How to Apply the Section 179 Deduction to Your Semi-Truck Fleet
Every year, fleet owners face the same balancing act: upgrading equipment to stay competitive while also managing cash flow and tax obligations. Section 179 of the IRS tax code can tip that balance in your favor. Instead of depreciating new and used trucks over several years, Section 179 lets you deduct the entire purchase price in the same tax year the asset is placed in service. For fleets investing in shop equipment, telematics platforms, or truck upgrades, that single-year write-off can translate into tens, or even hundreds, of thousands of dollars in immediate tax savings.
The clock, however, is always ticking. To claim the deduction, qualifying assets must be purchased and operational by December 31. Waiting until the last minute can mean delayed deliveries, backlogged installations, and missed savings. That’s why it pays to understand the rules well before the tax season ramps up.
In this guide, we’ll break down what qualifies as a depreciable business expense, explain how both new and “new-to-you" Peterbilt trucks fit the bill, and walk you through a step-by-step process for electing the deduction on IRS Form 4562. Whether you’re financing a late-model sleeper, adding vocational units, or outfitting your shop with new diagnostic tools, you’ll learn how to leverage Section 179 to keep more cash in your business while positioning your fleet for growth in the year ahead.
Section 179 Basics: What It Is and Why It Matters
Section 179 is an accelerated-depreciation provision in the U.S. tax code that lets businesses deduct the entire purchase price of qualifying equipment in the year it is placed in service instead of depreciating it over five, seven, or even ten years. For fleet owners, that means new and used semi-trucks, shop tools, and diagnostic equipment can translate into an immediate reduction of taxable income, freeing up cash for fuel, payroll, or the next equipment upgrade.
Each year, the IRS sets a dollar cap on how much you can expense under Section 179. For 2025, the limit is $1,250,000, and the figure is indexed for inflation, so it is expected to rise modestly for 2026. Any qualifying purchase up to that limit can be fully deducted, provided the equipment is purchased, delivered, and in service by December 31.
Section 179 is designed for small and midsize businesses, so the deduction begins to phase out once total qualifying purchases in the tax year exceed a second threshold ($3,130,000 for 2025, likewise adjusting for inflation each year). Every dollar spent above that ceiling reduces the allowable deduction dollar-for-dollar until it phases out entirely. Fleets planning large capital expenditures should time purchases—or combine Section 179 with bonus depreciation—to avoid losing part of the write-off.
Depreciable Business Expenses: Qualifying Property for Fleet Businesses
Section 179 covers a surprisingly broad spectrum of assets so long as they are tangible, purchased (not leased on an operating lease), and used more than 50 percent for business during the tax year. For trucking companies, that opens the door to deduct far more than just tractors and trailers.
Commercial Vehicles
Any Class 8 tractor, day cab, or medium-duty truck you buy, whether brand-new off the TLG lot or a late-model pre-owned unit, is eligible. Specialized vocational trucks, such as dump, refuse, tow, or mixer units, also qualify, provided they are placed in service by the end of the year and used primarily in your business. The same applies if you purchase glider kits or add new power units to existing chassis.
Trailers & Attachments
Dry vans, reefers, flatbeds, tankers, grain hoppers, and curtain-side trailers all meet the definition of depreciable equipment. Liftgates, refrigeration units, auxiliary power units (APUs), and other fixed attachments can also be expensed under Section 179 as long as they are capitalized on your books.
Support & Shop Equipment
Section 179 isn’t limited to rolling stock. Tire balancers and changers, mobile column lifts, air compressors, welders, diagnostic scan tools, and even forklift trucks used in your yard count. If the item has a determinable service life and is used in fleet operations, you can likely expense it.
Technology & Software
IRS rules allow “off-the-shelf” software to be expensed under Section 179. That means fleet-management and dispatch platforms, telematics hardware, GPS units, ELD devices, dash-cam systems, and subscription-based driver-training software (if capitalized) can all be deducted in the first year.
