Section 179 and bonus depreciation both let a business deduct equipment in the year it goes to work. They are not the same tool. Section 179 is chosen asset by asset and stops at your business income. Bonus depreciation has no dollar cap and applies by default. Most businesses that buy a lot of equipment use both. This guide shows when each one wins.
Greg Neilsen, JD, LLM (Master of Laws in Taxation), reviews our tax guides. Last reviewed: September 30, 2026.
Five points. Each one is explained below.
| Feature | Section 179 | Bonus depreciation |
|---|---|---|
| How it applies | You choose it, asset by asset, and can take part of the cost | Automatic for every qualifying asset, unless you elect out for a whole class |
| Dollar limit | $2.5 million for 2025, adjusted for inflation; reduced once purchases pass a much higher threshold | No dollar limit |
| Can it create a loss? | No. Limited to business income; the excess carries forward | Yes. The loss carries forward |
| Used equipment | Yes, if not from a related party | Yes, if not previously used by you and not from a related party |
| Building improvements | Yes for roofs, HVAC, fire protection, alarms, and security systems on commercial buildings | Interior improvements only (qualified improvement property) |
| Heavy SUVs (over 6,000 lb) | Capped at about $31,000 for 2025, adjusted for inflation | No special cap |
| Pickups with a 6-foot bed, cargo vans | Full cost, no SUV cap | Full cost |
Example: A remodeling company replaces the roof on the shop building it owns for $30,000. Bonus depreciation does not cover the roof, so on its own it would be depreciated over 39 years. Under Section 179, the company can deduct the full $30,000 this year, if it has the business income to absorb it.
Example: A pool service company buys a $68,000 SUV rated over 6,000 pounds and uses it 100 percent for work. Section 179 alone would stop at the SUV cap, about $31,000 for 2025. Bonus depreciation can deduct the full $68,000.
Yes. The order is fixed. Section 179 comes first, on the assets you choose. Bonus depreciation then applies to whatever cost is left. Regular depreciation covers anything after that.
Example: A plumbing company has $150,000 of profit before its purchases. It replaces the roof on its shop for $30,000, buys a $45,000 van rated over 6,000 pounds, and buys an $8,000 jetter. Section 179 takes the roof. Bonus depreciation takes the van and the jetter. Total deduction: $83,000. Profit falls to $67,000.
Trucks and vans over 6,000 pounds gross vehicle weight are not passenger cars, so both tools can deduct their full cost. Heavy SUVs are the exception: Section 179 caps them, bonus depreciation does not.
Pickups with a bed at least six feet long, and cargo vans with no seating behind the driver, are not held to the SUV cap. Vehicles under 6,000 pounds are held to annual caps under both tools.
Under either tool, the deduction follows business use. Keep a mileage log.
Both deductions come back when you sell. The gain up to the depreciation you took is taxed as ordinary income.
Vehicles have one more rule. If business use drops to 50 percent or less in a later year, part of the deduction is added back to income, under either tool.
Example: A cleaning company expenses a $40,000 van in 2026. In 2028 the owner starts using it mostly for personal driving. Part of the 2026 deduction comes back as income in 2028.
For S corporations, LLCs, and sole proprietors, Florida has no personal income tax, so the choice is federal. C corporations pay Florida corporate income tax, and Florida has its own rules for both tools. Check them before you count on the deduction at the state level.
We run both against your year: profit, what you bought, what you plan to buy, and what next year looks like. In our Planned plan, the choice goes in the written tax plan before you buy.
Read the full bonus depreciation guide, or see how this works for plumbing and remodeling companies.
Section 179. You apply it to the assets you choose, then bonus depreciation applies to the remaining cost, then regular depreciation.
No. Section 179 is limited to the business income from your active trades or businesses. Any excess carries forward to the next year.
There is no dollar limit. The deduction still follows business use for vehicles, and it applies only to qualifying property.
Yes, as long as you did not buy it from a related party, like a family member or a company you control.
Often, under Section 179. A roof on a commercial building qualifies for Section 179 expensing. Bonus depreciation does not cover it.
This guide is educational and is not tax advice for your situation. Tax rules change, and the right move depends on your numbers. Talk to a tax professional before you act.
Greg Neilsen, JD, LLM (Master of Laws in Taxation), reviews our tax guides. Last reviewed: September 30, 2026.
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