Section 179 Deduction

Buy a $40,000 piece of equipment and ordinary depreciation makes you deduct it in slices over five or seven years. Section 179 lets you take the whole $40,000 against this year's income instead. The deduction follows the calendar of when the asset is up and running, not when you sign the purchase order, so something bought in December but not installed until January counts next year.

For tax years beginning in 2026 you can expense up to $2,560,000. That ceiling starts shrinking dollar-for-dollar once your total qualifying purchases pass $4,090,000, and it disappears entirely at $6,650,000 of spend. The July 2025 One Big Beautiful Bill Act roughly doubled the old caps (they were $1.25M and $3.13M) and made both figures permanent fixtures of the code, indexed to inflation each year, so the numbers will keep drifting up.

What qualifies is broad: machinery, computers, off-the-shelf software, office furniture, qualified improvement property, and certain business vehicles. The asset has to be used more than 50% for business, and the deduction can't push your business into a loss. Section 179 is capped at your taxable business income; whatever you can't use this year carries forward indefinitely. Vehicles are where people get tripped up. An SUV between 6,000 and 14,000 pounds GVWR is limited to $32,000 of Section 179 in 2026. Passenger cars are capped far lower. Heavy trucks and vans over 14,000 pounds GVWR have no SUV-style cap.

Here's the wrinkle that changed the math for 2026. OBBBA brought back 100% bonus depreciation permanently for property acquired and placed in service after January 19, 2025. Bonus depreciation gets you to the same full write-off without the income limit or the spending phase-out, and you don't have to elect it asset by asset. So for a profitable company buying standard equipment, bonus often does the heavy lifting and Section 179 becomes the precision tool: use it when you want to cherry-pick which assets to expense, when bonus doesn't reach an asset, or to dial the deduction to an exact dollar amount.

Run the comparison before you file. Section 179's income limit and asset-by-asset election give you control; bonus depreciation gives you reach without strings. Most businesses end up layering them, and the right stack depends on your taxable income, your state's conformity rules, and whether you'd rather smooth deductions across future higher-rate years.