Maximizing Generator ROI With Section 179 Deductions
In most sectors, downtime is getting more expensive. According to Siemens, the cost of an hour’s downtime has doubled over five years. This cost arises in many ways — loss of revenue, cost of wages, price of emergency parts and potential penalties. In places like data centers, health care facilities and food businesses, downtime can be particularly detrimental.
The good news is that businesses can stay up and running with a few strategies, including investing in a backup generator. When your main power source fails, a generator can be the difference in avoiding expensive downtime. The cost to get started doesn’t have to be a burden, either.
Learn more about generator tax credits and how they can help your business mitigate downtime and maximize ROI.
Why Backup Power Is a Necessity
Today, electricity is the core of most operations. Whether keeping essential data servers online and backed up or powering refrigerators to store medicine or food supplies, power is a fundamental aspect of running a business. When the grid goes down, whether due to severe weather or general failure, almost no organization can afford to be without it for even a few minutes.
A recent United States Department of Energy report stated that blackouts could increase by 100 times in the next few years. If the existing power grid becomes further overloaded and unreliable, having the proper backup power will be even more crucial for businesses. With one or more backup generators, companies can maintain critical operations, minimize downtime costs and protect essential data and equipment.
Are Backup Generators Profitable?
While a generator is a necessary failsafe for keeping your business operating, it can also positively affect your profitability. Considering a backup generator as an ROI will help you understand how one can benefit your business beyond just backup power. This equipment offers long-term value by:
- Protecting critical assets during outages: A backup generator protects essential equipment and systems, preventing damage or data loss that could lead to financial losses. With an added layer of protection, companies avoid expensive repairs and potential disruptions to operations.
- Preventing revenue loss: Even a second of downtime can translate into lost revenue. A backup generator supports business continuity, so you can continue serving customers and fulfilling orders even during power outages. This helps you maintain a steady income stream, making the generator a profitable investment in the long run.
- Maintaining compliance with industry regulations: For industries that must adhere to strict regulations, investing in a backup generator helps you meet regulatory requirements — noncompliance can result in fines and legal repercussions, which impact your bottom line. This compliance aspect adds to the generator’s overall profitability by preventing financial losses.
- Reducing insurance premiums: Investing in a backup generator can lead to lower insurance premiums, as it demonstrates a proactive approach to risk management. These savings directly contribute to the generator’s profitability by reducing operational expenses.
- Maintaining business reputation: When your company can’t provide the promised services or products due to a power outage, customers and clients have negative experiences. A backup generator provides consistent service, protecting your brand image and customer loyalty. By maintaining a positive reputation, you can protect your revenue streams.
The cost to run a backup generator and the model you choose will impact your total ROI. It’s important to select the best generator type and size for your business’s needs, so you can keep operational costs manageable and make the most of your investment.
What Is the Section 179 Tax Deduction?
Supporting your company with a backup generator can be more cost-effective than you may expect. Section 179 of the IRS tax code lets businesses deduct the cost of specific property as an expense in the same year of purchase. This immediate deduction applies to the asset’s full value.
Under Section 179, only certain types of property qualify for tax deductions. Examples include vehicles, office equipment and business machinery, among others. To qualify, the property must be used for business purposes more than 50% of the time, and its purchase price can’t exceed the qualified dollar amount ranges outlined in the section.
Any business can take the deduction, as long as it has enough income to absorb it. In other words, if a company has a net income of $250,000, it can take a deduction up to $250,000. For 2025, the maximum Section 179 tax deduction is $2.5 million, with a phase-out threshold of $4 million.
You don’t need to have actually paid for the asset to deduct it. So long as you place the asset in service by December 31 and have a valid proof of purchase, you can write off the full cost. A tax professional can help you determine whether your assets qualify and what deduction you can take.
Are Generators Tax-Deductible?
Yes, generators are generally tax-deductible for businesses. Portable and stand-alone units are most often treated as equipment. Fully integrated systems may be considered permanent structures, so it’s worth consulting with a tax professional before you deduct your new generator.
Be sure to put the generator in service within the same year as you plan to write it off — that means fully installing it so it’s ready for use. Additionally, you must use the generator for business purposes over 50% of the time. Keep all documentation and records related to your purchase to make the process easier.
Since you can write off many kinds of commercial generators, you can choose from plenty of options. This equipment doesn’t have to be new, either — you can invest in high-quality, used backup generators to save costs without missing out on the tax deduction.
Section 179 vs. Bonus Depreciation
Section 179 lets businesses expense the cost of qualifying equipment placed in service during the tax year, up to an annual cap. In comparison, bonus depreciation is an additional first-year depreciation allowance that applies after Section 179 and can be used to write off the remaining basis of qualifying property. Both aim to accelerate deductions, but they work differently and can be used together.
As of 2025, the Section 179 benefit fully phases out once purchases exceed roughly $6.5 million, which is the maximum deduction and phase-out threshold amounts combined. Bonus depreciation is 100% for 2025, and, like Section 179, can apply to both new and used equipment, provided it’s the purchaser’s first use. Typically, you’ll apply Section 179 first and then bonus depreciation to whatever basis remains. Note that Section 179 is capped by your business’s taxable income, while bonus depreciation isn’t limited by taxable income and can create or increase a net operating loss.
Using Both Section 179 and Bonus Depreciation for Generators
A generator can typically qualify for Section 179 and bonus depreciation when placed in service. Both new and used generators can qualify, and financed purchases generally qualify the same as cash purchases — the key is that the generator is placed in service by December 31.
Here’s a quick example. Suppose your business purchases and places in service a $300,000 backup generator. If you have sufficient taxable income and are under the Section 179 limits, you could deduct the full $300,000 under Section 179. If you prefer not to use Section 179, or you’re constrained by the income limitation, 100% bonus depreciation in 2025 can typically deduct the remaining basis, resulting in a full first-year write-off either way. The right mix of Section 179 and bonus depreciation often comes down to cash flow goals, projected income and state regulations.
To get the most out of each, plan to place the generator in service by December 31, document the business purpose and use, and work with a tax advisor on proper asset classification. These steps will help you achieve the best balance between Section 179 and bonus depreciation so you can maximize backup generator ROI.
Browse Commercial Generators From Woodstock Power
From construction companies to medical centers to technology companies, backup generators are invaluable for various businesses. With Section 179 and bonus depreciation, the cost of purchasing one becomes more manageable.
Woodstock Power provides a range of high-quality used backup generators to meet your company’s needs. If you’re looking for a reliable power solution, our Philadelphia-based team of used generator specialists can help you locally or nationally.
Invest in commercial generators to avoid costly downtime by partnering with a name you can trust. Browse our solutions today, and reach out to us to get started.
