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Tax & accounting

Section 179 and Bonus Depreciation Limits for 2025 (IRS Pub 946)

When you buy equipment, vehicles or other business property, Pub 946 explains whether you can expense it right away or must depreciate it over time. Ask the assistant about limits, eligible property and MACRS.

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Answers are written by a language model solely from this base's documents, with numbered sources. They can be wrong and aren't legal, medical or financial advice: check the sources before any important decision.

What property can be depreciated

You can depreciate most types of tangible property except land, such as buildings, machinery, vehicles, furniture and equipment. The property must have a determinable useful life and be expected to last more than 1 year.

You must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate most property, and Pub 946 explains when you have to file Form 4562.

Section 179 limits for 2025

For tax years beginning in 2025, the maximum Section 179 expense deduction is $2,500,000. This limit is reduced by the amount by which the cost of Section 179 property placed in service during the year exceeds $4,000,000. The maximum for sport utility vehicles placed in service in 2025 is $31,300.

After applying the dollar limit, you must also apply the business income limit to find your actual deduction. For property used for both business and personal purposes, you can elect Section 179 only if business use is more than 50% in the year you place it in service.

Special depreciation allowance

For certain qualified property acquired after September 27, 2017, and before January 20, 2025, and placed in service in 2025, the special depreciation allowance is limited to 40% (60% for property with a long production period and certain aircraft).

For certain qualified property acquired after January 19, 2025, you can elect a 40% allowance (60% for long production period property and certain aircraft) instead of the 100% special depreciation allowance in the first tax year ending after January 19, 2025.

Frequently asked questions

Can I depreciate the land under my business building?

No. Pub 946 explains that you cannot depreciate land because it does not wear out, become obsolete or get used up. You can, however, depreciate certain land preparation costs, such as landscaping, that are closely associated with other depreciable property.

What if my listed property is used 50% or less for business?

If listed property is not used predominantly (more than 50%) for qualified business use, you cannot claim the Section 179 deduction or a special depreciation allowance for it.

Is the Section 179 deduction limited by my income?

Yes. Besides the dollar limit, the total Section 179 deduction is subject to a business income limit, which you apply after the dollar limit.

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{
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      }
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