Section 179 Tax Benefits

Hello, welcome everybody. We’re gonna go ahead and get started in ThrottleNet’s webinar series. This will be, obviously, the last one of 2025. We’ll be looking forward to seeing you guys again in 2026.

Today we’re gonna be talking with Chris Montgomery, our Director of Sales, who everyone knows is the famous Chris here at ThrottleNet. We’re gonna be talking today about a really specific topic that you need to act on pretty quickly, and it’s about how you can save some money on hardware upgrades on any type of hardware. We’re gonna cover a lot of different topics on that when it comes to getting a tax deduction on some of these hardware upgrades. To give you an idea of some of the things we’re gonna cover here in a little bit—and if you have questions along the way, please ask in the chat—we’re gonna be talking about Section 179 and what it means to you as a business owner, some qualifications, some requirements, documentation that you’re gonna need to have in place, some of the depreciation that you can take as a bonus, and then, of course, your return on investment, which is the most important part that everyone should be thinking of. And then there are a lot of common myths with Section 179 that we’re gonna be covering. So without further ado, let’s jump right into it.

So Chris, what is Section 179? It’s a good question, George. So before we even… before we even get into what Section 179 is, I did want to kind of preface our discussion today by saying George and I are not tax accountants. Okay, so at the end of the day, the reason that we are doing this webinar today is because we’re getting close to the end of the year. Yes, and what we’ll be talking about today is how you guys can make purchases here at the end of the year that you can fully depreciate and ultimately get a savings to your tax bill, okay, depending on how you frame it and look at it. So to your question, what is Section 179?

Yes. Okay, so Section 179, in a nutshell, is what I just said. It allows you to make purchases and then take that full depreciation this year as opposed to doing it over the next three or five years. So because of that, there’s a lot of benefit in doing so, and there’s a lot of qualifying purchases that you, as a business, can take advantage of and still get this tax benefit, and that’s what we’re here to talk about today. So it’s a very important topic because everybody is always trying to plan for what hardware is going out of date, trying to be as secure as possible—things that you need to be aware of in the ever-changing environment—along with the fact that things like Windows 11 just got upgraded. All these different upgrades are happening.

So what type of purchases are gonna qualify for this? Yeah. When you’re looking at your entire network as a whole in your business, the ones that I would stay focused on primarily are gonna be laptops, desktops, switches, firewalls, and there are some qualifying software applications. Say, for example, Windows 11 might be a qualifying application that you might be able to get the benefit associated with this depreciation, okay, to purchase that, given what you’d said about the end of life. Yeah, in fact, that occurred about a month, month and a half ago. Yeah.

With that said, though, the reason that I want to focus on those specific areas is because servers right now are gonna be challenging, and the reason I say that is because when you talk about servers, they typically require more of a custom build and design and typically take a little bit longer to get in stock. But if we know that we need workstations—and we’ll talk about this here momentarily—or firewalls or switches or things that can be ordered and received within a week or so, these are the types of purchases that I believe would be the ones you probably want to look at and investigate in more detail. Absolutely. And like you said in the beginning, talk to your accountant about upgrades you did with Windows 11.

You may have done Windows 11 upgrades in the past couple of months when everything went out of date. Yeah, make sure you mention that to your accountant. Yeah, you may be able to take a nice tax discount on that. So speaking of the tax discount, how does it lower the cost? When you’re buying—let’s say you’re buying a whole bunch of workstations, or you’re buying hardware en masse for your business and need a good refresh—how is this actually, Section 179, lowering the cost of this stuff?

So it’s really more of a framing and a mindset, okay? You know, I get it that depending on how you look at tax liability and tax ramifications, that could be considered soft costs; that could be a variety of different things. The way that I would typically envision this or the framing that I would typically use to apply here would be: let’s say we make a $30,000 purchase, okay? So we’re going out and we’re purchasing a handful of workstations or whatever the case might be—some switches and firewalls—and as part of that, your tax rate, keeping it a nice round number, is 25%.

