What is the maximum Section 179 deduction?

The maximum Section 179 deduction is $2,560,000 for tax years beginning in 2026. For tax years beginning in 2025 the cap is $2,500,000. Section 179 lets a business expense the full cost of qualifying equipment in the year it is placed in service, instead of depreciating it over several years. The 2026 figure comes from Revenue Procedure 2025-32, the annual inflation-adjustment update, and the 2025 figure comes from the One Big Beautiful Bill Act itself. Both caps are far higher than the roughly $1.25 million limit that applied before that law.

How did the One Big Beautiful Bill change the Section 179 limit?

The One Big Beautiful Bill Act roughly doubled the Section 179 cap. Public Law 119-21, signed in July 2025, set the maximum deduction at $2,500,000 for property placed in service in tax years beginning after December 31, 2024, up from the prior $1,250,000 limit. It also raised the phase-out threshold to $4,000,000 for 2025. The new dollar amounts are indexed for inflation going forward, which is how the 2026 cap steps up to $2,560,000. This is a permanent change to the statute, not a temporary bonus, so the higher ceiling applies each year until Congress changes it again.

When does the Section 179 deduction start to phase out?

The Section 179 deduction begins to phase out once you place more than $4,090,000 of qualifying property in service in 2026. Above that threshold, the maximum deduction is reduced dollar for dollar by every dollar of property over the line, and it reaches zero at $6,650,000. For 2025 the phase-out starts at $4,000,000. This is why Section 179 is aimed at small and mid-sized buyers: a business that places a very large amount of equipment in service loses the benefit and falls back on regular depreciation and bonus depreciation instead.

Is the Section 179 deduction limited by business income?

Yes. Your Section 179 deduction cannot exceed the total taxable income from the active conduct of your trades or businesses for the year. Section 179 can bring taxable business income down to zero, but it cannot create or increase a loss. Any amount you are not allowed to deduct because of this income limit is not lost. It carries forward to future years, where you can deduct it against business income, subject to the same limit each year. So the dollar cap and the phase-out set the ceiling, and the business-income limit sets how much of that ceiling you can actually use this year.

What is the Section 179 limit for SUVs?

For 2026, the most you can expense under Section 179 for a single sport utility vehicle is $32,000. This is a separate, lower cap that sits inside the overall limit and applies to SUVs rated between 6,000 and 14,000 pounds gross vehicle weight. It exists to limit the deduction on heavy passenger vehicles that would otherwise qualify for the full amount. The SUV cap is also inflation-adjusted each year under Revenue Procedure 2025-32.

How does a preparer apply Section 179 across a book of clients?

The maximum is rarely the hard part. The judgment calls are which assets qualify, whether Section 179 or bonus depreciation is the better tool for a given client, and whether the business-income limit will strand part of the deduction and force a carryforward. Those decisions depend on each client's asset purchases, entity type, and taxable income, and they change year to year with the equipment they buy. A preparer running this at scale has to pull every asset placed in service, confirm the placed-in-service dates, and model the deduction against business income before locking the return. That is exactly the kind of multi-document reconciliation that gets rushed at year end and reads cleanly when intake collects the fixed-asset detail up front. See how SignalsHQ structures multi-document tax prep for where a check like this fits.