2022 Section 179 Deduction Limit
For 2022, the Section 179 Deduction Limit is $1,080,000 (Maximum section 179 expensing deduction) and $2,700,000 (Phase-out threshold: cost of section 179 property placed in service).
Effective 2022-01-01Source: Rev. Proc. 2021-45 (IRS)Verified 2026-08-29
Compared with 2021
| Item | 2021 | 2022 | Change |
|---|---|---|---|
| Maximum section 179 expensing deduction | $1,050,000 | $1,080,000 | +$30,000 (+2.9%) |
| Phase-out threshold: cost of section 179 property placed in service | $2,620,000 | $2,700,000 | +$80,000 (+3.1%) |
Who it applies to
Taxpayers who elect to expense certain depreciable assets under Section 179 for taxable years beginning in 2022.
What changed this year, and why
For taxable years beginning in 2022, the maximum Section 179 expensing deduction is $1,080,000, up from $1,050,000 in 2021. The deduction begins to phase out when the total cost of Section 179 property placed in service during the year exceeds $2,700,000, increased from $2,620,000 in 2021.
Common questions
- What is the Section 179 deduction limit for 2022?
- For taxable years beginning in 2022, the maximum Section 179 expensing deduction is $1,080,000. This deduction begins to phase out when the total cost of Section 179 property placed in service during the year exceeds $2,700,000.
What counts as section 179 property
To claim a section 179 deduction, your property must satisfy four separate requirements. It must be eligible property, meaning it falls into one of the specific categories of depreciable property the IRS allows (such as tangible personal property, certain other tangible property used in manufacturing or services, single-purpose agricultural structures, storage facilities for petroleum products, off-the-shelf computer software, or qualified section 179 real property). It must be acquired for business use, not for personal purposes. It must have been acquired by purchase, meaning you bought it rather than receiving it as a gift or inheritance. Finally, it must not fall into any of the categories of property that the IRS specifically excludes from section 179 treatment. If your property fails to meet any one of these four conditions, it does not qualify for the section 179 deduction regardless of its cost or how you use it in your trade or business.
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 (2022), How To Depreciate Property (IRS)
How buying too much property cuts the deduction
The maximum section 179 deduction of $1,080,000 begins to phase out once the total cost of qualifying section 179 property you place in service during the year passes a certain threshold. When that cost exceeds $2,700,000, you must reduce the $1,080,000 dollar limit by the amount of the excess. The reduction cannot go below zero. For 2022, if the total cost of section 179 property placed in service reaches $3,780,000 or more, the entire dollar limit is eliminated and you cannot take any section 179 deduction at all. This phase-out applies to the aggregate cost of all qualifying property placed in service, not to any single item, so buying a large volume of equipment in one year can shrink or wipe out the expensing benefit even though each item on its own would otherwise qualify.
If the cost of your qualifying section 179 property placed in service in a year is more than $2,700,000, you must gen- erally reduce the dollar limit (but not below zero) by the amount of cost over $2,700,000. If the cost of your section 179 property placed in service during 2022 is $3,780,000 or more, you cannot take a section 179 deduction.
Publication 946 (2022), How To Depreciate Property (IRS)
The deduction cannot exceed your business income
Even after you determine your section 179 deduction amount based on the dollar limit and any investment limitation reduction, you cannot deduct more than the taxable income from all the trades or businesses you actively conducted during the year. To be considered actively conducting a trade or business, you must meaningfully participate in its management or operations. This business income limit applies after the dollar limit phase-out has been applied. If your section 179 deduction exceeds your business income for the year, the excess amount is not lost; it can be carried forward to the next tax year. When calculating taxable income for this purpose, you must exclude the section 179 deduction itself, the self-employment tax deduction, any net operating loss carryback or carryforward, and any unreimbursed employee business expenses. This ensures the limitation is based on the actual profitability of your business activities before the expensing deduction.
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 (2022), How To Depreciate Property (IRS)
Carrying the disallowed part forward, and which property it comes from
When the business income limit prevents you from deducting the full section 179 amount in the current year, the disallowed portion is not lost. It is carried forward to the next tax year and reported on line 13 of Form 4562. In the following year you enter the carryover on line 10 and apply it against that year's deduction. If you placed more than one item of property in service during the year, you may choose which specific properties have their costs carried forward. That election must be recorded in your books and records. Section 179 costs you received from a partnership or S corporation are treated as a single item for this purpose. If you do not make a specific selection, the disallowed amount is split equally among all properties you elected to expense for that year. When carryovers from multiple years exist, you must apply the oldest amounts first. If you sell or otherwise dispose of the property before the full carryover is used, neither you nor the new owner may deduct the remaining amount; instead it is added back to the property's basis.
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 (2022), How To Depreciate Property (IRS)
The separate cap on heavy SUVs
For heavy sport utility vehicles and certain other vehicles placed in service in tax years beginning in 2022, the expensing election is subject to a separate dollar cap of $27,000, regardless of the overall dollar limit. This cap applies to any 4-wheeled vehicle primarily designed or used to carry passengers on public roads that has a gross vehicle weight rating of more than 6,000 pounds but not more than 14,000 pounds. Even though such a vehicle may otherwise qualify for expensing, the most you can elect to expense in a single year is $27,000 of its cost; any remaining cost must be recovered through regular depreciation. Certain vehicles are exempt from this separate cap, including passenger vans designed to seat more than nine passengers behind the driver, pickup trucks with cargo areas not readily accessible from the passenger compartment, and specialized work vehicles with integral enclosures and no rear seating.
You cannot elect to expense more than $27,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service in tax years beginning in 2022. 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. However, the $27,000 limit does not apply to any vehicle: • Designed to seat more than nine passengers behind the driver's seat; • Equipped with a cargo area (either open or enclosed by a cap) of at least 6 feet in interior length that is not readily accessible from the passenger compartment; or • That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
Publication 946 (2022), 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. 2021-45 (IRS)
- Maximum section 179 expensing deduction
Election to Expense Certain Depreciable Assets. For taxable years beginning in 2022, under § 179(b)(1), the aggregate cost of any § 179 property that a taxpayer elects to treat as an expense cannot exceed $1,080,000
- Phase-out threshold: cost of section 179 property placed in service
Under § 179(b)(2), the $1,080,000 limitation under section 179(b)(1) is reduced (but not below zero) by the amount by which the cost of § 179 property placed in service during the 2022 taxable year exceeds $2,700,000.