Section 179 Expense Deduction

The Section 179 election lets you treat the cost of certain new assets as an expense rather than as a capital expenditure to be depreciated. This allows an expense deduction for part of the cost instead of a depreciation deduction. You cannot depreciate the amount expensed under Section 179 and you must deduct it from an asset's acquired value when determining its depreciable basis.

To qualify for the Section 179 election, an asset must generally be Section 1245 tangible property (or qualified real property), depreciable under MACRS, and acquired by purchase for use in an active trade or business. It can be new or used property.

Qualified Real Property

For tax years beginning after 2009, you can elect to expense qualified real property purchases.

For fiscal years 2010 through 2017, qualified real property is defined as:

Qualified leasehold improvement property
Qualified restaurant property, or
Qualified retail improvement property

These three types of property are depreciated over a 15-year MACRS recovery period using a straight-line method. Generally, use method MF100 or MA100. A $250,000 maximum applied for tax years 2010 through 2015, as noted on the Yearly Limits table.

For tax years beginning in 2018 and later, the definition of qualified real property is modified by the Tax Cuts and Jobs Act of 2017 to:

(1) any qualified improvement property described in Internal Revenue Code section 168(e)(6)

(2) any of the following improvements to non-residential real property placed in service after the date such property was first placed in service:

(A) Roofs.

(B) Heating, ventilation, and air-conditioning property.

(D) Security systems.

Software

Off-the-shelf computer software qualifies for the Section 179 expense deduction if it is placed in service in tax years after 2002. To enter off-the-shelf computer software, select property type P, a depreciation method of SF or SB, and an estimated life of 3 years.

Yearly Limits

The following maximum limits apply to property that qualifies under Section 179. The maximums are further reduced by the investment threshold and taxable income limits, when applicable.

For property placed in service in 1982 through 1986, the total maximum allowable amount you can expense is $5,000 per year for all assets combined. For property placed in service after 1986 through taxable years beginning before January 1, 1993, the total maximum amount that you can expense is $10,000 per year. For property placed in service in taxable years beginning after December 31, 1992, the table below displays the total maximum amount you can expense:

Tax Year Beginning In	Maximum Section 179
1993 through 1996	$17,500
1997	$18,000
1998	$18,500
1999	$19,000
2000	$20,000
2001 - 2002	$24,000
2003	$100,000
2004	$102,000
2005	$105,000
2006	$108,000
2007	$125,000
2008-2009	$250,000
2010-2015*	$500,000
2016**	$500,000
2017	$510,000
2018	$1,000,000
2019	$1,020,000
2020	$1,040,000
2021	$1,050,000
2022	$1,080,000
2023	$1,160,000
2024	$1,220,000
2025***	$2,500,000
2026 and thereafter	To be indexed for inflation.

* For fiscal years beginning in 2010 through 2015 an election to include up to $250,000.00 of real property that is qualified leasehold improvement, qualified restaurant, or qualified retail improvement property can be made. The real property deduction is subject to the same Section 179 phase-out rules as for personal property and does not apply to nonresidential real or residential rental property. To claim a Section 179 deduction on real property, identify all qualifying property using the Qualified §179 Property check box on the §179/Bonus Details window in Asset Detail to properly calculate the phase-out limits.

** The $250,000 cap on qualified real property is eliminated for tax years 2016 and later.

*** The One Big Beautiful Act (OBBBA) of 2025 retroactively increased the Section 179 limit to $2,500,000 from $1,250,000, effective January 1, 2025.

Sport Utility Vehicles

The Jobs Creation Act of 2004 limits the Section 179 expense on a Sport Utility Vehicle (SUV) weighing between 6,000 and 14,000 pounds to $25,000. The Tax Cuts and Jobs Act of 2017 increases the Sport Utility Vehicle (SUV) limit for inflation, starting for tax years beginning in 2019.

Additional Information

The maximum amount of Section 179 that you can take in one year is also limited by the investment amount and taxable income.

Note: There are increased limits for qualified Gulf Opportunity Zone property, New York Liberty Zone property, qualified Recovery Assistance property (Kansas Disaster Zone property), qualified Disaster Assistance property (Qualified Disaster Zone property), and Enterprise Zone property.

You cannot depreciate the amount expensed under the Section 179 deduction. For example, suppose you are entering an asset that you fully depreciated under an earlier system. If the asset's acquired value is $10,000 and you took $6,000 as a Section 179 expense, you would enter $10,000 as Acquired Value, $6,000 as the Section 179 expense, and $4,000 as beginning accumulated depreciation. If you are entering a newly acquired asset, enter the Section 179 expense amount and the system will calculate the correct depreciation on any remaining depreciable basis.

You also cannot take any Investment Tax Credit (ITC) on the part of an asset's cost that is expensed under Section 179. The application automatically takes any Section 179 expense into account when it calculates ITC for the asset.

The application will not let you enter more than the maximum Section 179 expense for one asset.

To view Section 179 amounts for each asset and totals for the fiscal year, run the Tax Expense report.
The Audit Advisor allows you to review your assets for yearly tax compliance, including the Section 179 Dollar Limit.