Section 179 vs bonus depreciation: a plain-language field guide
By the Tax Field Guide editorial team. Published 2026-11-06. Facts checked 2026-11-06. Related strategies: Accelerated Depreciation.
Education only; not tax, legal or investment advice. Tax rules change, and how they apply depends on your facts. No outcome is guaranteed.
Businesses often ask whether to use Section 179, bonus depreciation (the special depreciation allowance), or both. Both are ways to recover the cost of qualifying property faster than ordinary MACRS schedules. The details — dollar caps, bonus percentages, and which property qualifies — change by law year. This guide explains the concepts and where the IRS publishes the current figures. It is education only, not tax, legal or investment advice. For current-year dollar limits and percentages, see Publication 946, Topic no. 704, and the Instructions for Form 4562 rather than memorizing any single number from an article.
What Section 179 is
Section 179 lets you elect to deduct all or part of the cost of qualifying property in the year you place it in service, instead of recovering that cost only through regular depreciation.12 Key themes in Pub 946 and Topic 704:
- The property must be eligible section 179 property (generally tangible personal property and certain other listed categories, including some qualified real property when the election allows).2
- There is a dollar limit on how much you can elect, and that limit is reduced when you place more than a threshold amount of section 179 property in service. See current-year IRS figures in Pub 946.2
- After the dollar limit, the deduction cannot exceed taxable income from the active conduct of a trade or business; unused amounts generally carry forward.12
- Sport utility and certain other vehicles have an additional section 179 cap. See our Section 179 heavy SUVs guide and the current Pub 946 SUV limit line.
You report the election on Form 4562, Part I.3
What bonus (special depreciation allowance) is
The special depreciation allowance — often called bonus depreciation — is an additional first-year depreciation deduction for qualified property. Topic 704 states that this allowance is taken after any allowable Section 179 deduction and before other depreciation.1 Pub 946 chapter 3 covers which property is qualified, how the percentage works for different acquisition and placed-in-service windows, and how to elect out.2
The bonus percentage and the acquisition / placed-in-service windows are law-year dependent. Topic 704 currently describes different percentages for property in different date windows (including a return to 100% for certain qualified property acquired and placed in service after January 19, 2025).1 Always confirm the percentage that applies to your property's dates in the current Pub 946 and Form 4562 instructions. Do not assume last year's rate still applies.
Order of operations (educational framing)
IRS Topic 704 describes a common sequence for the same asset:1
- Apply any Section 179 election you make for that property.
- Apply the special depreciation allowance to remaining eligible basis.
- Depreciate any basis left under MACRS (or another allowed method).
That is a description of how the IRS arranges the rules, not a recommendation about whether to elect section 179, claim bonus, or elect out of bonus for a particular asset. Partnerships, listed property, short tax years and state conformity can change the practical result.
Side-by-side
| Section 179 | Bonus / special depreciation allowance | |
|---|---|---|
| Nature | Election to expense qualifying cost | Additional first-year depreciation for qualified property |
| Typical form | Form 4562 Part I | Form 4562 Part II (and Part V for listed property) |
| Dollar / income caps | Yes — see current-year IRS figures in Pub 946 | Percentage of remaining basis; date windows matter |
| Order | Applied first (when elected) | After section 179, before regular MACRS1 |
| Opt-out | You choose how much to expense (within limits) | You can elect not to claim the allowance for a class of property2 |
| Carryover theme | Disallowed amount from the business-income limit generally carries forward2 | N/A in the same way; unused basis stays for MACRS |
Forms and publications
- Publication 946, How To Depreciate Property — section 179 (ch. 2), special depreciation allowance (ch. 3), MACRS (ch. 4), listed property (ch. 5).2
- Topic no. 704, Depreciation — short summary of section 179, bonus order of operations, and MACRS.1
- Instructions for Form 4562 — how to report elections and depreciation on the return.3
For current-year IRS figures (section 179 dollar and phase-out thresholds, SUV cap, and bonus percentages by date), use those IRS pages for the year you are filing. Do not rely on a blog or this field guide as the source of the numbers.
Common mix-ups
- "100% write-off" slogans. Marketing copy often skips business-use tests, listed-property rules, the section 179 income limit, and state conformity.
- Passenger auto vs heavier SUV. Passenger automobiles have separate depreciation caps; heavier SUVs sit under a different section 179 vehicle limit. See Section 179 heavy SUVs.
- Credits vs depreciation. Section 179 and bonus are deductions (they reduce income), not tax credits. For the credit-vs-deduction contrast, see tax credit vs tax deduction.
- Real property / QIP. Some interior improvements and building systems can qualify for section 179 when treated as qualified section 179 real property; buildings as a whole generally do not. Confirm definitions in Pub 946.2
- Bonus is not optional by silence. The special allowance is generally claimed unless you elect out for a class of property under the rules in Pub 946.2
Related guides
- Section 179 heavy SUVs (Rev. Proc. 2025-32 and Notice 2026-11)
- Tax credit vs tax deduction
- Bonus depreciation and solar
- Cost segregation study pitfalls
- What is a transferable tax credit
- How to find a tax mitigation advisor
Professionals who list accelerated depreciation appear in the advisor directory when their public pages match; a listing is not a recommendation.
Common questions
Can Section 179 and bonus depreciation both apply to the same asset?
Topic 704 describes them in sequence: section 179 first (if you elect it), then the special depreciation allowance on remaining eligible basis, then regular depreciation.1 Whether that sequence is available for a specific asset depends on qualification, elections and current-year law. Confirm with a qualified professional and the current Form 4562 instructions.
Where are the current Section 179 dollar limits published?
In the current edition of Publication 946 (and related IRS news releases / revenue procedures that update the annual figures). This guide does not hard-code those limits because they change. See current-year IRS figures before you plan or file.
Is bonus depreciation the same percentage every year?
No. The special depreciation allowance percentage and the acquisition / placed-in-service windows depend on the law in effect for your property's dates. Topic 704 and Pub 946 describe the windows that apply when those pages were updated; always re-check for the year you are filing.12
Is this tax advice?
No. This is an educational field guide. Use Publication 946, Topic 704, Form 4562, and a qualified professional for your facts.
Education only; not tax, legal or investment advice. Talk to a qualified professional before acting.
Sources
- IRS, Topic no. 704, Depreciation, https://www.irs.gov/taxtopics/tc704
- IRS, Publication 946, How To Depreciate Property, https://www.irs.gov/publications/p946
- IRS, Instructions for Form 4562, https://www.irs.gov/instructions/i4562