Section 179 Depreciation

Who this may apply to

• Self-employed or business owner
• Purchasing qualifying equipment (computers, vehicles, machinery, software)
• Equipment used for business more than 50% of the time
• Within the 2026 Section 179 limit of $2,560,000, subject to the $4,090,000 phaseout threshold and taxable-business-income limit

Strategy connections

What could block this

• No qualifying property placed in service
• Business use does not exceed 50 percent where required
• Taxable-income or annual deduction limits restrict the current deduction

Important considerations

• Section 179 is limited to your business taxable income — it cannot create a loss (excess carries forward). Bonus depreciation has no such limitation
• If your business use of an asset drops below 50% in a later year, you may have depreciation recapture
• Vehicles have specific limits — for passenger automobiles placed in service in 2026, the first-year cap is $20,300 when bonus depreciation applies or $12,300 when it does not; qualifying heavy SUVs have separate Section 179 rules
• States may not conform to the federal Section 179 and bonus-depreciation rules. Model the applicable state adjustment separately.
• New York and Pennsylvania also do not conform to federal bonus depreciation. In these states, the deduction must be spread over the normal recovery period (5–15 years), significantly reducing the state component of year-one savings. Our estimates already reflect this adjustment.

• IRS Publication 946: How to depreciate property