Facility Improvements
Certain improvements made directly to a maintenance shop or terminal—fuel dispensing systems, security cameras, high-bay lighting, and vehicle wash bays—may also qualify as 15-year property and thus be eligible for Section 179 expensing. Consult your tax adviser about which building components meet the “qualified improvement property” rules.
Step-by-Step Guide to Claiming the Section 179 Deduction
Applying Section 179 is straightforward if you follow a disciplined process and keep meticulous records. Below is a five-step roadmap fleet owners can use to secure the deduction and withstand any future audit.
Step 1: Purchase and Place the Asset in Service
The IRS defines “placed in service” as the date an asset is ready and available for its intended business use, not merely the date you sign a purchase order. For trucks, that means the unit must be titled, insured, and rolling (or at least ready to haul) on or before 11:59 p.m. December 31 of the tax year. If you’re buying late in Q4, build extra lead time for delivery, upfitting, and DOT paperwork.
Step 2: Document Every Detail
Maintain a complete file for each qualifying asset that includes:
- Invoice or bill of sale showing purchase price and date.
- VIN or serial number and a description (e.g., “2024 Peterbilt 579 Sleeper”).
- Proof of payment or financing agreement.
- Date placed in service (odometer reading or internal deployment memo).
- Business-use percentage if the equipment has any personal-use component (must exceed 50 percent for Section 179).
Good record-keeping not only speeds tax prep but also provides crucial evidence if the IRS questions your deduction.
Step 3: Complete IRS Form 4562
Form 4562 is where you elect the Section 179 deduction. Fill out Form 4562 and attach it to your business tax return (Schedule C, Form 1120, 1120S, or 1065, as applicable).
- Part I, Line 1: Enter the total cost of all qualifying property you want to expense.
- Line 2: Enter the current year deduction limit (up to $1,250,000 in 2025).
- Line 3: Enter total equipment purchases for the year; if this exceeds the annual phase-out threshold ($3,130,000 in 2025), Part I will walk you through the reduction.
- Part II: Claim bonus depreciation on any remaining basis after Section 179 (if you choose).
Step 4: Coordinate with Your Tax Professional
While Section 179 is conceptually simple, nuances abound, especially if you operate in multiple states, finance equipment with complex leases, or approach the spending cap. A CPA can verify that your purchases and use percentages qualify, model how Section 179 interacts with bonus depreciation and state-level limits, and ensure the deduction doesn’t create an unintended Alternative Minimum Tax (AMT) issue. Consult your CPA early—preferably before the purchase—so you can structure deals and delivery dates for maximum tax benefit.
Step 5: Maintain Records for at Least Five Years
The IRS can audit returns within three years of filing (six years in some cases). Keep all invoices, financing documents, mileage logs, and maintenance records until at least the statute of limitations has expired. Digital copies stored in a secure cloud folder work fine, as long as they’re legible and complete.
Timing Tips and Best Practices
The Section 179 deduction is “use it or lose it” each tax year, so careful timing can turn routine equipment purchases into powerful tax-savings opportunities. Follow these best practices to be sure your trucks, trailers, and shop upgrades are eligible and that the deduction actually benefits your bottom line.
- Avoid the Q4 Crunch: Manufacturers and dealers often experience year-end backlogs. Ordering well before the holidays ensures the asset is delivered, titled, and road-ready before December 31. If you’re spec’ing specialized vocational units or adding aftermarket equipment, build in extra weeks for upfitting.
- Bundle Smaller Purchases Without Exceeding the Cap: If your fleet doesn’t plan to make a large purchase this year, consider grouping trailers, telematics devices, or shop tools into the same tax year to maximize the write-off. Just monitor total spending so you stay below the annual phase-out threshold. Otherwise, your deduction shrinks dollar-for-dollar.
- Evaluate Lease-Purchase and Financing Structures: Many capital leases (where you own the equipment at term-end) and financed purchases still qualify for Section 179. Confirm with your CPA that the contract transfers ownership or includes a bargain purchase option, and that payments begin and the truck is placed in service during the tax year.
