Accounting KetchupAccountingKetchup
Get My Price →

Section 179

Section 179 of the IRS tax code lets businesses deduct the full purchase price of qualifying equipment and software in the year it's purchased, instead of depreciating it over several years.

Section 179 Definition

Section 179 allows businesses to immediately expense (deduct) the full cost of qualifying assets in the year they're placed in service. Instead of spreading the deduction over 5–7 years through depreciation, you get the entire write-off upfront.

2026 Section 179 Limits

  • Maximum deduction: $1,220,000 (indexed for inflation)
  • Spending cap: $3,050,000 — deduction begins to phase out dollar-for-dollar above this
  • Must be placed in service during the tax year
  • Business must have taxable income — can't create a loss with Section 179

    • What Qualifies?

  • Machinery and equipment
  • Computers and software
  • Office furniture
  • Vehicles (with limitations — SUVs over 6,000 lbs have a $28,900 cap)
  • Certain building improvements (HVAC, fire protection, roofing, security)
  • Leased equipment (if the lease is treated as a purchase)

    • What Doesn't Qualify?

  • Real property (land, buildings — though some improvements qualify)
  • Inventory
  • Air conditioning or heating units for residential property
  • Property used outside the US

    • Section 179 vs. Bonus Depreciation

  • Section 179: full deduction, but can't create a loss; has a spending cap
  • Bonus depreciation (2026: 60%): no income limit, can create a loss, but only partial deduction
  • Strategy: use Section 179 first (up to the limit), then bonus depreciation on the rest

    • How to Record Section 179 in QuickBooks

    Record the asset purchase as a fixed asset. At year-end, your CPA will calculate the Section 179 deduction and create a depreciation journal entry for the full amount. The asset stays on your balance sheet with accumulated depreciation equal to its cost.

    FAQ

    Q: Can I use Section 179 for a vehicle?

    A: Yes, with limits. Passenger vehicles have strict caps (~$20,400 first year). SUVs/trucks over 6,000 lbs GVWR can deduct up to $28,900 under Section 179, plus bonus depreciation on the rest.

    Related Terms

  • Depreciation
  • Fixed Asset
  • Tax Deduction
  • Accumulated Depreciation

    • > Need help making sense of your books? Ketchup cleans up your QuickBooks in 3–7 business days — so your numbers actually make sense. Get your price →

    Related Terms

    Credit

    In bookkeeping, a credit is an entry on the right side of a journal entry or T-account that increases certain types of accounts and decreases others. Credits increase liabilities, equity, and revenue accounts. They decrease asset and expense accounts. Every transaction requires at least one credit a

    Retained Earnings

    Retained earnings is the cumulative total of net profits your business has earned since inception, minus any dividends or owner distributions paid out. It represents profits that have been kept ("retained") in the business rather than distributed to owners or shareholders. Retained earnings appear o

    Journal Entry

    A journal entry is a record of a financial transaction in the accounting system, showing the accounts debited and credited along with the amounts. Every journal entry must balance—total debits must equal total credits. Journal entries are the building blocks of double-entry bookkeeping and how trans

    Invoice

    An invoice is a document sent by a seller to a buyer requesting payment for goods or services delivered. It includes details like the invoice number, date, description of items, quantities, prices, payment terms, and the total amount due. In bookkeeping, creating an invoice records accounts receivab

    Related Resources

    DeductionsEquipment & Asset DeductionsGlossaryWhat Is Depreciation?

    Need these terms applied to your books?

    Accounting Ketchup catches up your QuickBooks so the glossary becomes your reality. Flat rate.

    Get My Price →