Okay, under this program, Section 179 allows you to take that full deduction of 25% off this year, so you’re not paying on that. So in a nutshell, that $30,000 investment is now reduced by $7,500 in the eyes of Uncle Sam, bringing down the actual investment of $22,500 and the ability then to reduce your overall tax liability by $7,500 because you can fully depreciate that purchase within calendar year 2025. So again, that’s typically how you would see the savings. Yeah. Because the savings are really being incurred based on the depreciation that you can take within the same calendar year, resulting in that piece of hardware or equipment ideally costing less or you’re not paying additional taxes or getting that additional tax benefit where you don’t have to pay that in.

Yeah, I love that—you’re saving on something you should be doing anyway, which is upgrading. Well, and take advantage of the tax benefits that are available to you as a business. Exactly. There are so many instead of spreading it out over three to five years. You’re gonna get a big discount now.

Yeah, and if you’re having a great year this year and a profitable year this year, and we need to figure out creative ways to reduce our liability, this is one of the ways to do that. So again, that’s why we bring this up in discussion typically around November and December, because this is about the time people are figuring out budgets and finalizing budgets and understanding, more importantly, what this calendar year, fiscal year, is gonna look like relative to the upcoming. Oh yeah.

So yeah, and you know, everybody says, “Oh well, when I push the button, the laptop comes on, right? We’re fine, right? It connects to the printer, we’re fine. Why do I need to upgrade all these different things?” Well, it can bring a return on investment.

It absolutely can. You need to upgrade these, and on top of the security side of it, I’m sure. Yeah, so let’s just talk in a couple of different ways about how it provides a return on investment. So first and foremost, I think we would all agree that when we have new equipment in place, it’s gonna be more efficient and productive. It’s gonna work better. It’s gonna work faster. It’s not gonna have the same potential downtime, okay, hypothetically speaking, that might come with older equipment where we’re having more troubleshooting that’s having to take place to keep that machine going. It’s just like a car. I had to replace my car earlier this week. I mean, again, a lot of maintenance—kind of throwing lipstick on a pig, so to speak—or throwing money down a hole, only to realize that when it was all said and done, I would have been better off buying the car six months ago and getting this behind me.

So the point is that by upgrading and updating your infrastructure, your core elements, you get the benefit of efficiency gains because you’re working on faster equipment; you don’t have the downtime that you might have dealing with troubleshooting or support-related issues that are coming up on older equipment. And more importantly, let’s be honest: your employees love getting new stuff. Yeah. So whenever you give them a new laptop or desktop or any sort of new items like this, this really reinforces why they’re there, and it gives them something new to play with.

Absolutely. Attitudes change; morale goes up. It’s not just your typical ROI where, hey, there’s a direct dollar relationship; there’s also just that mere fact that people love getting new technology. It makes them feel like they’re working for a forward-thinking organization, coupled with the fact that it’s just a warm, fuzzy feeling they get because they get to play with new equipment and technology. Now, I understand there are some of our users out there that really don’t want to see another piece of new technology in their lifetime—I get that—but that’s where we come into play. In a lot of cases, if we get new technology and we need assistance in understanding how this technology works, reach out to us.

That’s what we’re here to help with. And for goodness’ sake, some of these laptops I’ve seen and workstations I’ve seen that folks are working on cannot be updated anymore. They are done being upgraded. Please upgrade. It is a security problem. It is. When you cannot have security patches upgraded, if you have not looked at your firewall in 10 years, if you have not looked at anything—please do so.

It’s very important. Which brings me to the next point: what kind of projects matter most? Yeah, and which ones are gonna benefit the most. And yes, you talked a little bit about servers, right? But since those are such a custom thing to order and we’re looking at the last three weeks of the year, there are projects that can benefit big time even if you look into next year and your VCIO starts talking to you about next year. Well, that’s exactly it.

These are some projects that you need to talk about. So how do we find these things out? So if you’re a current ThrottleNet client—yeah—well in that case, you should have a VCIO associated with your account, or Virtual Chief Information Officer. Now, that individual is assisting you guys in better understanding exactly what your refresh schedule should look like. In addition, he built out—if you’re one of our clients that is on our Managed Network plus Cybersecurity program, and even for those that are not, I believe everybody has access to it today—we have our TN TechHub. Yes.

