Hospitals, data centers, and critical infrastructure need steady power; a generator protects patients, uptime, and public safety. The section 179 deduction helps you reduce the net cost of that generator in 2025. The rule lets you expense qualifying equipment in the year you place it in service. You avoid multi-year depreciation and you improve cash flow.
This guide explains how Section 179 applies to generators, what changed for 2025, and how to claim the deduction.
Compliance note: Always confirm rules with your tax advisor. This page is educational, not tax advice.
What Section 179 Does
Section 179 lets a business deduct the full purchase price of eligible equipment in the year of service. The property must be tangible, used more than 50% for business, and placed in service by December 31, 2025. You make the election on IRS Form 4562.
2025 Limits You Should Know
For tax year 2025:
-
The Section 179 maximum deduction is $1,250,000.
-
The phase-out starts at $3,130,000 of qualifying purchases.
-
The deduction drops dollar for dollar above that threshold.
Bonus Depreciation in 2025
Congress changed bonus depreciation in July 2025. The new law restores 100% bonus depreciation for qualifying property placed in service after enactment, replacing the prior 40% rate under the phase-down schedule. This update matters for large generator projects that exceed Section 179 limits.
How Section 179 and bonus depreciation work together:
-
Apply Section 179 first, up to the $1,250,000 cap and subject to the business income limit.
-
Apply bonus depreciation next to the remaining basis.
This sequence can produce a near-total write-off in year one on many generator purchases.
Do Generators Qualify?
Industrial generators qualify as tangible personal property if used for business. New and used units can qualify if they are new to your business. Leased equipment usually does not qualify unless you have a capital lease treated as a purchase for tax purposes. You must place the generator in service during the tax year. Keep purchase, delivery, and commissioning records.
Why This Matters for Hospitals, Data Centers, and Critical Infrastructure
Hospitals
Hospitals must protect life safety systems. A generator keeps surgical suites, ICU devices, and pharmacy storage online. Section 179 can lower acquisition cost for diesel or natural gas standby units, switchgear, and control systems. The deduction supports code-driven upgrades and N+1 strategies without delaying care needs.
Data Centers
Data centers sell uptime. Outages drive SLA penalties and brand risk. Section 179 supports high-kW sets, paralleling gear, and fuel systems. For multi-MW banks that pass the Section 179 cap, 100% bonus depreciation can write down the rest in year one under the new law. This pairing can turn a large capex into immediate tax savings.
Critical Infrastructure
Utilities, telecom hubs, water treatment, and public facilities use generators to protect essential services. Section 179 can help fund replacements before failure. Bonus depreciation helps large fleets, peaker-site backups, and distributed assets tied to resilience plans.
Eligibility Checklist
Use this quick checklist to confirm eligibility:
-
The generator is purchased (or under a capital lease treated as a purchase).
-
The generator is used >50% for business.
-
The unit is new to your business (new or used).
-
The system is placed in service by December 31, 2025.
-
You elect Section 179 on Form 4562 and keep commissioning documents.
Simple Examples
Example 1: Hospital standby system
-
Purchase price: $800,000
-
Section 179 deduction: $800,000 (within the 2025 cap)
-
Bonus depreciation: $0 (nothing left to depreciate)
Result: The hospital deducts the full cost in 2025, subject to income limits and other rules.
Example 2: Data center multi-generator bank
-
Purchase price: $3,500,000
-
Section 179 deduction: $1,250,000 (hits the cap)
-
Remaining basis: $2,250,000
-
Bonus depreciation: 100% of $2,250,000 under the July 2025 law
Result: Near-full write-off in year one, subject to rules on qualified property and placed-in-service dates.
Example 3: Utility buys a used unit
-
Purchase price: $400,000 for a used diesel generator
-
Section 179: Eligible if new to the business, >50% business use, and placed in service in 2025
-
Bonus depreciation: Apply to any remaining basis if applicable
Result: Fast write-off on a budget-friendly asset.
Quick Reference Table
| Item | 2025 Value | Notes |
|---|---|---|
| Section 179 max deduction | $1,250,000 | Business income limit applies |
| Phase-out threshold | $3,130,000 | Dollar-for-dollar reduction above this level |
| Bonus depreciation | 100% (per July 2025 law) | Applies after Section 179 |
| Placed-in-service deadline | December 31, 2025 | Keep delivery and commissioning records |
| Form to file | IRS Form 4562 | Make the election for Section 179 |
Sources for the table values: IRS and professional guidance.
Documentation You Should Keep
-
Purchase agreement and invoice
-
Serial number and model details
-
Delivery records and commissioning report
-
Site photos of installed equipment
-
Switching and load-bank test results
-
Maintenance contract and startup checklist
These records help you show the placed-in-service date and business use.
Filing Steps
-
Confirm that the generator meets the >50% business use test.
-
Confirm the placed-in-service date in 2025.
-
Calculate your Section 179 deduction up to $1,250,000.
-
Apply bonus depreciation to the remaining basis.
-
Complete IRS Form 4562 and retain all records.
Common Questions
Do used generators qualify?
Yes, if the unit is new to your business, used >50% for business, and placed in service during the year. Keep records that show prior ownership and your commissioning date.
Do leased generators qualify?
An operating lease does not qualify for Section 179. A capital lease that is treated as a purchase may qualify. Confirm the lease structure with your CPA.
Can I combine Section 179 and bonus depreciation?
Yes. You claim Section 179 first, then apply bonus depreciation to the remaining basis. Under the July 2025 law, bonus depreciation is 100%, which can erase most or all of the balance in year one.
What if I exceed the phase-out threshold?
You lose Section 179 dollar-for-dollar above $3,130,000 in qualified purchases, but you can still use bonus depreciation on eligible property.
How React Power Solutions Helps
React Power Solutions supports projects that protect patient care, uptime, and public services. Our Houston facility stocks diesel and natural gas generators from leading brands like Caterpillar, Cummins, Kohler, Waukesha, and Detroit Diesel. We carry new and used equipment. We test and prepare units for immediate operation. Our team helps you match kW, voltage, fuel type, and footprint to your site constraints and your specification. We support parallel systems, controls, switchgear, and fuel storage. We ship quickly and support global deployments.
If you need service or rebuilds, our certified team extends equipment life. If you need to sell surplus units, we provide fair market offers. We act as a single source so you can meet your placed-in-service deadline and document the startup for your files.
Action Plan for 2025
-
Scope the load and define redundancy (N, N+1, or 2N).
-
Select the unit or generator bank that meets code, runtime, and fuel strategy.
-
Confirm lead times for equipment, switchgear, and commissioning.
-
Schedule startup and load bank testing to lock in the placed-in-service date.
-
Coordinate with your CPA on Section 179 and bonus depreciation.
-
Order early if your project is large or spans multiple sites.
Final Thoughts
A generator is essential for clinical safety, uptime, and public trust. Section 179 makes the purchase more affordable in 2025. The restored 100% bonus depreciation expands savings on large systems. With clear steps, good records, and the right partner, you can place your equipment in service this year and claim the deduction.
React Power Solutions is ready to help you plan the project, source the right unit, and meet your deadline.
