They are not interchangeable. One is an election with two caps and a lodging rule; the other is automatic, uncapped, and stops at 20-year property. This tool applies both in statutory order and shows you the rule behind every number.
The acquisition date is the whole game.
100% bonus is permanent for property acquired after January 19, 2025. Anything acquired earlier is still on the old phase-down.
Apply Section 179 first, then bonus depreciation on basis not elected under Section 179, then regular MACRS. Section 179 is elective and capped ($2,560,000 for 2026, phasing out above $4,090,000, and never more than business taxable income). Lodging property is generally excluded, with a narrow hotel-or-motel transient-use exception. Bonus depreciation is automatic unless elected out, uncapped, and 100% for qualified property acquired after January 19, 2025; the legacy rate is 20% for earlier acquisitions placed in service in 2026.
One asset at a time. The category decides which mechanisms can reach it at all.
Desks, file cabinets, safes, and machinery with no shorter MACRS class (check Pub. 946's class-life table; construction and new farm equipment, for example, are 5-year). Recovery period: 7 years.
2026 dollar limit $2,560,000, phasing out above $4,090,000 of Section 179 property placed in service.
Applied in statutory order. Each card names the rule that allowed or blocked it and the filing action it requires.
$45,000
Elected amount $45,000 against a $2,560,000 dollar limit and $120,000 of business taxable income.
Election
Elective, asset by asset, on Form 4562 Part I. Nothing happens unless you elect it. You may expense less than the full cost to control the result.
$0
Acquired after January 19, 2025, so the permanent 100% additional first year depreciation applies to the $0 of basis remaining after section 179. No dollar cap, no income limit; it can create a net operating loss.
Election
Automatic. If you do NOT want it, attach an election-out statement — and it applies to every asset in that class placed in service during the year, not just this one.
$0
Nothing remains for regular depreciation; first-year expensing consumed the full depreciable basis.
Election
No election. This is the default treatment for whatever is not expensed in year one.
The two are routinely conflated. They differ on every axis that matters, and the differences are where the money is.
| Axis | Section 179 | Bonus depreciation |
|---|---|---|
| How it applies | Elective, asset by asset (Form 4562 Part I). Nothing happens unless you elect it. | Automatic. To decline it you must elect OUT, and the election binds the whole class for the year. |
| Dollar cap | $2,560,000 for 2026, reduced dollar for dollar above $4,090,000 of Section 179 property placed in service. | None. |
| Income limit | Cannot exceed business taxable income. Cannot create or increase a loss; the excess carries forward. | None. Can create a net operating loss. |
| Partial amounts | Yes — expense exactly the amount you want. | No — 100% of the class, or none of it. |
| Rental furniture & appliances | Generally excluded. Narrow exception: property used by a hotel or motel whose accommodations are predominantly used by transients (§50(b)(2)(B)). | No lodging exclusion; separate bonus-eligibility rules still apply. |
| Land improvements (paving, fencing) | Excluded: not Section 179 property. | Qualifies (15-year property). |
| Roof, HVAC, fire, security | Nonresidential only, via the qualified-real-property election. | Never — 27.5/39-year real property is outside the 20-year ceiling. |
| Business-use requirement | More than 50% in the year placed in service. | Generally scales by business use; listed property (including vehicles) must exceed 50% business use or the special allowance is unavailable. |
| Cars, light trucks and vans (6,000 lb or less) | Allowed, but Section 280F caps first-year depreciation, Section 179 included: $20,300 for 2026 ($12,300 with no bonus), times business use. | Counts toward the same Section 280F first-year cap; the rest is recovered in later years under later-year caps. |
| Rate for property acquired before Jan 20, 2025 | Not relevant — Section 179 has no acquisition-date rule. | Pre-OBBB schedule: 40% if placed in service in 2025; 20% in 2026. |
| State treatment | Most states conform, some at a lower cap. | Many states decouple entirely and require an add-back. |
Acquisition dates for binding contracts and self-constructed property can require factual judgment. Results also assume the asset was bought from someone unrelated to you (not a spouse, ancestor, descendant, controlled-group member or other §267/§707(b) related party) and that its basis isn't carried over or inherited — Section 179 requires this for new and used property alike. Used property must also not have been used by you before, or bonus depreciation is unavailable. The tool does not model the one-time 40%/60% transition election, future listed-property recapture, or entity-level allocation rules. A "Not sure" answer fails closed instead of manufacturing a filing position.
