What is the section 179 deduction limit for 2025 and 2026?
For taxable years beginning in 2025, a business can expense up to $2,500,000 of section 179 property, reduced dollar for dollar once property placed in service tops $4,000,000. For 2026 the inflation-adjusted figures are $2,560,000 and $4,090,000.
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The limits by year
The One Big Beautiful Bill Act (P.L. 119-21) raised the section 179 dollar limit to $2,500,000 and the phase-out threshold to $4,000,000 for taxable years beginning in 2025. Rev. Proc. 2025-32 sets the 2026 inflation-adjusted amounts.
| Taxable years beginning in | Dollar limit | Phase-out starts at | Heavy SUV cap |
|---|---|---|---|
| 2025 | $2,500,000 | $4,000,000 | $31,300 |
| 2026 | $2,560,000 | $4,090,000 | $32,000 |
How the phase-out works
The dollar limit drops by $1 for every $1 of section 179 property placed in service above the threshold, but not below zero. For 2026, a business that places $4,590,000 of section 179 property in service has a limit of $2,560,000 − $500,000 = $2,060,000.
The business income limit
The deduction also can't exceed taxable income from the active conduct of a trade or business for the year, figured before the section 179 deduction (IRC §179(b)(3)(A)). Amounts disallowed by this income limit carry forward to later years (IRC §179(b)(3)(B)).
Heavy SUVs
The heavy SUV cap applies to passenger vehicles rated over 6,000 pounds and up to 14,000 pounds gross vehicle weight. Publication 946 lists exceptions, such as vehicles that seat more than nine passengers behind the driver's seat.
Sources
- IRC §179(b): Election to expense certain depreciable business assets: limitations
- Rev. Proc. 2025-32, §4.24: 2026 inflation adjustments (2025-45 IRB)
- IRS Publication 946 (2025): How To Depreciate Property
Not tax advice. Check the sources against your client's facts before relying on this.