Question 1

What is Section 179 depreciation?

Accepted Answer

Section 179 allows businesses to deduct the full purchase price of qualifying equipment and software in the year it is placed in service, rather than depreciating it over several years. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, doubled the Section 179 limit to $2,500,000 (2025) with a phase-out threshold starting at $4,000,000. For 2026, these limits are inflation-adjusted to $2,560,000 (deduction limit) and $4,090,000 (phase-out threshold).

Question 2

What assets qualify for Section 179?

Accepted Answer

Most tangible business equipment qualifies, including machinery, computers, office furniture, vehicles, and off-the-shelf software. Qualified improvement property (QIP) for commercial interiors also qualifies. Real property (buildings), land, and inventory do not qualify for Section 179.

Question 3

What is the difference between Section 179 and bonus depreciation?

Accepted Answer

Section 179 has an annual deduction limit and requires the business to have taxable income. Bonus depreciation has no dollar limit and can create a net operating loss. Section 179 is elected per asset, while bonus depreciation applies automatically to all eligible assets unless you opt out.

Question 4

Can I use Section 179 for a vehicle?

Accepted Answer

Yes, but with limits. For 2025, passenger vehicles (under 6,000 lbs GVWR) have a first-year depreciation cap of $20,200 with bonus depreciation or $12,200 without (Section 280F limits). SUVs and trucks over 6,000 lbs GVWR can deduct up to $31,300 under Section 179. Vehicles over 14,000 lbs have no cap.

Question 5

What is the Section 179 phase-out?

Accepted Answer

The Section 179 deduction begins to phase out dollar-for-dollar when total equipment purchases exceed the threshold. For 2025, the phase-out starts at $4,000,000 and the deduction is fully eliminated at $6,500,000. For 2026, these are inflation-adjusted to $4,090,000 (phase-out start) and $6,650,000 (full phase-out). This targets the benefit at small and medium businesses while significantly expanding eligibility.

Question 6

Can I combine Section 179 with bonus depreciation?

Accepted Answer

Yes. You can apply Section 179 first (up to the annual limit), then apply bonus depreciation to the remaining cost. Any amount not covered by either provision is depreciated using standard MACRS rates. This strategy maximizes first-year deductions for large equipment purchases.

Section 179 Calculator

Frequently Asked Questions

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Section 179 Calculator

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Section 179 Calculator

Frequently Asked Questions

1What is Section 179 depreciation?

2What assets qualify for Section 179?

3What is the difference between Section 179 and bonus depreciation?

4Can I use Section 179 for a vehicle?

5What is the Section 179 phase-out?

6Can I combine Section 179 with bonus depreciation?

Related Calculators

Section 179 Calculator

Frequently Asked Questions

1What is Section 179 depreciation?

2What assets qualify for Section 179?

3What is the difference between Section 179 and bonus depreciation?

4Can I use Section 179 for a vehicle?

5What is the Section 179 phase-out?

6Can I combine Section 179 with bonus depreciation?

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