With qualifying warehouse racking systems, companies can optimize their storage investments while reducing their tax burden, regardless of whether you’re a small enterprise or a large corporation.

What is Section 179?

Section 179 is a provision in the United States Internal Revenue Code that says businesses can deduct the entire purchase price of qualifying equipment or software placed into service during the tax year.

For the deduction to apply, you must use the equipment or software more than 50% of the time for business purposes. The deduction has a maximum limit, which is adjusted annually.

As tangible personal property, custom industrial racking systems qualify for the deduction. So, if your company has been considering a storage upgrade, now is the time.

Recent Updates to Section 179

The maximum deductible amount under Section 179 was recently changed by 2025’s One Big Beautiful Bill Act (OBBBA) to $2.5 million, a 100% increase from 2024. The deduction cannot exceed your business’s taxable income, and it will be reduced once you exceed a $4 million phase-out threshold.

The Return of 100% First-Year or Bonus Depreciation

First-year depreciation, or bonus depreciation, is a tax incentive that allows businesses to deduct a substantial portion of the cost of qualifying assets in the year they are placed into service. It was originally implemented by the Tax Cuts and Jobs Act of 2017. The depreciation rate was set at 100% for qualified property that entered use between 2017 and 2022. Between 2022 and 2027, bonus depreciation was going to phase out 20% at a time.

The OBBBA changed this. It brought back the 100% bonus depreciation on a permanent basis. Now, most large custom systems that are acquired and placed into service after January 19, 2025, qualify for the deduction.

Warehouse shelving is eligible for the first-year or bonus depreciation, allowing you to use those funds to reinvest and grow your business.

How to Apply Section 179 and the Bonus Depreciation

The Section 179 deduction doubled in 2025, and the bonus depreciation established by the Tax Cuts and Jobs Act of 2017 was restored to 100%. The increase of the Section 179 deduction combined with the restoration of the 100% first-year or bonus depreciation deduction makes it an ideal time to invest in custom industrial storage systems that can enhance safety, productivity and efficiency.

Unlike Section 179, bonus depreciation is not limited by an annual cap. This provision applies to a broader range of assets, including tangible personal property, qualified improvement property and even used property that meets acquisition requirements.

To maximize tax benefits, businesses can strategically combine both provisions. In the year a qualifying asset is placed into service, a company can use the Section 179 expense deduction to deduct a portion of the asset’s cost immediately. If the asset’s cost exceeds the annual limit set by Section 179, the business can then use the bonus depreciation to further deduct the remaining cost up to the annual cap. This dual approach optimizes the immediate tax benefit while still capitalizing on the higher deduction limits of Section 179 for certain assets.

To claim Section 179 deductions, follow these steps:

• Ensure the asset qualifies — it should be tangible personal property or qualifying software used more than 50% of the time.
• Purchase and put the asset into service within the tax year. Keep detailed records of the purchase date, cost and usage.
• When filing taxes, complete IRS form 4562, “Depreciation and Amortization.” Enter the necessary information about the asset, including its description, cost and percentage used for the business.
• Calculate your deduction limit based on the annual cap. You can deduct the entire cost if the total cost doesn’t exceed your business’s taxable income.

It is recommended to work with a tax professional to ensure your deduction claim is accurate and gives you the best possible tax outcome.

Calculate Potential Section 179 Savings

Ready to see how the new deduction limits translate into immediate tax savings? Use this third-party calculator to factor in your estimated costs and see the potential tax reduction today. It takes both the new deduction limit and your company’s tax bracket into account.

Tax Savings on Extreme-Load, Space-Efficient Systems

Securing significant racking system tax savings used to be a matter of staying within the $1.25 million deduction limit imposed by Section 179. If an asset exceeded that number, there was only so much bonus depreciation could do. Your warehouse would have to depreciate the rest of the asset’s value over the next few years.

Now, with the limit doubled and the depreciation rate set to 100%, your warehouse can write off the value of safer, stronger racking systems in the first year of ownership.

The newfound size of the tax deduction also expands your warehouse’s options significantly. High-cost structural steel racking and custom systems that can safely handle over 80,000 pounds (36,287 kilograms) per shelf become more viable options.

Explore Industrial Racking Systems From Dexco

Section 179’s doubled deduction limit combined with the return of the 100% bonus depreciation represent an amazing opportunity. You can capitalize on the substantial tax savings with cutting-edge industrial storage systems from Dexco. Our premium racking solutions enhance your operational efficiency and improve overall safety, while enabling you to maximize available tax benefits.

Elevate your storage capabilities and financial advantage with Dexco® specialized rack systems — you’ll get lasting, advanced rack systems that fit your operational needs. Contact us today to get started with your customized storage solution.

Note: It’s crucial to stay updated on tax laws and to consult a qualified tax professional to determine if you qualify for and can use the Section 179 and/or the first-year depreciation deductions. Keeping meticulous records of your purchases and their business use is essential for substantiating your claims.