Section 179 vs bonus depreciation: which one wins?
Both let you deduct equipment faster. Section 179 has a 2026 limit of $2,560,000, and it can't create a loss. Bonus depreciation is back at 100% for property acquired after January 19, 2025, and it can create a loss. Smaller items may qualify for the $2,500 de minimis rule.
Updated November 2026 · By Pankil Kumar, Managing Partner
Quick facts
- Section 179 cap. $2,560,000 for tax years starting in 2026
- Bonus. 100% for property acquired after January 19, 2025
- Small items. De minimis safe harbor, per item or invoice
How do they differ?
| Feature | Section 179 | Bonus depreciation |
|---|---|---|
| 2026 limit | $2,560,000, phasing out from $4,090,000 | No dollar cap |
| Can it create a loss? | No, limited to business income | Yes |
| Choose asset by asset? | Yes | By class of property |
| New and used | Yes | Yes, if new to you |
| State treatment | Often follows | Many states don't follow |
Both apply to tangible business property like equipment, machinery, furniture and computers. Vehicles have their own limits. Section 179 for heavy SUVs is capped at $32,000 for 2026, and regular passenger cars have annual depreciation caps.
Which one should a small business pick?
Section 179 gives you more control, since you pick the assets and the amount. If your income covers it and you've only got a few purchases, it's often the simpler choice. Bonus is automatic unless you opt out, it works when you'd have a loss, and it isn't capped.
Many businesses use both, along with regular depreciation for whatever's left.
Does it always make sense to write it all off now?
No. A big deduction is worth the most in a high-income year. If this year is unusually low, spreading the deduction out may save more over time. You're also reducing the qualified business income that drives another deduction, and when you sell the asset, depreciation can be recaptured as income.
And a deduction doesn't make a purchase free. Spending $10,000 to save maybe $3,000 in tax still leaves you $7,000 poorer, unless the equipment earns its keep.
What about smaller purchases?
The de minimis safe harbor lets you expense items up to $2,500 each, or per invoice, if you make the election on your return and follow the same practice in your books. A $1,400 laptop can simply go through as an expense, with no depreciation schedule at all.
What should you do before year end?
To count, the asset has to be placed in service by December 31, which means ready to use, not just paid for. Check delivery dates in December. See more year-end moves.
Sources
- IRS Publication 946: How to depreciate property
- IRS: Tangible property regulations FAQ
- IRS: Working Families Tax Cuts
General information, not tax advice for your situation.
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See our business tax returns serviceIs bonus depreciation 100% in 2026?
Yes, for qualifying property acquired after January 19, 2025, under the 2025 tax law.
Can I use Section 179 on a used vehicle?
Yes, if it's used for business more than half the time, subject to vehicle limits.
Do states follow Section 179 and bonus depreciation?
Not always. Many states limit or ignore bonus depreciation, so your state income may differ from federal.
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