Home / Section 179 in 2026: Limits, Rules and What Changed
Section 179 in 2026: Limits, Rules and What Changed
The numbers for tax years beginning in 2026, where they come from, and the rules that still limit the deduction.
The 2026 numbers
- Maximum deduction: $2,560,000.
- Phase-out threshold: the maximum is reduced dollar for dollar by the amount that the cost of Section 179 property placed in service in 2026 exceeds $4,090,000, and it cannot go below zero.
- Heavy sport utility vehicles: $32,000.
Source: IRS Revenue Procedure 2025-32, section 4.24, and IRS Publication 946 ("What's New for 2026").
What changed
The One, Big, Beautiful Bill (Public Law 119-21) raised the base Section 179 limit to $2,500,000 and the phase-out threshold to $4,000,000 for property placed in service in tax years beginning after December 31, 2024. Both amounts are adjusted for inflation for tax years beginning after December 31, 2025, which produces the 2026 figures above. For 2025 the heavy SUV cap is $31,300.
The rules that still apply
- Qualifying property. It must be eligible property, acquired for business use and acquired by purchase. Machinery, equipment and certain other tangible property qualify. Land and land improvements do not. Some qualified real property improvements, such as roofs, HVAC and security systems on nonresidential buildings, can qualify if elected.
- Business use. Property must be used more than 50% for business.
- Business income limit. The deduction cannot exceed taxable income from your actively conducted businesses for the year. A disallowed amount can be carried to the next year.
- Related-party purchases. Property bought from a related person does not qualify.
- Where you claim it. The election is made on Form 4562.
Section 179 and bonus depreciation
The IRS describes a permanent 100% additional first year depreciation deduction for qualified property acquired after January 19, 2025. It can apply to cost that is not expensed under Section 179. Whether to use one, the other or both is a tax planning decision.
- IRS Rev. Proc. 2025-32: 2026 inflation adjustments (section 4.24, Section 179)
- IRS Publication 946 (2025): How To Depreciate Property
- 26 U.S.C. 179: Election to expense certain depreciable business assets
- IRS news release IR-2026-06: 100% additional first year depreciation (Notice 2026-11)
- IRS: About Form 4562, Depreciation and Amortization
Common questions
When do I have to buy the equipment to claim 2026 Section 179?
Property generally has to be placed in service for business use during the tax year. Pub. 946 notes that the limit does not shrink when property is in service for only part of a year. Confirm timing details with your tax professional.