The Monet Blog · Taxes
Section 179 lets you expense qualifying assets immediately, but it is capped, phased out, and cannot create a loss. Here is how to use it deliberately.
By Sankha NagChoudhurySeptember 17, 20267 min read
Section 179 is the election that lets a business write off the cost of qualifying property in the year it is placed in service rather than depreciating it. It is precise, it is optional asset by asset, and its three limits — the dollar cap, the phase-out, and the taxable-income ceiling — are what determine whether it helps you this year.
Tangible personal property used more than fifty percent for business, off-the-shelf software, and certain improvements to non-residential real property such as roofs, HVAC, fire protection, and security systems.
First, the annual dollar cap on total Section 179 expensing. Second, a dollar-for-dollar phase-out once total qualifying purchases in the year exceed a threshold. Third — and the one most often missed — the deduction cannot exceed your aggregate business taxable income.
Passenger automobiles are subject to luxury-auto caps. Heavier vehicles above the gross vehicle weight threshold, and vehicles built in ways that make personal use impractical, are treated differently and can support much larger first-year deductions.
Most planning uses both. Apply Section 179 selectively where you want control — usually to assets with the longest recovery periods — then let bonus depreciation handle the remainder, or elect out of bonus where a steadier deduction stream is worth more.
A deduction returns your marginal rate on the money, not the money. Spending a dollar to save thirty-odd cents only makes sense when the asset earns its keep.
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