What is the Section 179 deduction limit for 2026?

The 2026 Section 179 maximum deduction is $2,560,000, with phase-out beginning at $4,090,000 in total qualifying purchases and complete phase-out at $6,650,000. Limits per IRS Revenue Procedure 2025-32 (post-OBBBA inflation adjustments).

What is the bonus depreciation rate for 2026?

Bonus depreciation is 100% for qualified property placed in service in 2026, restored under the One Big Beautiful Bill Act of 2025. This reverses the prior phase-down (60% in 2024, 40% in 2025). Bonus depreciation has no aggregate cap and no business income limitation.

Can I use both Section 179 and bonus depreciation in the same year?

Yes. Section 179 is typically applied first up to the $2.56M limit, then 100% bonus depreciation applies to any remaining qualifying basis. The order maximizes flexibility because Section 179 is asset-by-asset elective; bonus depreciation applies automatically to all qualified property unless explicitly opted out at the asset class level.

Does Section 179 apply to vehicles?

Yes, with restrictions. Heavy SUVs, trucks, and vans over 6,000 lbs GVWR qualify for Section 179 up to $30,500 (2026 limit) plus 100% bonus depreciation on the remainder. Vehicles under 6,000 lbs have separate annual depreciation caps under the luxury auto rules. Listed property (including most vehicles) requires more than 50% business use to qualify for any Section 179 deduction.

What is the difference between equipment financing and Section 179?

Section 179 is a tax deduction; equipment financing is how you pay for the equipment. They work together: you can finance equipment with a loan, lease, or SBA 504 and still claim Section 179 on the full purchase price in year one. The financing structure affects when ownership transfers (and thus when Section 179 starts) — equipment loans qualify; some operating leases do NOT (you don't own the equipment). Talk to your CPA about $1 buyout leases, capital leases, and TRAC leases vs. operating leases.

Do I need positive taxable income to use Section 179?

Section 179 is income-limited — your deduction can't exceed your aggregate active business taxable income (you can't generate a net operating loss with Section 179 alone). Excess Section 179 carries forward to future years. Bonus depreciation has NO income limit and CAN generate an NOL for carryback or carryforward — that's why some taxpayers prefer bonus first.

When did 100% bonus depreciation come back in 2026?

100% bonus depreciation was restored by the One Big Beautiful Bill Act (OBBBA), signed into law in 2025. It applies to qualified property placed in service in 2026 and beyond. Before OBBBA, bonus depreciation was phasing down — 60% in 2024, 40% in 2025, scheduled to drop to 20% in 2026 and 0% in 2027. OBBBA reversed the phase-down.

How is Section 179 different from regular depreciation?

Regular depreciation (MACRS) spreads the equipment cost over its useful life — typically 5 or 7 years for most business equipment. Section 179 lets you deduct the full cost in year one, accelerating tax savings dramatically. For a $100K piece of equipment in a 24% bracket, MACRS yields ~$24K of tax savings spread over 5-7 years, while Section 179 yields the same $24K all in year one — better cash flow.

2026 Section 179 + 100% Bonus Depreciation Calculator

Section 179 Calculator (2026): Live Tax Savings on Equipment Financing

2026 Section 179 deduction limit: $2,560,000. Bonus depreciation: 100%. Phase-out begins at $4,090,000 in qualifying purchases. Enter equipment cost, your tax bracket, and business-use percentage. Live tax savings + effective net cost.

Updated for IRS Revenue Procedure 2025-32 (post-OBBBA). For property placed in service in 2026.

Last updated: April 24, 2026·By Ed Freeman, Capital Advisor — PeerSense

Equipment Inputs

Total Equipment Cost

Includes machinery, equipment, qualifying vehicles (over 6,000 lbs GVWR), software, and improvements.

Equipment Cost Slider: $150,000

$5K$8M

Federal Tax Bracket

Effective marginal federal rate. State tax savings are additional and not modeled here.

Business Use Percentage: 100%

Section 179 requires >50% business use. Vehicles & mixed-use property prorate accordingly.

Elect 100% bonus depreciation on remaining basis

Restored to 100% under the One Big Beautiful Bill Act for qualified property placed in service in 2026.

First-Year Tax Outcome

Section 179 Deduction: $150,000
100% Bonus Depreciation: $0
Total First-Year Deduction: $150,000
Federal Tax Savings (24% bracket): $36,000

Effective Net Cost

$114,000

After federal tax savings — 76.0% of list price.

Equipment cost:$150,000

Less: Tax savings:−$36,000

Effective net cost:$114,000

Calculator estimates federal tax savings only. State tax treatment varies — many states conform partially to Section 179 / bonus depreciation, some have different limits or exclude bonus entirely. Your actual tax outcome depends on business taxable income (Section 179 is income-limited), business structure, vehicle type, and qualifying property type. This is not tax advice — consult a CPA or tax attorney before making purchase decisions.

