Section 179 lets a business elect to deduct the cost of qualifying equipment, off-the-shelf software, and certain building improvements in the year of purchase rather than depreciating it. The 2025 tax legislation raised the maximum deduction to $2,500,000, phasing out dollar for dollar once total qualifying purchases exceed $4,000,000 (both indexed after 2025). Unlike bonus depreciation, Section 179 is capped by business taxable income: it cannot create a loss, with disallowed amounts carrying forward. It also offers asset-by-asset control, letting a business expense some purchases and depreciate others. Heavy SUVs over 6,000 pounds are eligible but subject to their own annual dollar cap. Qualifying real property improvements include roofs, HVAC, fire protection, and security systems for nonresidential buildings, which plain bonus depreciation does not cover.
Section 179 Expensing
Primary authority: IRC §179
The authority behind it
IRC §179
Every entry in this glossary cites the statute, regulation, or IRS guidance behind it.
Worked example
A dental practice with $700,000 of profit buys $180,000 of chairs and imaging equipment plus a $60,000 HVAC replacement for its office. Electing Section 179 on all $240,000 wipes those costs off this year's taxable income.
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Related terms
Bonus Depreciation
Bonus depreciation under IRC Section 168k lets a business deduct the entire cost of qualifying equipment and other...
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De Minimis Safe Harbor
The de minimis safe harbor is an annual election under Treas. Reg.
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MACRS (Modified Accelerated Cost Recovery System)
MACRS is the default depreciation system for tangible property placed in service after 1986.
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