And TN TechHub will give you the ability to go in and look at all your assets and see your readiness, see all the recommendations your VCIO has made, see everything they’re talking about for the subsequent year as far as planning and budgets are concerned. And you can work with your VCIO to understand, “Hey look, if we could take a few of these items out—say, firewall recommendations, a couple of new switches in 2026—can we put those into 2025 real quick? Get those things ordered and get them sent in so we can get those installed before the end of the year?” So again, what I would encourage you to do is that if you have an interest in understanding this, reach out to your VCIO. Understand exactly what his recommendations are going into 2026, and then as part of that, start talking to your accountant around, “These are the different areas that we can impact or address hypothetically leveraging Section 179 and the bonus depreciation.

Which ones should I do and which ones offer the most benefit?” Okay. But again, that discussion with your VCIO and looking at your TN TechHub dashboard in concert with a discussion with your CPA or accounting team is going to help you to understand what benefits you can derive from this and ultimately where you should be spending that money to get the most benefit. Absolutely, and could not agree more.

And on top of that, if you’re watching this for the first time, whether it’s live now or you’re watching this recorded later on social media, it’s very important to not panic if you’re not at this point. But in 2026, start doing what Chris is talking about—planning ahead—so that by the time you get to next October, November, December, you’re pulling triggers on upgrading your network and taking those tax benefits in a big, big way.

Now, along with all the positives, there are a lot of myths out there about Section 179. So let’s talk a little bit about some of these myths. So a handful of myths are, you know, one would be: only large companies are eligible for this type. Oh yeah, that’s always… The reality is no—small to medium-sized businesses are also eligible for these types of depreciations and bonus depreciations. And otherwise, the difference might be you may not have the huge accounting team bringing this to your attention. So there’s an assumption that, “Oh, well, it’s only eligible for them.”

No, they just happen to have a team that found it, right? Okay. The bottom line is that’s why we’re here—to bring it to your attention. Go talk to your accountant and find out what makes sense. In addition to that, of course, “You have to pay cash for all this.” You don’t have to pay cash. You can do leased or financed options. So again, if cash flow is tight but we still want the benefit, you can go out and lease equipment. You can go out and finance the equipment.

You can work through Dell Direct for financing if you want to, and we, as an organization, also have partners that we work with in the area for leasing options. Absolutely—dollar buyout lease. Yeah, when it’s done, you own it. That’s it. You own it at the end of term, and you still get the full benefit of Section 179. So again, just understand it’s not a cash-only deal. So if cash flow is tight and we don’t want to make a large expenditure, but we can afford to finance it or lease it and then spread that over time, you can then, of course, get the full benefit of that lease but depreciate everything here in 2025.

Another one is “software doesn’t count.” Now, it depends on what the software is. So again, a lot of the software does count. So again, you’d have to have that discussion with your CPA to know what qualifying purchases look like on the application side. But I can say with some certainty that Windows 11, for example, as an operating system—a required operating system in order to make sure you’re secure and patched and supported, more importantly—would most likely be an included piece of software. Also, the cloud—“You know, well, the cloud doesn’t count.” No—that too can be used under Section 179. Again, in that environment, you can do some cloud and some hybrid-type environments where some stuff is on-site and some is in the cloud, a combination of the two.

So those can be eligible purchases as well. Again, I’ll say it again: talk to your accountant and have that discussion with them as to whether or not that makes sense for your organization. But again, these are just some of those different myths that are out there. And the last one is “the IRS rarely approves it.” The reality is that there’s nothing that says this—this is all to incentivize business growth. And I think we’d all agree, under the current administration and in general, that’s what we want to see. So it’s highly unlikely—and that is a myth that’s out there—“Oh, we went through this whole process and everything was declined or denied.” The reality is, most likely, it will be approved.

