Section 179: Key 2026 Figures
| 2026 tax year | |
|---|---|
| Maximum Section 179 deduction | $2,560,000 |
| Phase-out begins at | $4,090,000 in qualifying purchases |
| Fully phased out at | $6,650,000 |
| Bonus depreciation | 100%, applied after Section 179 |
| Placed-in-service deadline | December 31, 2026 (calendar-year filers) |
Source: IRS Revenue Procedure 2025-32 and the One Big Beautiful Bill Act of 2025.
What is the Section 179 deduction limit for 2026?
The 2026 Section 179 deduction limit is $2,560,000. The deduction begins to phase out once total qualifying purchases exceed $4,090,000, reducing dollar for dollar, and is eliminated entirely at $6,650,000.
Both figures come from IRS Revenue Procedure 2025-32. The One Big Beautiful Bill Act, signed July 4, 2025, raised the base limit to $2.5 million from $1.25 million and made the higher thresholds permanent and indexed for inflation. For most businesses purchasing printers, servers, workstations, and network hardware, annual spend falls well below the phase-out threshold, so the cap is not a practical constraint.
What is Section 179?
Section 179 is a provision of the Internal Revenue Code that lets a business deduct the full purchase price of qualifying equipment and technology in the year it is placed in service, instead of depreciating that cost over several years.
The provision exists to encourage investment in growth-driving assets by delivering the tax benefit up front rather than spreading it across a depreciation schedule. The practical effect is improved cash flow in the year of purchase.
What technology qualifies for Section 179?
Most business technology qualifies, including computers, servers, printers, copiers, networking hardware, telecommunications systems, and off-the-shelf software. Property must be tangible, placed in service during the tax year, new to your business, and used more than 50% for business purposes.
- Common qualifying purchases:
- Computers, laptops, and workstations
- Servers, storage, and backup hardware
- Routers, switches, firewalls, and network infrastructure
- Multifunction copiers and office printers
- Production print and print finishing systems
- Telecommunications and unified communications systems
- Off-the-shelf software under a perpetual license
Equipment with significant personal use may not qualify for the full deduction.
Does software qualify for Section 179?
Off-the-shelf software purchased under a perpetual license qualifies. Software-as-a-service subscriptions do not.
This distinction trips up a lot of businesses. SaaS subscription fees are not Section 179 property because you are not purchasing an asset. The cost is still fully recoverable — subscription fees are typically deductible as ordinary business expenses in the year incurred — just through a different mechanism and without any cap.
Does equipment have to be new to qualify for Section 179?
No. Used equipment qualifies as long as it is new to your business. Refurbished and previously owned technology is eligible under the same rules as new equipment.
Can I claim Section 179 on leased or financed equipment?
Yes. Equipment acquired through a $1 purchase option lease or an Equipment Finance Agreement (EFA) qualifies for the full Section 179 deduction.
This is one of the most useful features of the provision. You deduct the entire purchase price in year one while spreading payments over the term of the agreement, which means the tax benefit can exceed your first-year cash outlay. True operating leases are treated differently — lease payments are deducted as expenses instead — so the structure of the agreement matters.
Is bonus depreciation still 100% in 2026?
Yes. 100% bonus depreciation is permanent for qualifying property acquired after January 19, 2025. The One Big Beautiful Bill Act ended the scheduled phase-down that would have reduced it to 40% and then 20%.
What is the difference between Section 179 and bonus depreciation?
Both allow a full first-year deduction, but bonus depreciation has no dollar cap, no phase-out, and no taxable income limit. Section 179 must be elected first, with bonus depreciation applied to any remaining basis.
| Section 179 | Bonus depreciation | |
|---|---|---|
| 2026 cap | $2,560,000 | None |
| Phase-out | Above $4,090,000 | None |
| Used equipment | Qualifies | Qualifies |
| Can create a loss | No | Yes |
| Election order | First | Second |
For most businesses buying office technology, the two provisions together mean the entire purchase price is deductible in the first year.
Can Section 179 create a business loss?
No. The Section 179 deduction cannot exceed your business's taxable income for the year. Any unused amount carries forward to future years.
This is the limit that most often surprises business owners. A company having a thin year may not be able to use the full deduction in that year. Because bonus depreciation is not subject to the same restriction, the interaction between the two is worth reviewing with your accountant before committing to a large purchase.
What is the Section 179 deadline for 2026?
Equipment must be placed in service by December 31, 2026 for calendar-year filers. Purchase date is not the test — the equipment must be installed and operational.
Equipment ordered in December but installed in January belongs to the following tax year. Installation lead times on production print systems and network infrastructure can run several weeks, so Q4 purchases benefit from early scheduling.
How much can a business save with Section 179?
Savings equal the deduction amount multiplied by your effective tax rate, so the figure depends on your entity type, tax rate, and taxable income.
Illustrative example, not a projection of your results: a business placing $180,000 of qualifying office technology in service in 2026, taxed at a 21% federal rate, would see roughly $37,800 in federal tax reduction in the first year. Your actual result will differ based on your circumstances and state treatment.
Do state tax rules follow the federal Section 179 rules?
Not always. State conformity to federal Section 179 and bonus depreciation rules varies considerably, and state treatment can meaningfully change your actual savings.
Some states decouple entirely, some cap the deduction at a lower amount, and some require an add-back with the difference recovered over time. If you file in more than one state, confirm the specifics with your tax professional before finalizing a purchase.
How can Allied help?
Allied Business Solutions offers a full range of office technology that qualifies for Section 179 and bonus depreciation — multifunction printers, production print systems, servers, network infrastructure, and unified communications. Our team can help you scope the right investment and align installation timing with your year-end deadline.
We work with businesses nationwide, from single-office operations to multi-site enterprises.