2017 Section 179 Deduction Limit
For 2017, the Section 179 Deduction Limit figures are $510,000 (Maximum section 179 expensing deduction) and $2,030,000 (Phase-out threshold: cost of section 179 property placed in service).
Effective 2017-01-01Source: Rev. Proc. 2016-55 (IRS)Verified 2026-09-02
Compared with 2016
| Item | 2016 | 2017 | Change |
|---|---|---|---|
| Maximum section 179 expensing deduction | $500,000 | $510,000 | +$10,000 (+2.0%) |
| Phase-out threshold: cost of section 179 property placed in service | $2,010,000 | $2,030,000 | +$20,000 (+1.0%) |
Who it applies to
Taxpayers who elect to expense certain depreciable assets under IRC Section 179 for taxable years beginning in 2017.
What changed this year, and why
For taxable years beginning in 2017, the maximum Section 179 expensing deduction is $510,000. The deduction is reduced (but not below zero) by the amount the cost of Section 179 property placed in service during the year exceeds $2,030,000.
Common questions
- What happens if I place more than $2,030,000 of Section 179 property in service during 2017?
- The $510,000 maximum deduction is reduced dollar for dollar by the amount the cost of Section 179 property placed in service exceeds $2,030,000. Once the cost surpasses the threshold by $510,000 or more, the deduction is reduced to zero.
- Does the $510,000 limit apply to the 2017 calendar year specifically?
- The limit applies to taxable years beginning in 2017. For calendar-year taxpayers, that is the 2017 tax year; for fiscal-year taxpayers, it is the fiscal year that begins in 2017.
What counts as section 179 property
Under section 179, only property that is acquired for business use by purchase qualifies. Eligible property includes tangible personal property (machinery, equipment, office equipment, printers, tanks, livestock, portable air conditioners), other tangible property used in manufacturing or service functions, single-purpose agricultural structures, petroleum storage facilities, off-the-shelf computer software, and qualified real property. Property must not fall into the "does not qualify" categories listed in the publication. The property is treated as tangible personal property for section 179 purposes based on federal tax rules, not local law.
To qualify for the section 179 deduction, your property must meet all the following requirements. It must be eligible property. It must be acquired for business use. It must have been acquired by purchase. It must not be property described later under What Property Does Not Qualify.
Publication 946 (2017), How To Depreciate Property (IRS)
How buying too much property cuts the deduction
The section 179 deduction phases out when the total cost of qualifying property placed in service during the year exceeds $2,030,000. For every dollar above that threshold, the maximum deduction of $510,000 is reduced dollar for dollar, though the deduction cannot go below zero. If total qualifying costs reach $2,540,000 or more in 2017, no section 179 deduction is available at all. The reduction is straightforward: subtract the excess cost over $2,030,000 from the maximum dollar limit, and the result is the taxpayer's allowable section 179 deduction for that year.
If the cost of your qualifying section 179 property placed in service in a year is more than $2,030,000, you generally must reduce the dollar limit (but not below zero) by the amount of cost over $2,030,000. If the cost of your section 179 property placed in service during 2017 is $2,540,000 or more, you cannot take a section 179 deduction.
Publication 946 (2017), How To Depreciate Property (IRS)
The deduction cannot exceed your business income
Even when the dollar limit and investment limitation allow a deduction, section 179 cannot exceed the taxpayer's taxable income from actively conducting a trade or business during the year. Active conduct generally means meaningful participation in management or operations. Any portion of the cost that cannot be deducted because of this business income limitation is not lost; it may be carried forward to a future year and applied against business income in that year, subject to that year's limits.
The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the ac- tive conduct of any trade or business during the year.
Publication 946 (2017), How To Depreciate Property (IRS)
Carrying the disallowed part forward, and which property it comes from
When a section 179 deduction is disallowed in one year because of the business income limitation, the taxpayer may carry the disallowed amount forward. If more than one property was placed in service in that year, the taxpayer can choose which specific properties the carryover is attributed to, and that selection must be reflected in the taxpayer's books and records. Section 179 costs allocated from a partnership or S corporation are treated as a single item for this purpose. If the taxpayer makes no selection, the total carryover is split equally among all properties elected for section 179 in that year.
If you place more than one property in service in a year, you can select the properties for which all or a part of the costs will be carried forward. Your selections must be shown in your books and records. For this purpose, treat section 179 costs allocated from a partnership or an S corporation as one item of section 179 property. If you do not make a selection, the total carryover will be allocated equally among the properties you elected to expense for the year.