Not for new acquisitions. The One, Big, Beautiful Bill made the 100% additional first year depreciation deduction permanent for qualified property acquired after January 19, 2025. The old schedule still governs earlier acquisitions: 40% when placed in service in 2025 and 20% in 2026. The acquisition date, not just the placed-in-service date, decides which rule applies.
Generally no for an ordinary residential rental. Publication 946 excludes certain property used predominantly to furnish lodging. Section 50(b)(2)(B) has a narrow exception for property used by a hotel or motel when the predominant portion of its accommodations is used by transients. Short stays alone do not establish that exception; confirm hotel-or-motel status before claiming Section 179. Bonus depreciation has no lodging exclusion, subject to its separate eligibility rules.
No. Roofs, HVAC, fire protection and security systems are building components with a 27.5-year or 39-year recovery period, and bonus depreciation only reaches MACRS property with a recovery period of 20 years or less. On a NONRESIDENTIAL building you can instead elect to treat them as qualified real property and expense them under Section 179. On a residential rental, neither mechanism applies.
Section 179 is an election you make asset by asset, capped by a dollar limit that phases out and by your business taxable income, and it cannot create a loss. Bonus depreciation applies automatically unless you elect out for an entire class, has no dollar cap or income limit, can create a net operating loss, and covers lodging property and land improvements that Section 179 excludes — but it never reaches real property with a recovery period over 20 years.
Precision and state taxes. Section 179 lets you expense an exact amount — enough to zero out business income without creating a loss you cannot use. Bonus is all-or-nothing for the whole class. And many states decouple from federal bonus depreciation while allowing Section 179, so a Section 179 election can avoid a state add-back that bonus would trigger.
For tax years beginning in 2026 the maximum Section 179 deduction is $2,560,000, reduced dollar for dollar once total Section 179 property placed in service exceeds $4,090,000. Both that dollar limit and the business-income limit apply per taxpayer, to all your Section 179 property combined. The cap for a sport utility vehicle placed in service in 2026 is $32,000. For 2025 the figures were $2,500,000, $4,000,000 and $31,300. A car, light truck or van rated 6,000 lb or less has a tighter limit: Section 280F caps its first-year depreciation, Section 179 and bonus included, at $20,300 for 2026 ($12,300 if no bonus depreciation applies; $20,200 and $12,200 for 2025), multiplied by the business-use percentage.
Primary references used for this content
How To Depreciate Property
Section 179 limits, business income limit, lodging exclusion, qualified real property, and the special depreciation allowance
View on irs.gov
Treasury, IRS issue guidance on the additional first year depreciation deduction amended as part of the One, Big, Beautiful Bill
Permanent 100% bonus depreciation for property acquired after Jan. 19, 2025; transition election
View on irs.gov
Depreciation limitations for passenger automobiles placed in service in 2026
Section 280F caps: $20,300 first year with bonus, $12,300 without; $19,800, $11,900, and $7,160 later
View on irs.gov
Hotel or motel transient-use exception
Narrow exception to the lodging-property exclusion
View on law.cornell.edu
Pre-amendment bonus depreciation schedule
IRS-published schedule stating the 20% rate for 2026 placements
View on irs.gov
One Big Beautiful Bill Expensing & State Tax Conformity
Which states decouple from federal bonus depreciation
View on taxfoundation.org
✓6 primary sources; links re-checked on a weekly rotation by the source watcher
Disclaimer: This calculator provides estimates for educational purposes only. Not tax, legal, or financial advice. Results may vary based on your specific circumstances. Consult a qualified CPA or tax professional for personalized guidance.
