2017 Section 179 Deduction Limit
For 2017, the Section 179 Deduction Limit is $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 2026-08-29
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)
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.