This blog article from Huddle Business Capital outlines recent updates to the Section 179 tax deduction and bonus depreciation for 2026. These updates replace the information we provided in a blog article last year regarding Section 179 and bonus depreciation. It is important to familiarize yourself with these changes, especially if you are considering investing in new or used capital equipment for your business this year.
The Section 179 deduction limit increased.
One of the most significant updates to Section 179 is the notable increase in the deduction limit on eligible property, which includes a wide range of assets such as equipment, machinery, vehicles, software, and technology. In 2026, the Section 179 deduction limit is $2,560,000.1
This enhancement enables businesses like yours to take greater advantage of immediate tax deduction, allowing you to invest more in essential tools and resources that support your growth and operational efficiency.
The Section 179 phase-out limit increased.
In 2026, the Section 179 phase-out threshold is $4,090,000.2 This means your qualifying deductions will decrease dollar-for-dollar after the total amount of eligible property purchased or financed and placed into service exceeds $4,090,000.
Bonus depreciation is 100%.
Bonus depreciation is an additional first-year depreciation allowance on "first use" business property—it lets you recover the cost of qualifying property. In contrast, Section 179 enables you to expense the cost. Bonus depreciation can be combined with Section 179, so long as Section 179 is applied first.
In 2026, the first-year bonus depreciation rate is 100% for qualifying property.3 It is worth noting that bonus depreciation was 40% in 2025, and it was scheduled to drop to 20% this year. However, approved legislation makes 100% bonus depreciation permanent, which is welcome news for business owners in 2026 and beyond.
Conclusion.
Understanding Section 179 and bonus depreciation enables you to make strategic decisions that align with your financial goals while complying with current tax regulations. Ensure you're prepared for capital equipment investments by consulting with a tax professional who can guide you through these updates and help you leverage them for your business. In the meantime, use Huddle Business Capital's handy Section 179 tax deduction calculator to see estimated savings.
Sources.
1, 2, 3 - https://www.nerdwallet.com/taxes/learn/section-179-deduction
Disclaimer.
Huddle Business Capital is not affiliated with nor endorses NerdWallet. This Huddle Business Capital blog article is purely educational and contains general information and opinions; it is not intended to provide advice or recommendations of any kind.
