No, Section 179 is not going away. The deduction is a permanent feature of the Internal Revenue Code, and the One Big Beautiful Bill Act signed in 2025 expanded it: for tax year 2026, you can expense up to $2,560,000 in qualifying business property, with the phase-out beginning at $4,090,000 in total purchases.
Why Section 179 Is Permanent
The rumor that Section 179 might disappear has two roots, and both are outdated. Before 2015, the higher deduction limits were temporary, and Congress had to renew them every year or two. The Protecting Americans from Tax Hikes (PATH) Act of 2015 ended that cycle by writing the deduction permanently into the tax code. It stays available in every filing season unless Congress affirmatively votes to repeal it.
The One Big Beautiful Bill Act (Pub. L. 119-21) then made the deduction more generous. Effective for tax years beginning after December 31, 2024, it doubled the base deduction from $1,250,000 to $2,500,000 and raised the phase-out threshold from roughly $3,130,000 to $4,000,000. Both figures are permanent and indexed to inflation.1Office of the Law Revision Counsel. 26 USC 179 – Election to Expense Certain Depreciable Business Assets
2026 Limits and How the Phase-Out Works
The IRS adjusts the dollar figures each year. For tax year 2026, the numbers set by Revenue Procedure 2025-32 are:2IRS. Revenue Procedure 2025-32 – 2026 Adjusted Items
- Maximum deduction: $2,560,000
- Phase-out threshold: $4,090,000 in total qualifying purchases
- Cap on any single SUV: $32,000
The phase-out reduces the deduction dollar for dollar once your qualifying purchases exceed $4,090,000. If you buy $4,100,000 in qualifying property, your $2,560,000 maximum shrinks by $10,000, leaving $2,550,000. At $6,650,000 in purchases, the deduction disappears entirely. Any cost you cannot expense under Section 179 can still be recovered through regular depreciation over the asset’s useful life, and in most cases through bonus depreciation as well.
What Property Qualifies
Section 179 applies to tangible personal property used in a trade or business, along with certain software and building improvements. You have to place the asset in service during the tax year you claim the deduction, which means the asset is ready and available for its intended business use even if you have not started using it yet.3Internal Revenue Service. Publication 946 – How To Depreciate Property
Common qualifying categories include equipment and machinery used in daily operations; business vehicles such as cars, trucks, vans, and SUVs (subject to the $32,000 SUV cap and the standard luxury auto limits for lighter passenger vehicles); off-the-shelf computer software available to the general public; and nonresidential building improvements such as roofs, HVAC, fire protection, alarm, and security systems installed after the building was first placed in service.1Office of the Law Revision Counsel. 26 USC 179 – Election to Expense Certain Depreciable Business Assets
The property must be acquired by purchase. Assets received as a gift, inherited, or bought from a related party (including a family member or a business you control) do not qualify. Used property does qualify, as long as it is new to you.
The 50 Percent Business-Use Rule
An asset qualifies only if you use it more than 50 percent for business in the year you place it in service.4Internal Revenue Service. Instructions for Form 4562 A truck used 70 percent for business can be expensed on the business portion. A truck used 50 percent or less for business is ineligible for both Section 179 and bonus depreciation. Vehicles and other listed property face particularly close scrutiny on this point, and if business use later drops below 50 percent during the asset’s recovery period, part of your deduction can be recaptured as ordinary income.
Your Business Income Caps the Deduction
Even if your purchases stay well under the dollar limit, Section 179 cannot create or increase a net loss. The deduction is capped at the total taxable income you earn from the active conduct of all your trades or businesses for the year.1Office of the Law Revision Counsel. 26 USC 179 – Election to Expense Certain Depreciable Business Assets Buy $200,000 in qualifying equipment while earning $150,000 in combined business income, and you can deduct $150,000 this year.
The disallowed amount is not lost. It carries forward indefinitely to future tax years, and you can claim it in the first future year where you have enough business income to absorb it, subject to that year’s limits.5eCFR. 26 CFR 1.179-3 – Carryover of Disallowed Deduction When carryforwards from multiple years stack up, the oldest is used first.
Where the “Going Away” Question Really Comes From
Most of the confusion traces back to a different provision: bonus depreciation under 26 U.S.C. § 168(k). The Tax Cuts and Jobs Act of 2017 set 100 percent bonus depreciation to phase down 20 percentage points per year starting in 2023, reaching zero by 2027. That phase-down actually began. The rate dropped to 80 percent in 2023, 60 percent in 2024, and was headed for 40 percent in 2025.
The One Big Beautiful Bill Act reversed it. The law permanently restored 100 percent bonus depreciation for qualifying property acquired and placed in service after January 19, 2025, with no new phase-down.6Office of the Law Revision Counsel. 26 USC 168 – Accelerated Cost Recovery System So both Section 179 and bonus depreciation are now permanent, though they work differently.
The differences matter when you plan a purchase. Section 179 has a dollar cap and cannot exceed your business income; bonus depreciation has no dollar cap and can create a net operating loss. Section 179 is an election you make asset by asset, giving you control over what to expense; bonus depreciation applies automatically to qualifying property unless you opt out. Many businesses use Section 179 first, up to its dollar and income limits, and then apply bonus depreciation to the remaining cost or to additional qualifying assets.
State Rules Do Not Automatically Follow
Federal permanence does not mean your state gives you the same write-off. Some states fully conform to the federal Section 179 deduction. Others set their own lower limits, in some cases as low as $25,000, regardless of the federal ceiling. A handful of states do not allow the deduction at all. State rules vary widely and can change independently of federal law, so check your state’s current conformity before assuming the full federal deduction will flow through to your state return.