2019 Section 179 Deduction Limit
For 2019, the Section 179 Deduction Limit figures are $1,020,000 (Maximum section 179 expensing deduction) and $2,550,000 (Phase-out threshold: cost of section 179 property placed in service).
Effective 2019-01-01Source: Rev. Proc. 2018-57 (IRS)Verified 2026-09-02
Compared with 2018
| Item | 2018 | 2019 | Change |
|---|---|---|---|
| Maximum section 179 expensing deduction | $1,000,000 | $1,020,000 | +$20,000 (+2.0%) |
| Phase-out threshold: cost of section 179 property placed in service | $2,500,000 | $2,550,000 | +$50,000 (+2.0%) |
Who it applies to
Taxpayers who elect to treat the cost of qualifying depreciable business property as an expense under Section 179 of the Internal Revenue Code
What changed this year, and why
The IRS adjusted the Section 179 expensing deduction limits for inflation for taxable years beginning in 2019.
Common questions
- What happens if the cost of Section 179 property placed in service exceeds the phase-out threshold?
- If the total cost of Section 179 property placed in service during the year exceeds $2,550,000, the $1,020,000 maximum deduction is reduced dollar for dollar by the excess. The deduction cannot go below zero.
- How does the 2019 Section 179 limit compare to earlier years?
- The 2019 limits are higher than those for 2018, reflecting an inflation adjustment.
What counts as section 179 property
To be eligible for the section 179 expensing deduction, your property must satisfy every one of the four listed conditions. First, the property must be a type of depreciable property the code treats as eligible (for example, tangible personal property used in a trade or business). Second, it must be acquired for use in that business, not for personal purposes or investment holding. Third, it must have been acquired by purchase, so property received as a gift or inheritance generally does not qualify. Fourth, it must not fall into one of the categories the publication later lists as disqualified property, such as land, buildings and their structural components, or property used to furnish lodging. All four conditions must be met; failing any one disqualifies the asset. Taxpayers should review both the eligible-property list and the disqualified-property list before deciding to elect the deduction.
What Property Qualifies? Terms you may need to know (see Glossary): Adjusted basis Basis Class life Structural components Tangible property 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 (2019), How To Depreciate Property (IRS)
How buying too much property cuts the deduction
Section 179 has a built-in phase-out for high-spending businesses. If the total cost of qualifying section 179 property placed in service during the year exceeds $2,550,000, the taxpayer must generally reduce the maximum dollar limit by the amount of cost above that threshold. The reduction cannot push the limit below zero. For 2019, the phase-out is complete once the cost reaches $3,570,000, at which point no section 179 deduction is available at all. The dollar limit before phase-out is $1,020,000. To illustrate: a taxpayer who places $2,600,000 of qualifying property in service exceeds the threshold by $50,000, so the deduction limit drops from $1,020,000 to $970,000. This investment limitation applies in addition to the business income limit and the separate heavy-SUV cap. It ensures that the expensing benefit primarily serves businesses making moderate capital investments rather than very large purchases.
If the cost of your qualifying section 179 property placed in service in a year is more than $2,550,000, you must gen- erally reduce the dollar limit (but not below zero) by the amount of cost over $2,550,000. If the cost of your section 179 property placed in service during 2019 is $3,570,000 or more, you cannot take a section 179 deduction. Example. In 2019, Jane Ash placed in service machi- nery costing $2,600,000. This cost is $50,000 more than $2,550,000, so she must reduce her dollar limit to $970,000 ($1,020,000 − $50,000).
Publication 946 (2019), How To Depreciate Property (IRS)
The deduction cannot exceed your business income
Even after the dollar limit is determined and any investment phase-out has been applied, a taxpayer cannot deduct more under section 179 than the taxable income from the active conduct of any trade or business during the year. The phrase "actively conduct" means the taxpayer meaningfully participates in the management or operations of that trade or business. Taxable income for this purpose is figured by totaling net income and losses from all actively conducted trades or businesses, including section 1231 gains or losses, interest from working capital, and wages or salaries, but excluding the section 179 deduction itself, the self-employment tax deduction, any net operating loss carryback or carryforward, and unreimbursed employee business expenses. Any section 179 cost that is disallowed in one year solely because of this business income limit is not lost; it can be carried forward to the next tax year and treated as a section 179 deduction in that later year.
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. Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the manage- ment or operations of the trade or business.
Publication 946 (2019), How To Depreciate Property (IRS)
Carrying the disallowed part forward, and which property it comes from
When a taxpayer places more than one item of section 179 property in service during a single year and part of the total elected cost is disallowed - typically because of the business income limit - the taxpayer gets to choose which specific properties will absorb the carryforward. The selection must be documented in the taxpayer's books and records. If the taxpayer does not make a selection, the IRS defaults to allocating the carryover equally among every property that was elected for section 179 treatment that year. Section 179 costs that were allocated to the taxpayer from a partnership or an S corporation are treated as a single item of property for this purpose, so they are not split out property by property when the allocation is being made. When carryovers from more than one prior year exist and only a portion can be used in the current year, the amounts must be applied starting with the earliest year first, preserving the older disallowed deductions before reducing the more recent ones.