2026 Section 179 + Bonus Depreciation Limits at a Glance

Section 179

Maximum Deduction$2,560,000
Phase-Out Begins$4,090,000
Complete Phase-Out$6,650,000
Min Business Use> 50%

Bonus Depreciation

2026 Rate100%
2025 Rate (was)60% / 40%
Restored ByOBBBA (2025)
Cap on Total BasisNone

The OBBBA Change Matters

The One Big Beautiful Bill Act of 2025 restored 100% bonus depreciation (from a phased-down 60% in 2024 and 40% in 2025) and bumped the Section 179 limit to $2.56M for 2026. Together, that means an equipment purchase up to $2.56M can be 100% deducted via Section 179 in year one — and any amount above that gets 100% bonus depreciation on the remaining basis. There is no longer a tax incentive to delay equipment purchases into 2027 waiting for "better depreciation."

How to Use the Section 179 Calculator

1Enter your equipment cost. Include machinery, qualifying vehicles (over 6,000 lbs GVWR), software, and improvements. Vehicles under 6,000 lbs have separate annual caps and are not modeled here.
2Select your federal marginal tax bracket. Sole proprietors, LLCs, and S-corps use individual brackets (10–37%). C-corps use the flat 21% rate. State tax savings are additional and depend on your state's conformity to federal Section 179 / bonus depreciation.
3Set business-use percentage. Section 179 requires at least 50% business use. Mixed-use property prorates the qualifying basis. Vehicles used 60% for business get 60% of the deduction.
4Read the live outputs. Section 179 deduction (capped at $2.56M, phase-out begins at $4.09M of total purchases). 100% bonus depreciation on remaining basis. Total first-year deduction. Federal tax savings at your bracket. Effective net cost.

Section 179 vs. Bonus Depreciation — When to Use Each

For 2026 with both at 100%, the practical difference is income limitation and election flexibility. Section 179 is income-limited (you can't generate a net operating loss with Section 179 alone) but elective per asset. Bonus depreciation has no income limit but applies to all qualified property unless explicitly opted out at the asset class level.

Choose Section 179 First When

• Total qualifying purchases under $2.56M
• You have positive taxable income to offset
• You want to selectively deduct specific assets and depreciate others over their useful life (asset-by-asset election flexibility)
• You're a smaller business and want to maximize current-year deduction within the income limit

Choose Bonus Depreciation First When

• Total purchases exceed Section 179 limits ($2.56M / $4.09M phase-out)
• You want to generate a net operating loss (NOL) for carryback / carryforward
• You're acquiring a fleet or production line where asset-by-asset elections aren't practical
• You're a C-corp using bonus depreciation to reduce taxable income materially below 21% effective

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Sources & References

Section 179 + Bonus Depreciation Sources (2026)

IRS Revenue Procedure 2025-32 — Inflation-adjusted Section 179 deduction limits and phase-out thresholds for tax year 2026.
IRS Publication 946 — How to Depreciate Property — Official IRS guidance on Section 179, MACRS depreciation, bonus depreciation, and listed property rules.
IRS Section 179 Topic Page — Frequently asked questions on Section 179 election, recapture, and qualified property eligibility.
One Big Beautiful Bill Act (OBBBA) — Public Law 119-10 — 2025 tax legislation that restored 100% bonus depreciation and increased Section 179 limits beginning 2026.
U.S. Treasury — Tax Expenditures FY2026 — Treasury Office of Tax Analysis estimates and methodology on accelerated depreciation provisions.
AICPA — Bonus Depreciation Guidance — American Institute of CPAs technical guidance on Section 168(k) bonus depreciation election.

External links are provided for informational and verification purposes. PeerSense is not affiliated with and does not endorse any third-party site. Information was current at the time of publication.

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We structure equipment loans, leases, SBA 504, and sale-leasebacks. Different structures impact when and how you can claim Section 179 — equipment loans qualify; some operating leases do not. Talk to our team to align the deal structure with your tax plan.

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Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder. Updated April 2026.

Disclaimer: This calculator estimates federal tax savings using 2026 IRS limits per Revenue Procedure 2025-32 (post-OBBBA). It does not model state tax treatment, alternative minimum tax (AMT), passive activity rules, business income limitation under Section 179, qualified business income deduction interactions, or asset class restrictions. Not all property qualifies — used property, certain real property improvements, and listed property have specific eligibility rules. This is not tax, legal, or financial advice. Consult a qualified CPA or tax attorney before making purchase or financing decisions. PeerSense is a capital advisory firm, not a lender or tax advisor. Limits cited are subject to change by future legislation or IRS administrative action.