Business Owner
intermediate · $50K - $100K
Instead of depreciating business equipment over years, Section 179 lets you deduct the entire cost in year one.
Buy $50K of qualifying equipment for the business?
Deduct $50K this year. (Vehicles have separate caps, covered below.) Limit: $2.56 million (2026, increased by OBBBA).
Annual Limit
$2.56 million (phases out above $4.09M in purchases) - 2026
Key takeaways
- Lets a business deduct the full cost of qualifying equipment in year one instead of depreciating over time.
- The 2026 limit is $2.56 million, phasing out above $4.09 million of purchases (the OBBBA made this permanent).
- Equipment must be used more than 50% for business and placed in service that year; new or used both qualify.
- The deduction cannot exceed business taxable income, though unused amounts carry forward.
Section 179 vs. bonus depreciation
| Section 179 | Bonus depreciation | |
|---|---|---|
| Annual dollar cap | $2.56M (2026) | No dollar cap |
| Can create a loss | No | Yes |
| Election | You choose the amount | Automatic on remaining basis |
Applied in order: Section 179 first, then bonus depreciation. General mechanics, not a recommendation.
Requirements
- Equipment used 50%+ for business
- Purchased (not leased) and placed in service same year
- Business must have taxable income
How to Implement
- 1Purchase qualifying equipment (computers, vehicles, machinery)
- 2Calculate business use percentage
- 3Elect Section 179 on Form 4562
- 4Deduct full cost in year of purchase
The bottom line
Section 179 accelerates equipment write-offs into year one, capped at income and a dollar limit. It is often paired with bonus depreciation, which handles the rest.
Frequently Asked Questions
Related business owner strategies
Sources
- Internal Revenue Service, Rev. Proc. 2025-32
2026 inflation-adjusted amounts (tax brackets, standard deduction, estate & gift, FSA, credits)
- Internal Revenue Service, Notice 2025-67
2026 retirement plan limits (401(k), IRA, SIMPLE, catch-up)
- Internal Revenue Service, Rev. Proc. 2025-19
2026 HSA and HDHP inflation-adjusted limits
Educational information only. Not financial, tax, or legal advice or a recommendation. Figures are drawn from the primary sources cited above; verify current amounts with the source before acting.