The section 179 dollar limit is $2,500,000 for taxable years beginning in 2025 and $2,560,000 for 2026, reduced dollar for dollar above $4,000,000 and $4,090,000 of section 179 property placed in service, and limited to business income. Section 179 is applied before bonus depreciation.
The limits, with their authority.
Public Law 119-21, section 70306, raised the section 179 dollar limit to $2,500,000 and the phase-out threshold to $4,000,000 for property placed in service in taxable years beginning after 31 December 2024, and indexed both for inflation. Revenue Procedure 2025-32, section 4.24, sets the 2026 figures at $2,560,000 and $4,090,000, with the sport utility vehicle limit at $32,000. The 2025 sport utility vehicle limit is $31,300. The pre-act figures for 2025 in Revenue Procedure 2024-40 ($1,250,000 and $3,130,000) are superseded for any taxable year beginning after 2024.
| Tax years beginning in | Dollar limit | Phase-out begins | Fully phased out | SUV limit | Authority |
|---|---|---|---|---|---|
| 2025 | $2,500,000 | $4,000,000 | $6,500,000 | $31,300 | Public Law 119-21, section 70306; Instructions for Form 4562 (2025) |
| 2026 | $2,560,000 | $4,090,000 | $6,650,000 | $32,000 | Rev. Proc. 2025-32, section 4.24 |
Three limits apply in order.
First the dollar limit, reduced by the phase-out. Second the taxable-income limit: the deduction cannot exceed the taxpayer's aggregate taxable income from the active conduct of any trade or business for the year; the excess carries forward without limit of time (section 179(b)(3)). Third, for a sport utility vehicle over 6,000 pounds gross vehicle weight, the per-vehicle cap. Section 179 property is tangible personal property used in a trade or business, off-the-shelf software, and qualified real property, which means qualified improvement property and roofs, heating and air conditioning, fire protection and security systems on nonresidential buildings (section 179(d)(1), (e), (f)). Used property qualifies.
| Line | Amount |
|---|---|
| Section 179 property placed in service in 2026 | 4,300,000.00 |
| Less the phase-out threshold | (4,090,000.00) |
| Reduction of the dollar limit | 210,000.00 |
| Dollar limit for 2026 | 2,560,000.00 |
| Less the reduction | (210,000.00) |
| Maximum section 179 election | 2,350,000.00 |
| Taxable business income for the year | 1,900,000.00 |
| Section 179 deduction allowed | 1,900,000.00 |
| Carried forward to 2027 | 450,000.00 |
| Basis remaining after the election (4,300,000 less 2,350,000) | 1,950,000.00 |
| Bonus depreciation at 100% on the remaining basis | 1,950,000.00 |
| First-year deduction, section 179 plus bonus | 3,850,000.00 |
Section 179 goes first; bonus takes the rest.
The election reduces basis before bonus depreciation is computed, and bonus takes the remaining basis of qualifying property in classes not elected out. With bonus at 100% for property acquired after 19 January 2025, the federal result is usually the same either way, so the reasons to elect section 179 are elsewhere: it is limited to business income and cannot create a loss; it is elected asset by asset, so it can be aimed at property that a state conforms to (many states allow the federal section 179 amount but add bonus back; California caps section 179 at $25,000); and it applies to some property that bonus does not. The bonus depreciation article covers the acquisition-date rule; the depreciation engine page lists the elections the register applies.
What to record on the asset.
- The section 179 amount elected, per asset and per year, and the carryforward if the income limit applied.
- Whether the asset is section 179 property: tangible personal property, off-the-shelf software or qualified real property.
- The sport utility vehicle flag and its gross vehicle weight rating.
- The entity-level total of section 179 property placed in service in the year, because the phase-out is tested across the entity, not the asset.
- The state section 179 treatment in each state book.
In Fixed Asset Desk: the 2025 and 2026 limits are loaded, the phase-out is tested across the entity's additions at the period run, and carryforwards are kept on the asset.
Sources: Internal Revenue Code section 179; Public Law 119-21, section 70306; Revenue Procedure 2025-32, section 4.24; Revenue Procedure 2024-40; Instructions for Form 4562 (2025); Publication 946 (2025), chapter 2. Checked 20 September 2026.