Investing in forklifts, sideloaders, piggyback forklifts and other material-handling equipment is a necessity for warehouse, manufacturing, distribution and port operations. But in 2025, thanks to favorable tax rules, such purchases can also deliver a powerful tax benefit right away: Section 179 expensing (plus bonus depreciation).

Below, we will explain:

• What Section 179 is, in simple terms
• How it applies specifically to forklifts and material-handling equipment
• The 2025 limits and mechanics you need to be aware of
• The benefits — and some cautions — of using Section 179 for forklift purchases

What Is Section 179?

Under U.S. tax law, “Section 179” is a provision that allows a business to deduct (i.e. “expense”) the cost of certain qualifying property in the year it is placed in service — rather than capitalizing the cost and writing it off gradually through depreciation over many years.

Ordinarily, most machinery or equipment would be subject to depreciation (for example, over 5 or 7 years, using the Modified Accelerated Cost Recovery System, MACRS). Section 179 lets you “front-load” that deduction, within limits, so you get more tax benefit right away.

Because the tax code also provides bonus depreciation (or “special depreciation allowances”), many businesses combine Section 179 and bonus depreciation to immediately write off 100% of the cost in the first year, provided certain rules are satisfied.

Why Forklifts, Sideloaders, Piggyback Forklifts and Material-Handling Equipment Qualify

Forklifts, lift trucks, warehouse racking, conveyors, loading dock equipment, sideloaders, piggyback forkliftss and similar material-handling machinery are generally tangible property used in business operations. Because they are “property used in a trade or business,” they often qualify for Section 179 expensing.

Key points:

1. New or used are both eligible (if “new to you”)
   The equipment doesn’t necessarily need to be brand new — a used forklift may qualify, as long as it was not previously in your books and is used predominantly for business purposes.
2. Business use requirement
   The forklift must be used more than 50% for business. If there’s any personal or non-business use, you must allocate accordingly.
3. “Placed in service” in the tax year
   The purchase (or financing) must occur, and the equipment must be ready to use (i.e. installed, operational) by December 31 of the tax year in question.
4. Within overall limits
   There are ceilings to how much total Section 179 deduction you can take in a year. Also, if your total qualifying purchases exceed a threshold, the deduction begins to phase out.

Thus, for many businesses purchasing related equipment, Section 179 (plus bonus depreciation) offers a way to deduct large capital outlays immediately, rather than stretching them over years.

How the Deduction Works in Practice (Example)

To illustrate, let’s run through a hypothetical scenario. (This is illustrative only; consult your tax advisor for your numbers.)

• Your business buys new equipment for $100,000 in 2025.
• You use it 100% for business.
• You have not met the Section 179 cap, and your total qualifying equipment purchases are below the phase-out threshold.

Step 1: Elect Section 179
You apply Section 179 to deduct, say, the full $100,000 (or a portion, depending on your other asset purchases and your taxable business income).

Step 2: Bonus Depreciation
Because Bonus Depreciation is 100%, any remaining basis (if any) may also be deducted immediately, essentially allowing a full first-year expensing.

Result:
You deduct the full $100,000 in 2025, reducing your taxable income (and your tax liability) in that year, instead of spreading depreciation over 5–7 years under MACRS.

Without Section 179 + bonus depreciation, you might have been limited to a smaller first-year depreciation (e.g. a fraction under MACRS), with the balance spread over future years.

Imagine your tax rate is 25%. That $100,000 deduction saves you $25,000 in taxes now (assuming you have sufficient taxable income). And because you got the deduction sooner, you keep more of that cash to reinvest in operations, maintenance, or additional equipment.

Benefits of Using Section 179

Here are the main advantages:

1. Immediate tax relief
   Rather than waiting years to depreciate equipment, you can significantly reduce your tax burden in the year of purchase. That’s cash you can use earlier.
2. Improved cash flow
   Because your tax liability is lower, you retain more liquidity to invest back into operations.
3. Incentive to modernize/upgrade fleets
   The tax code is encouraging capital investment — making it more financially compelling to replace older, less efficient forklifts.
4. Simplicity & flexibility
   You choose how much of your eligible purchases to expense under Section 179 (i.e. you don’t have to take the maximum).
5. Used equipment qualifies
   You can apply Section 179 to used forklifts, terminal tractors or container handlers, which helps small or growing operations invest more affordably.
6. Stacking with bonus depreciation
   Because bonus depreciation is 100% in 2025, you can often deduct the entire cost, even beyond the Section 179 cap (subject to rules).

Things to Watch Out For / Potential Risks

While Section 179 offers a strong incentive, there are pitfalls or constraints to be aware of:

• Income limitation
  Your Section 179 deduction cannot exceed your business’s taxable income from active operations. If you don’t have enough income, unused deduction may carry forward.
• Phase-out / cap on total purchases
  If your total qualifying purchases exceed the phase-out threshold, your Section 179 deduction is reduced.
• Recapture rules
  If your business usage of the equipment falls below 50% in later years, or if you sell the equipment prematurely, some of the deduction may be “recaptured” (i.e. added back to income) in those later years.
• State conformity
  Some states do not fully conform to the federal Section 179 and bonus depreciation rules. You might not get the same benefit on your state tax return. (Always check your state laws.)
• Proper documentation
  You need to maintain good records: purchase invoices, installation, date placed in service, percentage of business use, logs, etc. The IRS may ask for proof.
• Mind the year-end timing
  To qualify, the equipment must be placed in service by December 31. Delays in delivery, installation, or setup could jeopardize eligibility for the tax year.

We always recommend you consult your own tax professional to ensure you receive all the benefits of Section 179 and that your business qualifies for the benefits.

Visit our website to see our selection of new and used forklifts, terminal tractors and container handlers. For more information or pricing, contact us at 804-233-0051.