How much equipment can my business write off this year under Section 179?

The Section 179 deduction cap for 2026 sits around $2.5 million. That means your business can expense up to that amount in qualifying property purchases for the year, deducting the full cost in the year you place the equipment in service rather than depreciating it over time.

If your total qualifying purchases exceed roughly $4 million for the year, the available deduction begins to phase out dollar for dollar. Spend $4.5 million on equipment and you lose $500,000 of the allowable deduction. Once your purchases hit approximately $7 million, the Section 179 deduction phases out completely for that year.

Qualifying property includes equipment, machinery, vehicles used for business, computers, off-the-shelf software, and certain improvements to nonresidential property like roofs, HVAC systems, fire protection, alarm systems, and security systems. The improvements category was expanded in recent years and catches some business owners by surprise because they assume building work does not qualify.

One detail that trips up owners with multiple businesses is that the $2.5 million cap applies per taxpayer across all their businesses combined. If you own three LLCs and each buys $1 million in equipment, you have hit the cap and need to allocate the deduction among them. This is where working with a CPA firm in Pelham, Alabama helps you coordinate across all your interests.

Bonus depreciation works alongside Section 179 and covers property that qualifies under both provisions. As of this writing, bonus depreciation is phasing down from 100% in prior years, so the percentage available depends on when property is placed in service. For larger purchases or when you have exhausted Section 179, bonus depreciation picks up what remains. The two tools layer together but they have different rules and different strategic uses.

The planning point matters more than the numbers themselves. Whether to use Section 179, bonus depreciation, or standard depreciation depends on your taxable income this year, your expected income in future years, and whether accelerating the deduction actually saves you money or just shifts when you pay. Taking the full deduction in a low income year might waste some of the benefit. Spreading it over time might save more in total if your income is rising.

These are decisions that need to happen before year end, not during tax season. Once December 31 passes, your options narrow considerably. That is why year-round tax planning matters for businesses making significant equipment purchases.

The numbers I have shared reflect current law and should be verified before making decisions. These limits adjust annually for inflation and the rules around bonus depreciation are changing as part of a scheduled phasedown. If you are considering a major equipment purchase, book a consultation so we can look at your specific situation and determine the best approach.