Section 179 vs Bonus Depreciation Comparison
OBBB restored 100% bonus depreciation through 2029. Compare Section 179 (capped at $1.22M, requires taxable income) vs bonus depreciation (uncapped, allows loss) for your equipment purchases in 2027.
| Section 179 | |
| Available 179 ($1,220,000 − used) | — |
| 179 deduction (capped at taxable income) | — |
| MACRS depreciation on remaining basis | — |
| Year-1 total deduction | — |
| Year-1 tax savings | — |
| 100% Bonus Depreciation | |
| Bonus deduction (100% of cost) | — |
| Year-1 tax savings (can create NOL) | — |
Two ways to accelerate business equipment depreciation in 2027: Section 179 (immediate expensing up to $1.22M, limited to taxable income) and 100% Bonus Depreciation (restored under OBBB through 2029, no cap, can create a Net Operating Loss). The right choice depends on your equipment cost, taxable income, and multi-year tax strategy.
Section 179 — Limited but Flexible
2027 cap: ~$1,220,000 (indexed). Phase-out begins at $3.05M total qualifying purchases. Critical constraint: 179 deduction cannot exceed your business taxable income — it can reduce tax to zero but cannot create a loss. Unused 179 carries forward indefinitely.
100% Bonus Depreciation — Restored by OBBB
One Big Beautiful Bill Act (P.L. 119-21) restored 100% first-year bonus depreciation through 2029. No dollar cap. CAN create or expand a Net Operating Loss carryforward (under TCJA-permitted 80% rule). Phases down: 80% in 2030, 60% in 2031, 40% in 2032, 20% in 2033, 0% in 2034.
How to Choose
Choose Section 179: when current-year taxable income absorbs deduction, you want flexibility to spread depreciation, or your purchase exceeds the bonus phase-down threshold. Choose Bonus: when purchase exceeds 179 cap, you want NOL carryforward for future high-income years, or you have multiple businesses with combined high cost.
Last updated May 2026. Sources: IRS Pub 946 Depreciation, IRS Form 4562, P.L. 119-21 (One Big Beautiful Bill Act).