Section 179 worked examples
the arithmetic for four purchases.
These examples show how the 2026 limits work on real-sized machine purchases. All figures are hypothetical, the tax rates are assumptions, and state tax is ignored. Your adviser will use your actual numbers.
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.
A used vertical machining center, $85,000.
Assumptions: a sole proprietor buys a used VMC for $85,000, places it in service on December 18, 2026, has $250,000 of taxable business income, and pays a 24% federal rate on the income the deduction offsets.
- Section 179 elected: $85,000 (well under the $2,560,000 limit and under business income).
- Federal tax offset at 24%: about $20,400 ($85,000 x 0.24).
- If the machine were not running until January 4, 2027, the deduction would move to the 2027 tax year.
A new five-axis machine, $450,000, with the income limit.
Assumptions: a C corporation (21% federal rate) buys a five-axis machining center for $450,000 under a contract signed in 2026, places it in service in November 2026, and has $300,000 of taxable business income before the deduction.
- Section 179 is limited to $300,000 by business income; the other $150,000 of an election would carry forward.
- Alternatively, 100% bonus depreciation can cover the full $450,000, because bonus depreciation is not limited by business income. That could create a $150,000 loss, which your adviser handles under the loss rules.
- Either way, federal tax on the $300,000 of 2026 income could be offset: about $63,000 ($300,000 x 0.21).
A $2.8 million shop expansion.
Assumptions: a manufacturer places $2,800,000 of qualifying machines in service in 2026, all acquired after January 19, 2025, with enough business income to use the deduction.
- Total purchases of $2,800,000 are below the $4,090,000 phase-out threshold, so the full Section 179 limit is available.
- Section 179: up to $2,560,000.
- The remaining $240,000 can be covered by 100% bonus depreciation, so the full $2,800,000 can be deducted in 2026.
A $4.5 million purchase year near the phase-out.
Assumptions: a larger shop places $4,500,000 of Section 179 property in service in 2026.
- Amount over the threshold: $4,500,000 minus $4,090,000 = $410,000.
- Reduced Section 179 limit: $2,560,000 minus $410,000 = $2,150,000.
- The rest can still qualify for 100% bonus depreciation if acquired after January 19, 2025.
- At $6,650,000 or more of purchases, the Section 179 limit reaches zero; bonus depreciation still applies.
What these examples leave out.
The examples ignore state tax, self-employment tax, the qualified business income deduction, interest, other deductions and the timing of estimated tax payments. They show how the federal limits interact, not what your return will show.
The Section 179 guide.
Where these facts come from.
- IRS Rev. Proc. 2025-32 (2026 inflation adjustments, section 179 limits)
- IRS Publication 946, How To Depreciate Property
- 26 U.S.C. 168(k) (special allowance for certain property)
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.