exceed $4,000,000 and fully phasing out around $6,500,000.
Simply put: many small and mid‑sized operations can potentially expense most or all of the qualifying equipment they put into service this year, as long as they meet IRS rules and work with their tax professional.
Section 179 generally applies to machinery and equipment used more than 50% for business, such as tractors, combines, hay tools, planters, utility tractors, mowers, loaders, and certain ag buildings and technology. The key is that the equipment must be purchased (or financed) and placed in service by December 31, 2025—not just ordered or sitting on a lot.
In addition to Section 179, 100% bonus depreciation has been restored for qualifying property acquired and placed in service after January 19, 2025. Bonus depreciation can apply after Section 179 is used or when Section 179 is limited by income or the phase‑out, allowing many buyers to fully deduct the cost of eligible equipment in 2025.
Assets acquired before the January 19, 2025 date generally follow the earlier phase‑down schedule, which only allowed 40% bonus depreciation in 2025, so timing and documentation matter. This is another reason to have customers loop in their CPA when planning larger equipment purchases.
Imagine a farm buys a $250,000 piece of qualifying equipment in 2025, and the operation’s tax advisor confirms it can fully use Section 179. If the full $250,000 is expensed in 2025, the farm’s taxable income could be reduced by that amount, potentially saving tens of thousands of dollars in federal income tax, depending on the marginal rate. For larger operations buying multiple machines, Section 179 and bonus depreciation together may allow them to expense a significant share of their total 2025 capital spending.
If the business has lower taxable income—or has already used up its Section 179 limit—bonus depreciation may help them keep accelerating deductions instead of stretching them over the asset’s normal recovery period. Every situation is different, which is why the example should always be a starting point for a conversation with a tax professional.
As year‑end approaches, it helps to step back and ask a few questions:
What machines are limiting productivity going into next season—tractors, combines, sprayers, hay equipment, loaders, or commercial mowers?
How much taxable income is expected for 2025, and how might Section 179 or bonus depreciation align with that picture?
Talking through these points with both our team and a tax advisor can help match the right machine and the right timing to the operation’s tax and cash‑flow goals.
Working with a partner like Koenig Equipment who understands how farmers and businesses use Section 179 can make the year‑end process smoother. Our team can help identify qualifying tractors, combines, hay tools, compact equipment, and commercial machines that fit both your needs and your budget. We can also coordinate timing for delivery and setup so new equipment is ready to work — and qualifies as “placed in service” — before year‑end.
If you are planning a 2025 upgrade or want to explore how new or used equipment could fit into your Section 179 strategy, connect with your nearest store location to start the conversation. Your local Koenig team can walk through options, availability, and financing so you are ready to make the most of current tax rules and be set up for the coming season.
Koenig Equipment does not provide tax, legal, or accounting advice. This material is for general informational purposes only and is not intended to be relied upon as tax, legal, or accounting advice; customers should consult their own tax, legal, and accounting advisors regarding their specific situations and current IRS guidance.