Section 179 Deduction: Limits, How It Works in 2025
Thanks to the Section 179 deduction, you might not have to wait around to depreciate your business’s assets.
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Key takeaways
Section 179 of the Internal Revenue Code lets businesses deduct the cost of certain assets immediately rather than over time.
Office furniture, certain vehicles, computers and off-the-shelf software are typically deductible expenses.
The Section 179 deduction limit is $2,500,000 in 2025 and $4,000,000 in 2026.
What is the Section 179 deduction?
The Section 179 deduction is a tax deduction for the purchase of certain business assets. The deduction can help lower a business’s taxable income in the year the purchased items are put into service.
How the Section 179 tax deduction works
Items that fall under Section 179 may be deductible at full value immediately rather than depreciated over time.
For example, if you buy a new piece of machinery for your factory and begin using it right away, you may be able to deduct the entire cost of the factory from your business’s taxable income in one year instead of over time.
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Types of assets eligible for the Section 179 deduction
Office furniture, computers and off-the-shelf software are examples of business equipment eligible for the Section 179 deduction.
The Section 179 deduction generally doesn’t cover real estate.
Some vehicles, such as cargo vans, are eligible Section 179 expenses, but vehicles traditionally used for personal transportation rarely qualify.
Many business expenses are immediately deductible, regardless of whether they qualify for Section 179:
rent
office supplies
insurance
certain startup costs
In contrast, Section 179 mostly deals with assets that retain value after you begin using them and that would otherwise be written off gradually during the course of their time in service.
» Learn more: Small-business tax deductions you need to know
2025 Section 179 deduction limits
A business can combine multiple expenses to reach that total, but there is an overall limit on how much eligible equipment you can buy and still receive a deduction. The Section 179 deduction limit is $2,500,000 in 2025 and $4,000,000 in 2026.
2025 limits | 2026 limits | |
|---|---|---|
Section 179 deduction limit | $1,250,000 | $2,500,000 |
Phase-out limit | $3,130,000 | $4,000,000 |
What expenses qualify for Section 179?
Section 179 is for business income, not personal income. If you personally bought a piece of equipment last year, that doesn’t count.
However, because many people earn business income through activities such as freelance work or consulting, Section 179 is relevant to many households. There are many ways of setting up a business, all of which can affect taxes, but in general, the following types of purchases could be eligible for a Section 179 deduction.
Computer software that is not custom-made or modified specifically for your company.
Machinery and equipment.
Livestock.
Some vehicles.
Other types of products may also be eligible for Section 179 deduction, depending on the nature of your business and how you use the equipment.
‘Hummer tax deduction’: Which vehicles does Section 179 cover?
Section 179 was once jokingly referred to as the “Hummer tax deduction” because some business owners could use the high limit on applicable expenses to buy expensive trucks.
Section 179 deductions are limited to vehicles under 6,000 pounds, which would affect tax considerations for many expensive cars. But large SUVs can be heavy, so they weren’t covered by those rules. That’s why the lower limit for SUVs is now part of Section 179.
So, how do you know if your passenger vehicle qualifies for the Section 179 deduction? Here are some major factors that determine whether a vehicle is subject to the limit for SUVs.
It weighs more than 14,000 pounds.
More than nine people can sit in the vehicle behind the driver’s seat.
The vehicle has a cargo compartment 6 or more feet long, and the compartment isn't accessible from the passenger seating area.
The vehicle “has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.”
Does Section 179 cover real estate?
Broadly speaking, Section 179 doesn’t cover real estate purchases. If you bought a new headquarters for your business, you may have to expense the depreciation over time to receive a tax benefit from that transaction. Land and land improvements, such as “swimming pools, paved parking areas, wharves, docks, bridges, and fences,” also aren't eligible, according to the IRS.
However, there are a few special types of property that may qualify as a Section 179 expense:
Property used primarily for lodging.
Roofs.
Fire alarm and protection systems.
Security systems.
Ventilation, heating and air-conditioning property.
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- State: $0 to $69 per state.
- Expert help or full service filing is available with an upgrade to Live packages for a fee.
What if you don’t qualify for Section 179?
Section 179 is increasingly important for businesses because tax laws expanding the immediate deductibility of other business purchases are phasing out.
The Tax Cuts and Jobs Act allowed a practice known as “bonus depreciation” to expand for several years. It’s similar to how Section 179 works, but it covers a wider range of expenses.
Through 2022, people could use bonus depreciation to write off eligible assets right away. In 2023, the portion of an eligible expense that could have been claimed dropped to 80%. In 2024, it dropped to 60%, and in 2025, it dropped further to 40%. It will continue to decline each year until it is zero in 2027.
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