DEFINITION
Section 179 is one of the most-used small-business tax tools. The annual deduction limit is substantial but capped, and the deduction phases out for businesses purchasing very large amounts of property in a single year. Bonus depreciation is the related — and sometimes better — alternative.
WHEN IT MATTERS
Anytime you purchase meaningful business equipment, vehicles, or off-the-shelf software.
COMMON QUESTIONS
When does Section 179 beat bonus depreciation?
When you want flexibility to deduct only part of an asset's cost in the current year — Section 179 lets you elect amounts; bonus depreciation is all-or-nothing per asset class.
RELATED SERVICES
R · RELATED TERMS
Depreciation
Spreading the cost of a long-lived asset over its useful life rather than expensing it all in year one.
Estimated Tax Payments
Quarterly payments business owners and self-employed individuals make toward their annual tax bill.
S Corporation
A tax election that lets a corporation or LLC pass income through to its owners' personal tax returns, avoiding double taxation.