Section 179 vs. bonus depreciation
how they stack for a machine purchase.
Both let a business deduct most or all of a machine's cost in the first year. They have different limits, and they are applied in a set order. Knowing the difference helps you and your adviser decide how much to deduct this year.
Not tax advice. Talk to your tax adviser or CPA about your situation. Information is current for the 2026 U.S. federal tax year (checked October 29, 2026); state rules differ.
Section 179 is chosen; bonus depreciation is automatic.
Section 179 is an election. You choose which property and how much of its cost to expense, up to $2,560,000 for 2026, and the deduction cannot exceed your taxable income from the active conduct of your business. Any amount the income limit blocks carries forward to later years.
Bonus depreciation (the special or additional first-year allowance in 26 U.S.C. 168(k)) is 100% for qualifying property acquired after January 19, 2025. It applies automatically unless you elect out for a whole class of property, it has no dollar cap, and it is not limited by business income.
Section 179 first, then bonus, then regular depreciation.
The IRS applies the deductions in a fixed order: the Section 179 amount you elect comes off the cost first, the special depreciation allowance applies to what remains, and regular depreciation (MACRS) applies to anything left after that.
Where they differ.
| Section 179 | 100% bonus depreciation | |
|---|---|---|
| How it applies | You elect it on Form 4562, Part I, and choose the property and amount | Automatic for qualifying property unless you elect out by class |
| Dollar limit (2026) | $2,560,000, reduced once purchases exceed $4,090,000 | None |
| Business-income limit | Yes; the blocked amount carries forward | No |
| Used machines | Yes, if acquired by purchase and not from a related person | Yes, if you never used it before and bought it |
| Business use | More than 50% in the year placed in service; recapture if it later falls to 50% or less | Follows the regular depreciation rules |
| Acquisition date rule | Placed in service in the tax year | 100% for property acquired after January 19, 2025 |
Typical situations, for discussion with your adviser.
- You want to deduct an exact amount. Section 179 is chosen property by property and dollar by dollar, so it can be sized to the income you want to offset.
- Your purchases are larger than the Section 179 limit, or larger than this year's business income. Bonus depreciation covers the remaining cost because it has no dollar cap and no business-income limit.
- Your state treats the two differently. Many states do not follow the federal rules for one or both. Ask your adviser how your state handles each before choosing.
- Your business use may drop. Section 179 requires more than 50% business use in the year the machine is placed in service, and the benefit can be recaptured if business use later falls to 50% or less.
When was the machine acquired?
The 100% rate depends on when the machine was acquired, not only when it was placed in service. Under the statute, property is generally treated as acquired no later than the date a written binding contract for it was signed. A machine bought under a binding contract signed before January 20, 2025 follows the older, lower phase-down rate even if it is placed in service in 2026. IRS Notice 2026-11 explains how the acquisition date is determined.
The Section 179 guide.
Where these facts come from.
- IRS Publication 946, How To Depreciate Property
- 26 U.S.C. 179 (election to expense certain depreciable business assets)
- 26 U.S.C. 168(k) (special allowance for certain property)
- IRS Notice 2026-11 (100% additional first-year depreciation)
- Instructions for Form 4562, Depreciation and Amortization
Published by Delta Arc, LLC · Editor: Michael Davis · Last reviewed October 29, 2026.
Not tax advice. Talk to your tax adviser or CPA about your situation. Information is current for the 2026 U.S. federal tax year (checked October 29, 2026); state rules differ.