The One Big Beautiful Bill Breakdown: Section 179

Section 179 expensing allows businesses to expense personal property and certain qualified real property, with the goal of incentivizing businesses to invest in capital expenditures and keep growing. Section 179 is a flexible, targeted deduction that allows businesses to choose which assets to deduct right away, up to a set limit, and is limited to taxable income.

The Previous Tax Law

Under the Tax Cuts and Jobs Act (TCJA) of 2017, for property placed in service in tax years beginning in 2018 and beyond, Section 179 permitted a maximum deduction of $1 million with a phase-out threshold of $2.5 million.

These limits were indexed for inflation, and by 2025, these limits had increased to a $1.25 million deduction and a $3.13 million phase-out threshold, with the deduction fully eliminated once purchases exceeded $4.38 million.

New and Final Law Under the One Big Beautiful Bill

The bill makes Section 179 expensing permanent and doubles the maximum deduction to $2.5 million with a phase-out threshold of $4 million in equipment purchases. The increased limits apply to property placed in service in taxable years beginning after December 31, 2024.

These limits will continue to be adjusted for inflation. In addition, previous tax law changes that expanded the definition of property eligible for Section 179 expensing were made permanent.

What It Means for You

The ability to elect out of bonus depreciation and use Section 179 selectively provides valuable flexibility for managing taxable income across entities or years. However, it’s essential to discuss this strategy with your tax advisor to ensure optimal planning.

It’s also important to remember that state conformity varies. Business owners operating in multiple states should consult your tax advisor to understand how these deductions will be treated at the state level.

To learn more about how the One Big Beautiful Bill and this specific provision may impact you, contact your Warren Averett advisor.