3 Tax Moves to Make Before Buying Equipment
3 Tax Moves to Make Before Buying Equipment
Planning to buy equipment before the end of 2025? Great move — but timing and strategy matter. These three tax-smart steps can help your Tulsa business save big and stay compliant. Whether you’re upgrading your office, investing in new software, or purchasing machinery, understanding how to maximize deductions is key.
1. Use Section 179 to Deduct the Full Cost
Section 179 allows businesses to deduct the full purchase price of qualifying equipment in the year it’s placed in service. For 2025, the deduction limit is $2.5 million, with a phase-out beginning at $4 million in total purchases. This includes computers, office furniture, machinery, and even certain vehicles. If you’re planning a large investment, acting before December 31 ensures you capture the full benefit.
Keep in mind: the equipment must be used more than 50% for business purposes. Also, leased equipment may qualify, which is helpful for businesses managing cash flow. For more details, check IRS Publication 946.
2. Stack Bonus Depreciation for Bigger Savings
In addition to Section 179, bonus depreciation allows you to deduct 100% of the cost of eligible assets placed in service after January 19, 2025. This applies to new and used equipment, and there’s no spending cap. If your purchases exceed the Section 179 limit, bonus depreciation kicks in to cover the rest.
This strategy is especially useful for startups or growing businesses investing heavily in infrastructure. By stacking both deductions, you can significantly reduce your taxable income. However, bonus depreciation is set to phase down in future years, so 2025 is a prime opportunity.
3. Time the Purchase and Delivery
To claim deductions in 2025, the equipment must be placed in service by December 31 — not just ordered. That means it must be delivered, installed, and ready for use. Waiting until the last week of December can be risky due to shipping delays, backorders, or installation issues.
We recommend starting the process in early November. This gives you time to compare vendors, schedule delivery, and ensure everything is operational before the deadline. During our tax planning consults, we help clients map out purchases and avoid last-minute surprises.
Image: Planning business equipment purchases before year-end
Bonus Tip: Keep Your Records Audit-Ready
Document every purchase with invoices, receipts, and proof of delivery. Note the date the equipment was placed in service and its business use percentage. These records are essential if the IRS questions your deductions. Visit our News & Information hub for more compliance tips.
Final Thoughts
Buying equipment before year-end can be a smart financial move — but only if done strategically. By combining Section 179 and bonus depreciation, and timing your purchases correctly, you can reduce your tax bill and reinvest in your business. If you’re unsure what qualifies or how to structure your purchases, our Tulsa-based team is here to help.