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 (2019), How To Depreciate Property (IRS)
The separate cap on heavy SUVs
The section 179 expensing election has a separate, much lower dollar cap that applies specifically to heavy sport utility vehicles and certain similar vehicles. For vehicles placed in service in tax years beginning in 2019, the maximum amount a taxpayer can elect to expense is $25,500 per vehicle. This cap applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, with a gross vehicle weight rating above 6,000 pounds but not more than 14,000 pounds. The rule targets vehicles that are large enough to escape ordinary passenger-auto limits but are still primarily passenger carriers rather than true work trucks. Certain vehicles are exempt from the $25,500 cap, including those seating more than a small number of passengers behind the driver, those with a long cargo area not accessible from the passenger compartment, and integral-enclosure vehicles without rear seating. Any cost above the cap is depreciated under the general depreciation rules rather than being immediately expensed.
You cannot elect to expense more than $25,500 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service in tax years beginning in 2019. 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 (2019), How To Depreciate Property (IRS)
Estates and trusts are shut out of this deduction entirely
Under the 2019 Section 179 rules, estates and trusts are barred from making the election entirely. Even if an estate or trust places qualifying property in service during the tax year, it cannot claim any portion of the $1,020,000 maximum deduction. The restriction applies regardless of whether the property would otherwise meet all of the qualifying tests. Because the deduction is unavailable to these entities, they must recover the cost of the property through regular MACRS depreciation instead. The phase-out threshold of $2,550,000 in property cost is irrelevant to an estate or trust, since the deduction is never reachable in the first place.
Estates and trusts cannot elect the section 179 deduction.
Publication 946 (2019), How To Depreciate Property (IRS)
The deduction lands in the year the property is placed in service, not when you paid for it
For 2019, the Section 179 election lets a taxpayer recover the cost of qualifying property immediately rather than spreading it over several years through depreciation. The deduction is timed to the year the property is placed in service, not the year it was paid for. This means a business that bought equipment in late 2018 but did not install and begin using it until 2019 would claim the deduction on its 2019 return. The maximum deduction available is $1,020,000, subject to a phase-out that begins once the total cost of Section 179 property placed in service during the year exceeds $2,550,000. Taxpayers should keep records of the exact date each asset was ready and available for use, because that date - not the purchase date or the invoice date - controls when the deduction lands.
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 (2019), How To Depreciate Property (IRS)
The election is made by filling out Part I of Form 4562
To claim the 2019 Section 179 deduction, the taxpayer must make the election by completing Part I of Form 4562 and attaching it to the return. The form is filed with the original 2019 return, whether or not it is filed by the due date, or with an amended return for 2019 filed within the time prescribed by law. If the property being expensed is listed property, the taxpayer must first complete Part V of Form 4562 before filling out Part I. The election is irrevocable once made, except with IRS consent, so the taxpayer should confirm that the property qualifies and that the total cost of Section 179 property placed in service during the year will not push past the $2,550,000 phase-out threshold, which would reduce the maximum $1,020,000 deduction dollar for dollar.
Election. You elect to take the section 179 deduction by completing Part I of Form 4562.
Publication 946 (2019), How To Depreciate Property (IRS)
When another deduction also caps out at taxable income, the two have to be worked out together
A taxpayer may face two separate taxable-income ceilings in the same year. The Section 179 deduction itself cannot exceed taxable income from the active conduct of a trade or business, and another deduction - such as the charitable contribution deduction - also caps at a percentage of taxable income. When both limits apply, the IRS requires the taxpayer to work them out in a specific order: first figure taxable income without either deduction, then figure a hypothetical Section 179 deduction, then apply the other deduction's limit taking the Section 179 amount into account, and finally apply the Section 179 business-income limit. For 2019 the maximum Section 179 deduction is $1,020,000, phased out dollar for dollar once the cost of Section 179 property placed in service exceeds $2,550,000. Failing to coordinate the two limits can cause one or both deductions to be overstated on the return.
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.
Publication 946 (2019), How To Depreciate Property (IRS)
If business use falls to 50% or less, part of the deduction comes back as income
If, in any year during the property's recovery period, the percentage of business use drops to 50% or less, the taxpayer must recapture part of the Section 179 deduction previously claimed. The recapture amount is included as ordinary income on Part IV of Form 4797 in the year the drop occurs. In addition, the basis of the property is increased by the recapture amount so that future depreciation deductions are figured on a higher basis. For 2019, the maximum deduction is $1,020,000, and the phase-out threshold is $2,550,000 in total cost of Section 179 property placed in service. Listed property follows separate recapture rules and should not be handled under these provisions. Taxpayers should monitor business-use percentages each year throughout the recovery period, because even a temporary dip below 50% triggers the recapture, and the resulting income inclusion can be substantial.
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 (2019), 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. 2018-57 (IRS)
- Maximum section 179 expensing deduction
Election to Expense Certain Depreciable Assets. For taxable years beginning in 2019, under § 179(b)(1), the aggregate cost of any § 179 property that a taxpayer elects to treat as an expense cannot exceed $1,020,000
- Phase-out threshold: cost of section 179 property placed in service
Under § 179(b)(2), the $2,550,000 limitation is reduced (but not below zero) by the amount the cost of § 179 property placed in service during the 2019 taxable year exceeds $2,550,000.