But what’s the harm in trying, right? So again, you’ll still be able to depreciate it. It’s just a matter of: will you be able to do it all in calendar year 2025? Yeah. And again, again, anything that you purchase to benefit your network is not just helping your network from a positive standpoint of your employees’ morale and happiness—it’s a security issue. Absolutely. These things have to be upgraded. They have to have continuous patching. You can’t just sit on a firewall from ten years ago and hope that it’s gonna stop the bad guys. Right? It’s not necessarily that way. It’s always good to do that. So from a tech strategy, you want to be talking to folks like ThrottleNet—or, if you’re using a different vendor, you definitely want to talk to ThrottleNet, of course—but if you’re using a different vendor, ask them about these things for a strategy going forward, to make sure that you have something planned in place.

But in the end, take the tax benefit. And that leads to—and I know you’ve said many times we’re not accountants—well, I’ll just say one last thing as far as that’s concerned in general, and this may be where you were going with it, George, but balancing this plan, if you will, with the tech strategy side of things. So in that case, guys, don’t let this be driven by the tax benefit. I mean, that’s an added bonus, but you still need to defer back to: what does our organization actually need? So that’s where you’re looking at life cycles, where you’re looking at, to George’s point, potential security risks in the organization. In a nutshell: what moles need to be whacked first? That’s what we’re looking for.

So don’t drive it based on just the “I want to make the biggest purchase I can to get the full depreciation value.” No—make the purchase where it makes sense to most benefit the organization. That will ensure you see the highest return on investment. Right. And that leads to the question of: should you buy now or wait? I know we’ve covered a little bit of this. We only have about a week or so to get some orders in right now. This equipment—if it is equipment—you can do the cloud, and we talked about some software.

Definitely talk to your accountant. But if it is equipment, it has to be on-site. This is the one that’s always up for debate and discussion. So again, we want to make sure that we’re having the discussion with our accounting team around this. But there are three things they typically want to see: A) it’s been ordered; B) it’s been delivered; and C) that it’s in use. Okay. Now, that “in use” part is the part that is really somewhat debatable. Yeah—is “in use” just having it plugged in and somebody could sit down, a user could sit down and use it? Or does it need to be attached to the domain or what have you? But again, in our experience and from what I’ve seen out there, “in use” simply means that it’s a computer that’s powered on and a user could sit down and begin performing some level of work on it.

Whether or not it’s tied to a domain and everything else most likely is not going to make a huge difference in the grand scheme of things. So with that said, those are really the three primary qualifiers: you know, is it a qualifying purchase within Section 179 campaign or tax code? In addition, was it installed or taken in by the end of the year? And is it in working order by the end of the year? So with that said, you need to prove that. Okay. So, you know, in order to prove that—yeah—you’ve gotta have some documentation. Yeah, you’ve got to get a little documentation. So of course, first off: a receipt, purchase invoice—so how much did I pay for this?

Again, that’s our depreciation and getting the full bonus depreciation there. In addition, confirmation of installation. So this could be a bill from ThrottleNet, this could be a notice from us that states that yes, this was installed. And then last but not least, placed-in-service date. So when exactly did you power it on and turn it on and actually get it ready for service? With that said, if you have a financing agreement, you would need to supply that to them as well. And in addition to that, an asset list.

So ideally: here is a list of all of our assets; here is a list of the assets we’ve replaced—and that can give some insight as well as to whether or not you’re eligible or not. So again, those are the core things that you need to provide. But for the most part, as long as you have a receipt, an install date, and a go-live date on it, you should be good to get whatever you’re eligible for with regard to these purchases. And you bring up a good point too: if this is the catalyst to get you started on an asset list, cannot encourage that anymore. Absolutely not. You need to know what’s in your network, what’s on your network, what’s operating, how old it is—every piece of what’s going on—so that you have a full scope of what you have in your business and what kind of holes you may have from security issues without that.

So if you don’t have a very clear fixed-asset understanding of what’s on your network, this needs to be a catalyst to get that going. Absolutely. And to George’s point, the number of CFOs, controllers, and accountants that I talk to where the number-one complaint right now is: “Chris, I don’t have any idea what equipment we have. I can’t find it. I don’t know what’s going on because I don’t have asset tracking through my current provider,” or in general. As a result, again, that’s why we want to have all that rolled up into our dashboard so you, as our client, have easy visibility. Yes. And then also providing that secondary resource in your VCIO, so that, “Hey, I don’t even feel like looking at this. I’m just gonna call one of my VCIOs and have them generate the reports for me.” Absolutely. So again, we can do all that for you if you’re a current client.

