The Section 179 deduction
Section 179 lets a business deduct the cost of equipment in the year it's bought, instead of depreciating it over years. It's the rule behind "buy it before December 31." Since 2025, bonus depreciation does much the same thing — so the real question is which to use, and whether the purchase makes sense at all.
How Section 179 works
Normally, equipment is deducted a piece at a time over its useful life. Section 179 lets you elect to deduct the cost — up to a limit — in the year you place it in service. You choose it asset by asset on Form 4562, and you can take all of an asset's cost or just part.
The 2026 limits
- $2,560,000 in total for the year.
- Reduced dollar for dollar once the business places more than $4,090,000 of qualifying property in service — it's aimed at small and mid-size businesses.
- $32,000 for a heavy SUV — over 6,000 and up to 14,000 lb gross vehicle weight.
- No more than your business income. The deduction can't exceed taxable income from actively running a business — which includes wages from a job. Anything over carries forward to next year.
- S corporations and partnerships apply the limits twice: once for the business, and again on each owner's return.
What qualifies
- Equipment and machinery, computers, furniture, and off-the-shelf software
- Vehicles used more than 50% for business — with the caps described in vehicle write-offs
- For commercial buildings: interior improvements, roofs, heating and air conditioning, fire protection and alarm systems, and security systems
It has to be bought — not inherited, or bought from a close relative — used more than half for business, andplaced in service by year-end. Ordering something on December 30 that arrives in January counts next year.
Section 179 vs bonus depreciation
| Section 179 | Bonus depreciation | |
|---|---|---|
| How much | Up to $2,560,000 | 100% for property acquired after January 19, 2025, no dollar limit |
| Business income limit | Yes — the excess carries forward | No — it can create a loss |
| How it's chosen | Elected asset by asset, any amount | Automatic for a whole class of property unless you opt out |
| New or used | Both | Both |
| State taxes | Most states follow it, often with lower limits | Many states don't follow it |
With 100% bonus depreciation back, many businesses write off equipment without Section 179 at all. Section 179 still matters when you want to deduct part of an asset's cost, when your state doesn't follow bonus depreciation, or for building improvements.
Is the purchase worth it?
A deduction gives back your tax rate on the money spent — about 30 cents on the dollar at a 30% rate — never the whole cost. Equipment the business needs is cheaper after the deduction. Equipment bought for the deduction is still mostly money spent. And when you sell it, the deduction comes back as ordinary income through depreciation recapture; if business use falls to 50% or less, part of it comes back even without a sale.
Which to use, and how much to take, is a question for your CPA or tax attorney before year-end.
Sources
- Rev. Proc. 2025-32 — the 2026 Section 179 limits
- IRC §179 — the limits, the income limit and carryover, qualifying property, and recapture
- IRS guidance on bonus depreciation — 100% for property acquired after January 19, 2025
- IRS Publication 946 — Section 179 and depreciation
- IRS Form 4562 — where the election is made
General information, not advice for your situation. Whether a strategy fits depends on your facts — talk to your CPA or tax attorney about whether you qualify before you put it in place. Your accountant remains responsible for your return.
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