Section 179 deduction limit 2027.

Three limits apply, in order

Section 179 lets a business treat the cost of qualifying equipment as an expense in the year it is placed in service instead of depreciating it. Section 179(b) limits the election three ways. First is the dollar limit, $2,640,000 for 2027. Second is the investment reduction: the dollar limit is reduced, not below zero, by the amount the total cost of section 179 property placed in service in the year is more than $4,230,000. Third is the income limit: the deduction cannot exceed the taxable income from the taxpayer's active trades or businesses, and any amount disallowed by that limit carries forward to the next year.

Sport utility vehicles

For a heavy SUV that the statute defines as a four-wheeled vehicle rated at no more than 14,000 pounds gross vehicle weight and not subject to section 280F, only $33,100 of cost can be taken into account for 2027. That cap is a limit within the section 179 election; it is separate from the larger first-year depreciation rules, which this page does not cover.

Why the investment limit matters

A business buying more than about $4.2 million of equipment in a year loses the election one dollar at a time. At $5,000,000 of purchases the dollar limit drops by $770,000 to $1,870,000. At $6,870,000 the limit is gone, which is why large buyers lean on other first-year depreciation methods instead.

What changed from 2026

The dollar limit rises $80,000, from $2,560,000 to $2,640,000. The phase-out threshold rises $140,000, from $4,090,000 to $4,230,000, and the SUV cap from $32,000 to $33,100. The structure of the three limits did not change.

Worked example (2027)

A contractor places $1,000,000 of qualifying equipment in service in 2027 and has $900,000 of taxable business income before the deduction. The dollar limit is $2,640,000 and there is no phase-out because $1,000,000 is under $4,230,000, so the most the contractor could elect is the full $1,000,000. The income limit caps the deduction at $900,000, and the remaining $100,000 carries forward. A company that places $5,000,000 of property in service has a limit of $2,640,000 minus $770,000, which is $1,870,000, and with $9,000,000 of income it deducts the full $1,870,000. One that places $3,000,000 in service with only $500,000 of income deducts $500,000 and carries forward $2,140,000.

Method

The calculator subtracts any cost above $4,230,000 from $2,640,000, floors the result at zero, takes the lesser of your cost and that limit as the amount you can elect, and then caps the deduction at your business income. The difference is the carryforward. It assumes every item qualifies as section 179 property and ignores SUV items, married-couple allocation and the passive-activity rules. Figures were read on November 9, 2026.

What this does not cover

• Whether an asset is qualifying section 179 property.
• Bonus depreciation and other first-year rules.
• The SUV cap as it applies to a specific vehicle.
• State rules, many of which limit section 179 differently.

Figures read from the sources below on November 9, 2026. Last updated November 9, 2026.

Sources

• IRS Revenue Procedure 2026-35, section 3.26 (election to expense certain depreciable assets) (retrieved November 9, 2026)
• IRS Revenue Procedure 2025-32, section 4.24 (the 2026 amount) (retrieved November 9, 2026)
• 26 U.S.C. section 179 (election to expense certain depreciable business assets), text at Cornell Legal Information Institute (retrieved November 9, 2026)
• IRS news release IR-2026-133, November 5, 2026 (retrieved November 9, 2026)