If you’re not a current client and you’d like to see those same benefits and features, by all means, reach out to us. Yeah. And along with that, I mean, we can come in and do a complete network assessment for you at zero cost and take a look at what you have, provide a full report of everything that’s on your network, and at least give you some sort of scope of what you’re dealing with. Yeah. So if you’re not ready to do anything this year because you’ve got three weeks left and you’re worried about it, at least let us talk to you and get your ’26 going right. Get a budget rolling. Start getting things down on paper so that way you can have a discussion with the team, know exactly what you’re going into in Q4 of ’26, which is gonna help you on budgeting, it’s gonna help you on security.

There are so many aspects that start with understanding exactly what assets are on your network. Correct. And bottom line, guys, is it’s about being proactive as opposed to reactive. Nobody wants a machine to die while they’re in the middle of using it, and then everybody has to drop everything to run down to Best Buy or Micro Center, go get a machine, plug it in, get it all connected up and operational. Mistakes happen, and that’s typically messed up. I think we’d all agree on that. So—well, let’s take a look and see if we have any questions. I know one would be: what should we be prepared for in terms of IT strategy long term?

So that’s gonna be something that, you know, you had briefly touched on with the VCIO. But I think what we’re looking at here is: what can you do? What can a VCIO do? If you don’t have a Virtual Chief Information Officer—obviously a CIO is great for a large, large business that’s gonna have a CIO—we provide Virtual Chief Information Officers that meet with you quarterly. But how are they helping, as far as to answer this question: strategy and long term? Yeah. So George, what they typically do is they spend the vast majority of their time—I shouldn’t say the vast majority—they’re there as consultants and strategists. But a big component of what they do is reviewing where we are relative to best practices, okay?

And then bringing to your attention different insights and ideas and methodologies relative to not only best practices, but any third-party governing bodies that may be putting in place additional compliance requirements. So as part of that, the first phase of discussion really is, to your point, talking to the VCIO. Yeah. Understanding exactly what we have in place. And then, with our TN TechHub dashboard, we can then say, “Okay, here’s what we’ve identified. And based on the life cycle of these devices, we can build out budgets and planners going out three to five years.” So the idea ultimately, guys, is that if we’re not doing it this way today, in the future we need to be. And if you’ve got a solution that allows you to future plan going out multiple years, and you can make adjustments along the way—and that’s all gonna collaborate with your vCIO so they can see what you’re doing and work directly with you—it doesn’t get any easier or better than that. Absolutely.

Yeah, don’t sit down and try to figure this out all on your own. No! That’s what we’re here to do. So by all means, reach out to your vCIO, reach out to me, reach out to anybody here at ThrottleNet. We’ll get you in touch with the right person, and as a result, we can come in and have a discussion around it from there. Perfect. So great.

Well, I think that was the end of the questions. Yeah, I really appreciate your time, Chris. Thank you so much for the insight. We got this done in about 20 minutes, so yeah… you know, guys, we give you a little bit of your time back today. Go get some lunch. Absolutely. But again, in closing on this—just kind of to wrap it up and tell them what you told them, kind of thing, if you will—so again, Section 179, guys, is something that you look at for bonus depreciation at the end of the year. As part of that, have a discussion with your vCIO around qualifying purchases as well as your accountant. Determine what those qualifying purchases are and what the eligibility looks like. From there, if it’s something we can move forward with, your vCIO will create a statement of work and a proposal for you. They’ll send it over to you digitally. You can approve it, submit payment, submit that to us. We’ll get the equipment ordered and get a scheduled time for install. Okay. Again, if you have any questions or you want to better understand what this looks like as a whole, by all means, reach out to your vCIO or one of us here and we can offer you additional assistance and insights there. Great. So guys, thank you so much, everybody.

Have a great rest of the 2025 Christmas and a happy New Year, guys. Yep. I’ll see you soon. Cool.