As the calendar moves toward the final quarter, business owners and their advisors need to sharpen their Q4 tax planning. Among the most powerful tools still under-leveraged is the Section 179 deduction, especially in light of recent legislative changes. With careful planning, businesses can significantly reduce their tax burden, improve cash flow, and make strategic investments. Below, we’ll walk through what’s new under Section 179, year-end move you should consider, pitfalls to avoid, and how Hive Tax’s AI-driven research and planning tools can help you move faster and more precisely.
What’s New for Section 179 in 2025
Thanks to the One Big Beautiful Bill Act (signed July 4, 2025), several changes make Section 179 more favorable than it’s been in years.
Key updates include:
- Higher deduction cap: The maximum Section 179 deduction is now $2.5 million of qualifying property placed in service in 2025.
- Higher phase-out threshold: The deduction begins phasing out once total Section 179-eligible purchases exceed $4 million.
- Permanency: These enhanced limits and definitions are now permanent starting for tax years beginning after December 31, 2024.
- Expanded eligibility: More types of property, including certain qualified improvements to non-residential real property (e.g. roofs, HVAC, alarm/security systems), off-the-shelf software, and both new and used qualifying equipment, are eligible under Section 179.
- State conformity issues: While the federal rules are more generous, not all states conform to these changes or to bonus depreciation rules. Always check state law.
Additionally, bonus depreciation has been permanently restored to 100% for qualifying property acquired after Jan. 19, 2025. This is important because Section 179 and bonus depreciation can work together, but their interaction should be carefully managed.
Why Q4 is Critical for Section 179 Planning
- Placed-in-service requirements: To claim Section 179 (or bonus depreciation), the asset must be placed in service by year-end. That means Q4 is the window for timing purchases, deliveries, installation, etc.
- Cash flow and budgeting: Capital expenditures are easier to plan in Q4 once income forecasts, budgets, and profitability for the year are clearer.
- Avoid surprises with income limitations: Section 179 deductions are limited by taxable business income. If income estimates change late in the year (e.g. a big project, sale, or loss), it affects how much Section 179 you can use.
- Election timing and strategy: Deciding whether to use Section 179 first (on certain property), then bonus depreciation, versus spreading depreciation out over multiple years may have different outcomes depending on current vs. future expected profitability, tax rates, and regulatory risk.
Practical Steps & Moves to Make Before December 31
Here are actionable steps for you and your clients during Q4:
- Inventory upcoming capital purchases
Identify all qualifying property (equipment, software, certain building improvements) that can be placed in service before year-end. - Assess business income projections
Estimate your business income for the full year to see how much Section 179 you realistically can use. If income is expected to be limited, maybe don’t try to push every opportunity this year. - Timing & installation
Ensure not just purchase, but placed in service—meaning installed, ready to use—for assets. Ordering in Q4 is not enough if installation or setup pushes the service date into next year. - Vehicle purchases
Heavy vehicles (>6,000 lbs GVWR) can qualify; but vehicles have separate rules, limits (for SUVs, etc.), and business use thresholds. Document business use carefully. - Compare Section 179 vs bonus depreciation
In many cases, applying Section 179 first (especially for property that might not qualify for bonus depreciation, or where you want control over what gets expensed immediately) then using bonus depreciation for the remainder may deliver the best mix. - State tax conformity check
If your business operates in multiple states or in states that don’t automatically adopt federal depreciation/expensing rules, adjust strategy accordingly (you might favor Section 179 in some situations). - Record keeping & documentation
• Purchase orders, invoices, proof of installation/placed in service
• Business use logs (in particular for vehicles)
• Decisions / elections made (e.g. electing out of bonus depreciation for certain asset classes) - Use carry-forwards wisely
If your Section 179 deduction is limited by income, you can carry forward unused amounts to future years, but it’s usually better to plan so you fully use it if doing so makes sense in light of expected future tax rates.
Pitfalls & Risks to Avoid
- Overbuying just to hit a threshold may reduce marginal return, especially if depreciation recapture or state conformity is bad.
- Buying too early without ensuring it’ll be placed in service.
- Not tracking business vs personal use properly in mixed-use assets.
- Missing deadlines or improperly documenting the election.
- Assuming bonus depreciation will work the same way in every jurisdiction—state variation can bite.
How Hive Tax AI Research & Planning Tools Help You Win with Section 179
You and your clients can dramatically streamline, optimize, and de-risk this Q4 process using tools built specifically for tax & finance professionals. Here’s how Hive Tax’s AI-powered research and planning tools make a difference:
| Capability | How It Helps in Q4 / Section 179 Planning |
| Automated legislative & regulation updates | Hive’s AI tracks real-time changes (e.g. the One Big Beautiful Bill Act) so you get alerts when deduction caps, phase-out thresholds, or property categories change. No more guessing or relying on stale rules. |
| Scenario modeling | Want to see trade-offs of expensing now vs later? Hive lets you model different purchase amounts, taxable income forecasts, and mix of assets. You can test “what if I buy $X of equipment now vs next year” and see the tax impact immediately. |
| Asset qualification checker | Input descriptions of equipment, software, or improvements; the tool helps you assess whether they meet Section 179 eligibility (personal property vs real property, business use %, etc.), flag risk areas (e.g. vehicles, mixed-use). |
| Timing & placed-in-service monitoring | Hive can set reminders relative to deadlines, monitor stages of acquisition, installation, and use. Ensures nothing slips past year-end because something wasn’t “in service.” |
| State conformity analysis | Hive lets you compare treatments across your states of operation, so you can see how state law might limit or expand the benefit of Section 179 or bonus depreciation. |
| Documentation & audit-risk flagging | Generates checklists (e.g. documentation you need for vehicles or real property improvements), highlights weak spots, suggests what may get questioned in audit. |
Q4 Checklist: Are You Ready to Maximize Section 179 in 2025?
- You have a list of all capital purchases that could qualify, with projected placed-in-service dates
- Taxable income projections prepared (or at least best estimate) to see what cap you’re likely to hit
- Vehicle purchases vetted (GVWR, business use, documentation)
- Software or building improvement purchases assessed to confirm eligibility
- State tax implications reviewed for all jurisdictions involved
- Relevant elections (bonus depreciation, opt-outs) considered and prepared
- Documentation system in place for invoices, product specs, usage logs, installation dates
Bottom Line
For many businesses, Q4 2025 represents a “use it or lose it” opportunity. With Section 179 limits dramatically higher, bonus depreciation restored, and more flexibility in property definitions, the potential tax savings are significant. But that potential only materializes with timely, informed decisions—and solid documentation.
As CPAs, your role is more than compliance; it’s strategic partnership. Helping clients make proactive choices in Q4 can deliver immediate savings, better cash flow, and more capacity for reinvestment—especially as we head into 2026.
If you haven’t already, now’s the time to put Hive Tax AI research & planning tax tool to work: they’ll help you see the full landscape of what’s possible, avoid missteps, and move decisively.