What is Section 179?

Under Section 179 of the IRS tax code, a business can elect to expense — rather than depreciate — the cost of certain qualifying property the year it is first used in the business. That means a $50,000 piece of equipment can reduce your taxable income by $50,000 in year one instead of spreading the deduction over five or seven years.

What qualifies for Section 179?

Qualifying property generally includes tangible personal property used more than 50% for business: machinery, equipment, computers, office furniture, most vehicles (with limits), and off-the-shelf software. Real property (land, buildings) does not qualify for Section 179. See IRS Publication 946 for the full property classification list.

• Machinery, equipment, and tools used in your business.
• Computers, servers, and off-the-shelf business software.
• Office furniture and fixtures.
• Certain business vehicles (SUVs over 6,000 lbs have a separate annual cap).
• Qualified improvement property (interior improvements to non-residential buildings).

2026 limits and phase-out

The One Big Beautiful Bill Act (P.L. 119-21) raised the Section 179 deduction limit to $2,560,000 for tax years beginning in 2026, up from $1,220,000 in 2024. If your total property purchases exceed $4,090,000, the deduction phases out dollar-for-dollar. The deduction also cannot exceed your business's taxable income for the year — though any disallowed amount carries forward to future years. The same law also permanently restored 100% bonus depreciation for qualifying property placed in service after January 19, 2025, which can cover any basis left over once Section 179 is applied — see the full breakdown of what the One Big Beautiful Bill Act changed for how the two rules interact.

How Section 179 connects to equipment financing

You can claim Section 179 on financed equipment — not just equipment you pay for outright. If you finance $100,000 of machinery and your business's net income supports it, you may deduct the full $100,000 in year one even while making monthly payments. That's why many small businesses combine equipment financing with a Section 179 election: the tax savings in year one can meaningfully offset the cost of borrowing. If your business is planning a qualifying purchase, apply with ClearValue Lending to explore equipment financing options — we route to the funding partners best matched to it. Consult a CPA to confirm your Section 179 eligibility before filing.