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Section 179 vs Bonus Depreciation: Which One Should You Use?

6 min read
By the HaraPro Team · Reviewed by a licensed CPA · Published April 2026 · Updated June 2026

Both Section 179 and Bonus Depreciation let you deduct the full cost of a business asset in the year you buy it. But they work differently, have different limits, and apply to different situations.

Section 179 at a Glance

FeatureSection 179
2026 Maximum$1,220,000
Phase-out threshold$3,050,000
Business use required>50%
New or used assetsBoth
Can create a loss?No — limited to business income
SUV limit (>6K lbs)$28,900

Bonus Depreciation at a Glance

FeatureBonus Depreciation
2026 Rate40% (phasing down from 100% in 2022)
Maximum deductionNo dollar limit
Business use required>50%
New or used assetsBoth (since TCJA 2017)
Can create a loss?Yes — can generate a net operating loss
SUV limitNone (deducts based on % rate)

Which One Should You Use?

💡 Key insight: You can use BOTH on the same asset. Section 179 first (up to the limit), then bonus depreciation on the remaining basis, then regular MACRS on anything left.

Here's the decision framework:

SituationBest ChoiceWhy
Asset under $1.2M, profitable business§179Full deduction, simpler
Business has a loss this yearBonus§179 can't create a loss; bonus can
Heavy SUV (>6K lbs)§179Full deduction for qualifying SUVs
Asset over $1.2MBonus + §179 combo§179 up to limit, bonus on the rest
Want to spread deductions over yearsRegular MACRSSkip both and depreciate over 5-7 years

Bonus Depreciation Phase-Down Schedule

YearBonus Rate
2022100%
202380%
202460%
202540%
202620%
2027+0% (unless Congress extends)
⚠️ Timing matters: Bonus depreciation is phasing down every year. If you're buying a major asset, doing it sooner captures a higher bonus rate. But don't buy assets just for the tax deduction — the business purpose must come first.

Real Example: $65,000 Business Vehicle

Assume a qualifying SUV over 6,000 lbs, 100% business use, placed in service in 2026 (current §179 cap and bonus percentage at irs.gov):

MethodYear 1Year 2-5Total
§179 Only$65,000$0$65,000
Bonus Only (20%)$13,000$52,000 over MACRS$65,000
§179 + Bonus$65,000$0$65,000
MACRS 5-Year Only$13,000$52,000$65,000

For a heavy SUV, Section 179 alone gets you the full deduction in year one. Bonus depreciation at 20% doesn't add value here. But for assets where §179 is maxed out or the business has a loss, bonus depreciation fills the gap.

See how HaraPro handles Section 179 vs bonus depreciation
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