Publication 946 (2017), How To Depreciate Property (IRS)
The separate cap on heavy SUVs
A separate cap applies to heavy sport utility vehicles and certain other passenger vehicles placed in service during the tax year. The section 179 expensing election for any such vehicle cannot exceed $25,000 of its cost. The rule covers any 4-wheeled vehicle primarily designed or used to carry passengers over public roads that is rated at more than 6,000 pounds gross vehicle weight but not more than 14,000 pounds. The remaining cost above $25,000 may be recovered through regular depreciation rather than section 179 expensing.
You cannot elect to expense more than $25,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight.
Publication 946 (2017), How To Depreciate Property (IRS)
Estates and trusts are shut out of this deduction entirely
Under federal tax rules for 2017, estates and trusts are not allowed to claim the section 179 deduction at all. While individuals, partnerships, and corporations may elect to expense the cost of qualifying property up to the annual limit, an estate or trust that acquires and places qualifying property in service cannot make this election. The property must instead be recovered through regular depreciation deductions over its applicable recovery period. For the 2017 tax year, taxpayers who are eligible may expense up to $510,000 of qualifying property costs, but that benefit phases out dollar for dollar once the total cost of section 179 property placed in service during the year exceeds $2,030,000. Estates and trusts, however, never reach that question because they are excluded from the deduction entirely from the start.
Estates and trusts cannot elect the section 179 deduction.
Publication 946 (2017), How To Depreciate Property (IRS)
The deduction lands in the year the property is placed in service, not when you paid for it
The section 179 deduction is claimed in the tax year when the property is placed in service, not necessarily when payment was made. This timing rule means that taxpayers must coordinate the deduction with the year the property becomes available for use in their trade or business. The deduction allows recovery of property costs up to the annual limit, but only in the year the property is actually placed in service. For 2017, this means the deduction is available for qualifying property that was placed in service during that calendar year, regardless of when the purchase price was paid.
You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service.
Publication 946 (2017), How To Depreciate Property (IRS)
The election is made by filling out Part I of Form 4562
The section 179 deduction election is made by completing Part I of Form 4562. For property placed in service in 2017, the form must be filed with either the original 2017 tax return (whether or not filed timely) or an amended return for 2017 filed within the prescribed time period. If the deduction is being elected for listed property, Part V of Form 4562 must be completed before completing Part I. The election establishes the taxpayer's choice to expense the property under section 179 rather than recovering the cost through regular depreciation deductions over the property's recovery period.
You elect to take the section 179 deduction by completing Part I of Form 4562.
Publication 946 (2017), How To Depreciate Property (IRS)
When another deduction also caps out at taxable income, the two have to be worked out together
When a taxpayer has both a section 179 deduction and another deduction that is limited by taxable income, the two limitations must be coordinated. The section 179 deduction itself is subject to a business income limit, but if another deduction also has a taxable income limitation, that other deduction's limit must be figured by taking the section 179 deduction into account. The IRS requires taxpayers to work through specific steps: first figure taxable income without either the section 179 deduction or the other deduction, then calculate a hypothetical section 179 deduction, and finally determine the proper amounts for both deductions considering their interaction. This coordination prevents taxpayers from double-counting the same taxable income against multiple limitation formulas.
Two different taxable income limits. In addition to the business income limit for your section 179 deduction, you may have a taxable income limit for some other deduction. You may have to figure the limit for this other deduction taking into account the section 179 deduction.
Publication 946 (2017), How To Depreciate Property (IRS)
If business use falls to 50% or less, part of the deduction comes back as income
If the percentage of business use for section 179 property drops to 50% or less in any year during the property's recovery period, the taxpayer may have to recapture part of the deduction. In the year this drop occurs, the recapture amount must be included as ordinary income on Part IV of Form 4797. The taxpayer must also increase the property's basis by the recapture amount. This rule ensures that taxpayers who claim the section 179 deduction for property later used primarily for personal purposes or in a non-business capacity give back a portion of the tax benefit. The recapture provisions apply throughout the property's recovery period, not just in the year the deduction was originally claimed.
You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the per- centage of business use drops to 50% or less.
Publication 946 (2017), How To Depreciate Property (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2016-55 (IRS)
- Maximum section 179 expensing deduction
Election to Expense Certain Depreciable Assets. For taxable years beginning in 2017, under § 179(b)(1), the aggregate cost of any § 179 property that a taxpayer elects to treat as an expense cannot exceed $510,000
- Phase-out threshold: cost of section 179 property placed in service
Under § 179(b)(2), the $510,000 limitation is reduced (but not below zero) by the amount the cost of § 179 property placed in service during the 2017 taxable year exceeds $2,030,000.