What Section 179 does and why it matters
Section 179 of the Internal Revenue Code lets businesses immediately deduct the full cost of qualifying property in the year it is placed in service, rather than depreciating it over multiple years. Before this provision, a business that bought a $50,000 piece of equipment might only deduct $10,000 per year over five years. Section 179 lets you deduct the full $50,000 in year one.
The One Big Beautiful Bill Act significantly expanded Section 179 limits. The 2025 deduction cap was raised to $2.5 million, up from $1.22 million in 2024. With inflation adjustments, the 2026 limit is $2.56 million. The phase-out threshold — the point at which the deduction begins to shrink — is $4.09 million in 2026, up from $3.05 million in 2024.
What qualifies for Section 179
Most tangible personal property purchased for business use qualifies. This includes equipment and machinery, computers and off-the-shelf software, office furniture, business vehicles, and certain improvements to nonresidential buildings such as roofs, HVAC systems, fire protection, and security systems.
The property must be placed in service during the tax year — meaning you actually start using it for business, not just purchase it. A laptop ordered in December but not received until January of the next year does not qualify for the current year.
Business vehicles have separate limitations. The deduction for passenger vehicles is capped, and the limits depend on whether the vehicle is a car, truck, or van, and its gross vehicle weight. Heavier vehicles — those over 6,000 pounds gross vehicle weight — generally have higher deduction limits.
Section 179 vs. bonus depreciation in 2026
Bonus depreciation is a related but different provision. In 2026, bonus depreciation allows businesses to deduct 100% of qualifying property in the year it is placed in service — similar to Section 179 but with different rules.
The key differences: Section 179 cannot create a tax loss (the deduction is limited to your business income), while bonus depreciation can. Section 179 lets you choose which assets to expense and how much, giving you more control over your taxable income. Bonus depreciation applies to all assets in a class if you elect it.
For most small businesses with modest equipment purchases, Section 179 is the simpler and more flexible choice. For larger businesses making purchases that exceed business income, bonus depreciation may allow a loss carryforward.
How to claim the Section 179 deduction
To claim Section 179, you file IRS Form 4562 (Depreciation and Amortization) with your tax return. You need records showing the date of purchase, the date you placed the property in service, and the cost.
The deduction is claimed on the business return — Schedule C for sole proprietors, Form 1120-S for S corporations, Form 1065 for partnerships. The deduction flows through to the individual return for pass-through entities.
A tax professional can help you decide which assets to expense under Section 179, whether to use bonus depreciation for any remaining purchases, and how to maximize the deduction without triggering a loss that cannot be used in the current year. RoboTax can connect to your accounts and surface your business spending so a professional has a complete picture of your equipment purchases.
Frequently asked questions
What is the Section 179 deduction limit for 2026?
The Section 179 deduction limit for 2026 is $2.56 million, with a phase-out threshold of $4.09 million. These limits were significantly increased by the One Big Beautiful Bill Act.
What types of property qualify for Section 179?
Equipment, machinery, computers, off-the-shelf software, office furniture, business vehicles, and certain building improvements such as roofs and HVAC systems qualify. The property must be placed in service during the tax year.
Can Section 179 create a tax loss?
No. Section 179 deductions are limited to your business taxable income. Unused deductions can be carried forward to future years. Bonus depreciation, by contrast, can create a loss.
Is bonus depreciation still available in 2026?
Yes. Bonus depreciation allows 100% immediate expensing of qualifying property placed in service in 2026. It can be used alongside or instead of Section 179 depending on your situation.
Sources and further reading
These resources are included for educational context. RoboTax is not tax, legal, or financial advice, and this content should be reviewed with a qualified tax professional before being used for filing decisions.