Section 179 vs Bonus Depreciation
Section 179: $1.22M cap (2024), 100% immediate. Bonus depreciation 2027: 40% (phasing down). 100% bonus expired 2022.
| Equipment cost | — |
| Business income | — |
| Tax year | — |
| Section 179 cap | — |
| Section 179 taken | — |
| Remaining after 179 | — |
| Bonus rate | — |
| Bonus depreciation | — |
| Regular MACRS | — |
| Total Year 1 | — |
Section 179 and bonus depreciation both allow immediate expensing of business equipment. Differences: Section 179 limited to business income ($1.22M cap 2024), bonus depreciation no income limit but phasing down (100% pre-2023 → 40% 2026 → 20% 2027 → 0% 2028).
Section 179 Mechanics
Cap 2024: $1,220,000 maximum deduction. Phase-out: $1 reduction for every $1 over $3,050,000 total equipment. Income limitation: cannot exceed business net income. Carryover: excess carries forward to next year. Election made on Form 4562.
Bonus Depreciation Phase-Down
2017-2022: 100% (TCJA). 2023: 80%. 2024: 60%. 2025: 60%. 2026: 40%. 2027: 20%. 2028: 0%. Major change post-TCJA — major timing/strategy implications for equipment purchase decisions.
Combining Strategies
Take Section 179 FIRST (income-limited). Then take bonus depreciation on REMAINING basis. Then regular MACRS on whatever's left. Best for businesses with large equipment purchases AND adequate income.
Last updated May 2026. Sources: IRS Publication 946.