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What Construction Companies Should Know About Section 179 Deductions in 2025

If your construction business is planning to purchase equipment, vehicles, or software this year, Section 179 of the tax code could offer a major tax break.

What Is Section 179?

Section 179 allows businesses to deduct the full cost of qualifying equipment in the same year it is put into service, instead of depreciating it over time. For construction companies investing in new machinery, trucks, or software, this could possibly lead to big savings on your tax bill.

Qualifying Purchases Include:

  • Heavy equipment (e.g. excavators, loaders, skid steers)
  • Trucks and work vehicles used over 50% for business
    • Light vehicles (up to 6,000 lbs GVWR): Deduction limited to $12,200 in the first year, with the rest depreciated normally.
    • Heavy SUVs and trucks (6,001–14,000 lbs GVWR): Deduction capped at $31,300.
    • Heavy work trucks and vans (over 6,000 lbs GVWR, not SUVs): May qualify for the full Section 179 deduction (up to the annual limit), including heavy-duty pickups with beds 6+ feet long and commercially modified cargo vans.
  • Office computers or field tablets
  • Estimating, scheduling, and accounting software
  • HVAC, alarm, or fire protection systems installed in commercial buildings

This is exciting information, but keep in mind there are requirements that must be met.

Requirements:

  • Equipment must be purchased or financed (not leased under certain structures)
  • Must be used more than 50% for business
  • Must be placed in service by December 31st of the current year

Things to Note:

  • The deduction cannot exceed your business’ taxable income
  • If you exceed the spending cap, the deduction begins to phase out
  • Bonus depreciation may apply after Section 179 is maxed out—and is useful if your income is low or you are at a loss

How to Maximize Your Section 179 Deduction

Taking full advantage of the Section 179 deduction can significantly reduce your construction company’s tax liability—but it requires some strategic planning. Here is how to make the most of it:

1. Time Your Purchases Wisely

Section 179 only applies to equipment put into service during the tax year. This means:
Buying equipment in December but not using it until January = no deduction this year
Plan major purchases and deliveries to ensure the equipment is in use by December 31

2. Bundle Equipment Purchases

If you are already planning to buy one piece of equipment, consider if now is the time to invest in other needed items:

  • Qualifying Vehicles
  • Tablets or project management software
  • Upgrades to your office systems or job site trailers

Bundling purchases can help you hit the deduction limit.

3. Finance Smartly

You do not need to pay cash to claim Section 179—financed equipment can qualify also, as long as:

  • You own the asset (i.e., capital lease or loan—not an operating lease)
  • It is placed in service during the year

This means you can deduct the full cost now, even if you spread payments over multiple years.

4. Prioritize High-Cost/High-Use Assets

Use Section 179 to write off the assets that provide the most value to your business and have the longest useful life, such as:

  • Excavators
  • Dump trucks
  • Specialized software for bidding, tracking, or estimating

Save lower-cost, shorter-life items for other depreciation strategies.

5. Coordinate With Your Tax Pro

Every construction business has a unique tax situation. A reputable tax professional can help you:

  • Run cost/benefit scenarios
  • Balance Section 179 with bonus depreciation
  • Avoid unintended tax consequences

This is especially important if your company’s income fluctuates year to year.

Section 179 is a valuable opportunity for construction companies planning to reinvest in equipment or technology. If your business had a strong year, now is the time to plan ahead and take full advantage of this deduction—do not wait until the last minute! Strategically using Section 179 can help you grow your operations while significantly reducing your tax burden. If you have questions or need guidance, we are here to help.

*The information provided in this blog post is for general informational purposes only and does not constitute accounting, tax, financial, or legal advice. It is not intended as a substitute for professional consultation tailored to your specific circumstances.*

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at adding technology, we know you want to focus on what you do best as a contractor. in order to do that, you need a proactive back office crew who has financial expertise in your industry.

the problem is that managing and understanding key financial compliance details for your business is a distraction when you want to spend your time focused on building your business (and our collective future).
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Ready to run your business with the same
confidence you have on the job site?

At adding technology, we know you want to focus on what you do best as a contractor. In order to do that, you need a proactive back office crew who has financial expertise in your industry.

The problem is that managing and understanding key financial compliance details for your business is a distraction when you want to spend your time focused on building your business (and our collective future).

We understand that there is an art to what contractors do, and financial worries can disrupt the creative process and quality of work. We know that many contractors struggle with messy books, lack of realtime financial visibility, and the stress of compliance issues. These challenges can lead to frustration, overwhelm, and fear that distracts from their core business.

That's where we come in. We're not just accountants; we're part of your crew. We renovate your books, implement cutting-edge technology, and provide you with the real-time job costing and financial insights you need to make informed decisions. Our services are designed to give you peace of mind, allowing you to focus on what you do best - creating and building.

Here’s how we do it:

  1. Schedule a conversation. Let’s break ground on your financial renovation.
  2. We work through an assessment together that leads to a plan based on your specific needs. Then, we execute, and you have the opportunity to evaluate us on progress from day 1.
  3. Enjoy the freedom to build our future!

Schedule a conversation today, and in the meantime, download the Contractor’s Blueprint for Financial Success: A Step by-Step Guide to Maximizing Profits in Construction.” So you can stop worrying about accounting, technology, and compliance details and be free to hammer out success in the field.

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