- Coordinate Cash-Flow and Estimated Tax Payments: A large Section 179 deduction can dramatically lower Q4 estimated taxes or generate a refund, improving liquidity for fuel, payroll, or debt reduction. Run projections with your accountant before finalizing year-end equipment orders so you can align cash needs with the deduction’s impact.
- Document “Placed-in-Service" Dates Rigorously: The IRS focuses on when the asset is ready for business use, not simply purchased. Keep delivery receipts, insurance binders, and driver dispatch records that verify the truck or trailer was operational by year-end.
- Check State Conformity and Future Plans: Not all states mirror federal Section 179 limits. If you operate or file in a non-conforming state, like California or Pennsylvania, plan for a lower state-level deduction. Also, map out next year’s capital needs now; spreading large purchases across tax years can help you stay under the cap annually.
Common Misconceptions About Section 179 to Avoid
Even seasoned fleet operators can stumble over the finer points of Section 179. Misunderstandings about eligibility, documentation, and state-level rules can cost you part, or all, of the deduction. By understanding these common pitfalls, fleet owners can safeguard their Section 179 strategy. Below are the issues tax professionals see most often.
”Any Business Use Qualifies” — Not Quite
To claim Section 179, an asset must be used more than 50% for business in the year it’s placed in service. Mixed-use pickups or service vans that double as personal vehicles require a pro-rated deduction based on actual business mileage. Ignoring the 50-percent test invites IRS scrutiny and possible recapture of the write-off.
State Non-Conformity
Some states, including California, Pennsylvania, and North Carolina, do not fully conform to federal Section 179 limits or bonus-depreciation rules. If you file in multiple states, your federal deduction may be reduced or disallowed on the state return, creating unexpected taxable income. Always review state conformity before finalizing your tax plan.
Placing in Service vs. Signing Paperwork
Buying a truck in December does not automatically qualify it for Section 179. The unit must be delivered, titled, insured, and ready for dispatch by December 31. Merely signing a purchase agreement or parking an unfinished chassis on your lot is insufficient. Keep delivery receipts, insurance binders, and inspection logs to prove the placed-in-service date.
Assuming All Leases Qualify
Operating leases—where the dealer retains ownership and you return the equipment at term end—do not qualify for Section 179. Only capital leases or financed purchases that transfer ownership (or include a bargain-purchase option) are eligible. Review lease language carefully with your CPA before counting on the deduction.
Over-Leveraging for a Write-Off
Section 179 is a tax incentive, not a reason to overextend your capital budget. Buying equipment solely for the deduction can strain cash flow if the additional trucks don’t generate revenue. Run ROI and utilization analyses first, then let Section 179 amplify savings on assets you truly need.
Ignoring Recapture Rules
If the business use of the asset falls to 50 percent or less within the first five years, you may have to recapture part of the initial deduction as ordinary income. Keep usage records—mileage, job tickets, driver logs—to document continued business utilization and avoid a surprise tax bill.
Maximize Your 2025 Tax Savings with TLG
Section 179 remains one of the most powerful tax tools available to fleet owners, letting you deduct the full cost of qualifying trucks, trailers, shop equipment, and fleet-management technology in the year you place them in service. By pairing this accelerated write-off with thoughtful timing, sound financing, and meticulous documentation, you can slash taxable income and boost tax flow while modernizing your fleet.
Remember, the window to utilize Section 179 closes on December 31. Waiting too long can mean delivery delays, missed placed-in-service deadlines, and lost savings, especially in a market where build slots and inventory move quickly.
Ready to put Section 179 to work for your fleet? Browse TLG’s extensive inventory of new and used Peterbilt trucks and talk to your tax professional to get started. In-house financing is available through TLG Financial. TLG recommends consulting with a qualified tax professional concerning the 2025 Section 179 deduction and your business.
[ Browse Available Semi-Trucks ]