For 2026 the Section 179 deduction limit is $2,560,000. It is reduced dollar for dollar once the cost of qualifying property placed in service exceeds $4,090,000, so it reaches zero at $6,650,000, and the cost of a sport utility vehicle that can count is capped at $32,000 (IRS Rev. Proc. 2025-32).
At a glance
Key Facts
2026 maximum
$2,560,000
Phase-out starts at
$4,090,000 of purchases
Reaches zero at
$6,650,000
SUV cap
$32,000
Introduction
The Section 179 deduction lets a business write off the cost of qualifying equipment in the year it starts using it, instead of spreading the cost over years of depreciation. The size of the deduction, and who can use it, depend on three limits: a dollar cap, a phase-out and a business income limit.
This guide gives the 2026 and 2025 limits, what qualifies, the rules that restrict the deduction, how it differs from the 100% special depreciation allowance, and two worked examples. It follows IRS Revenue Procedure 2025-32, the Form 4562 instructions and Publication 946.
Section 01
Section 179 Limits for 2026 and 2025
Limit
2026 (tax years beginning in 2026)
2025 (tax years beginning in 2025)
Maximum Section 179 deduction
$2,560,000
$2,500,000
Phase-out starts when qualifying purchases exceed
$4,090,000
$4,000,000
Deduction reaches zero at
$6,650,000
$6,500,000
Sport utility vehicle cap
$32,000
$31,300
The 2026 figures come from IRS Revenue Procedure 2025-32. The 2025 figures are in the Form 4562 instructions. The phase-out works dollar for dollar: the limit is reduced by the amount by which the cost of Section 179 property placed in service in the year exceeds the threshold, but not below zero. The zero points are the maximum plus the threshold (derived: $2,560,000 + $4,090,000 and $2,500,000 + $4,000,000).
Section 02
What Qualifies as Section 179 Property
Per the IRS, Section 179 property is property you acquire by purchase for use in the active conduct of your trade or business. The Form 4562 instructions list the categories: qualified Section 179 real property, tangible personal property (including cellular telephones, similar telecommunications equipment and air conditioning or heating units), and other tangible property, except buildings and their structural components, used for things such as manufacturing, production or transportation. Our depreciation recapture guide explains what happens to the deduction if you later sell the asset at a gain.
Section 03
The Rules That Limit the Deduction
Dollar limit and phase-out: the annual maximum above, reduced by qualifying purchases over the threshold.
More than 50% business use: if the property is used for both business and other purposes, you can elect the deduction only if you use it more than 50% for business in the year you place it in service. You then multiply the cost by the percentage of business use.
Business income limit: the deduction each year, after the dollar limit, is limited to the taxable income from the active conduct of any trade or business during the year. Any cost not deductible in one year because of this limit can be carried to the next year.
Per taxpayer, not per business: the limits apply to each taxpayer, not to each business.
Sport utility vehicles: the IRS sport utility vehicle cap ($32,000 for 2026) applies to vehicles rated at more than 6,000 pounds and not more than 14,000 pounds gross vehicle weight, with exceptions in Pub. 946 for vehicles such as those that seat more than nine passengers behind the driver.
Passenger automobiles: the total Section 179 and depreciation deduction for a passenger automobile is limited. See Pub. 946, chapter 5.
If you deduct only part of the cost under Section 179, you can generally depreciate the cost you do not deduct.
Section 04
Section 179 vs the 100% Special Depreciation Allowance
Section 179 expensing
100% special depreciation allowance
What it is
An election to expense the cost of qualifying property in the year it is placed in service
A depreciation allowance for certain qualified property
2026 headline limit
$2,560,000, phased out above $4,090,000 of purchases
The IRS describes it as 100% of the cost for certain qualified property acquired and placed in service after January 19, 2025
Where reported
Form 4562, Part I
Form 4562, Part II
The One Big Beautiful Bill Act (P.L. 119-21) reinstated the 100% special depreciation allowance for certain qualified property acquired and placed in service after January 19, 2025. Which property qualifies, and whether you can elect out or choose a lower percentage, is set out in Pub. 946 chapter 3. Ask your tax professional which approach fits your purchases; this guide does not predict which gives the bigger deduction.
Section 05
Worked Examples
Example 1: the income limit. A sole proprietor buys $400,000 of qualifying equipment in 2026 and has $300,000 of taxable income from the business before the deduction.
Step
Amount
Equipment cost
$400,000
Dollar limit for 2026 (purchases below the phase-out start)
$2,560,000
Business income limit
$300,000
Section 179 deduction (the smallest of the three)
$300,000
Carried to the next year
$100,000
Example 2: the phase-out. A company places $4,590,000 of qualifying property in service in 2026. That is $500,000 over the $4,090,000 threshold.
Step
Amount
Maximum deduction
$2,560,000
Less the amount over the threshold
$500,000
Reduced Section 179 limit
$2,060,000
Both examples are illustrations that ignore the vehicle caps and other rules.
Section 06
How to Claim It
You file Form 4562 if you are claiming a Section 179 expense deduction, which may include a carryover from a previous year. The deduction is figured in Part I of the form. The IRS instructions say to complete only one Part I in its entirety when computing the deduction if you file more than one Form 4562. Keep invoices and proof of the date the property was placed in service.
$2,560,000 for tax years beginning in 2026, reduced dollar for dollar by the amount that the cost of Section 179 property placed in service exceeds $4,090,000. The sport utility vehicle cap is $32,000 (Rev. Proc. 2025-32).
Q
What is the 179 deduction limit in 2025?
$2,500,000, reduced by the amount that the cost of Section 179 property placed in service exceeds $4,000,000. The 2025 sport utility vehicle maximum is $31,300 (Form 4562 instructions).
Q
What is Section 179 in simple terms?
An election that lets a business deduct the cost of qualifying equipment and some other property in the year it is placed in service, up to a yearly dollar limit, instead of depreciating it over several years.
Q
What qualifies for a Section 179 deduction?
Property you acquire by purchase for active use in your trade or business: qualified Section 179 real property, tangible personal property and certain other tangible property. Buildings and their structural components are excluded from the last category.
Q
What are the rules for Section 179 deductions for vehicles?
The sport utility vehicle cap is $32,000 for 2026, and the total Section 179 plus depreciation for a passenger automobile is separately limited. Business use must be more than 50%. See Pub. 946 chapters 2 and 5.
Q
Is there a limit based on income?
Yes. After the dollar limit, the deduction is limited to taxable income from the active conduct of any trade or business for the year. Costs not deductible because of this limit can be carried to the next year.
Q
What if I use the property for both business and personal reasons?
You can elect Section 179 only if business use is more than 50% in the year you place it in service, and you then multiply the cost by the business-use percentage.
Q
Can I take Section 179 on part of an asset?
Yes. If you deduct only part of the cost under Section 179, you can generally depreciate the rest of the cost.
Q
How do I claim Section 179?
Complete Form 4562 and attach it to your return. The deduction is figured in Part I.
Q
Is Section 179 the same as bonus depreciation?
No. Section 179 is an elective expensing deduction with a dollar cap and a business income limit. The 100% special depreciation allowance is a separate provision that applies to certain qualified property acquired and placed in service after January 19, 2025.
Disclaimer:This guide gives general tax information for educational purposes and is not tax, legal or financial advice. Rules, forms and deadlines are set by the authorities named here and can change; check the official sources linked in this guide and talk to a qualified tax professional about your own situation.