U.S. · Tax forms
Form 4562 line 3, threshold cost.
The $4,000,000 phase-out threshold for 2025 and the arithmetic of lines 2 through 5.
Line 3 (“Threshold cost of section 179 property before reduction in limitation”) is $4,000,000 for 2025 according to Worksheet 1. If the cost on line 2 is above it, line 4 reduces the limitation by the excess and line 5 shows what is left.
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What the 2025 Form 4562 says
| Item | Meaning | What the IRS says |
|---|---|---|
| Line 2 | Total cost placed in service | Enter the total cost of all section 179 property you placed in service during the tax year, including listed property from Part V and property placed in service by your spouse, even if filing separately |
| Line 3 | $4,000,000 | Base maximum threshold cost of section 179 property before reduction in limitation for 2025; enter this amount on Form 4562, line 3 |
| Line 4 | Reduction | The form says: subtract line 3 from line 2; if zero or less, enter -0- |
| Line 5 | Dollar limitation | The form says: subtract line 4 from line 1; if zero or less, enter -0-; if married filing separately, see instructions |
| If line 5 is zero | Cannot elect | If line 5 is zero, you cannot elect to expense any section 179 property; skip lines 6 through 11, enter zero on line 12 and carry any 2024 disallowed deduction on line 13 |
| Married filing separately | Split the limit | Multiply the total limitation by 50% unless you both elect a different allocation; the percentages must total 100% |
| Partnerships, S corporations | Applied twice | The limitations apply to the partnership and each partner, and to an S corporation and each shareholder; a controlled group is one taxpayer |
What “threshold” means here
The instructions say the amount of section 179 property you can elect is limited to the line 1 maximum, and that this amount is reduced if the cost of all section 179 property placed in service in 2025 is more than $4,000,000. Line 3 is that $4,000,000 trigger, not a deduction.
The arithmetic
Line 4 equals line 2 minus line 3, floored at zero. Line 5 equals line 1 minus line 4, floored at zero. Every dollar of cost above the threshold takes a dollar off the limitation.
Include your spouse's property
Line 2 also counts property placed in service by your spouse, even if you file separately. That can push you over the threshold even when your own purchases would not.
Worked example
A business placed $4,300,000 of section 179 property in service in 2025. Line 2 is $4,300,000 and line 1 is $2,500,000. Line 3 is $4,000,000. Line 4 is $300,000. Line 5 is $2,500,000 less $300,000, which is $2,200,000. Had the cost reached $6,500,000 or more, line 5 would be zero and no section 179 election would be available. Names and figures are made up.
More line pages in this set
Related lines: Form 4562 Line 1, Form 4562 Line 11.
Sources
- Instructions for Form 4562 (2025): the line-by-line instructions on this page. Page last reviewed or updated April 30, 2026. Read November 2, 2026.
- Form 4562, Depreciation and Amortization (2025): the printed line wording and arithmetic on the form. Read November 2, 2026.
Tax year 2025 form and instructions. Line labels were read from the IRS PDF posted on the date read; line numbers, dollar limits and cutoff years change between editions, so check them against the form for your tax year. The $4,000,000 and $2,500,000 figures are for tax years beginning in 2025; later years differ. Names in worked examples are made up.
Frequently asked questions
What is the line 3 amount for 2025?
$4,000,000, shown as the base maximum threshold on Worksheet 1 in the instructions.
What does line 4 do?
It subtracts line 3 from line 2 (not below zero) to measure how far total cost exceeds the threshold.
Does this apply per business?
The limits apply to the taxpayer, and to a partnership and each partner, and an S corporation and each shareholder.
What if my spouse also bought property?
Line 2 includes property your spouse placed in service, even if you file separate returns.
What happens when line 5 is zero?
You cannot elect to expense any section 179 property for the year.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. A CPA or an enrolled agent can confirm what a line means for your return. Everything runs in your browser; nothing you enter is sent anywhere.