Section 179 vs Bonus Depreciation for Self-Employed (2026)

Updated May 6, 2026 2026 · 10 min read

You bought a $4,200 MacBook Pro, a $2,800 standing desk, and a $48,000 Toyota 4Runner that you use 80% for client work. In a normal world, the IRS would force you to deduct those purchases over five, seven, or even fifteen years through depreciation tables. In the actual world, two provisions — Section 179 and bonus depreciation — let you write off all or most of those costs in the year you place them in service. They look identical at first glance and they often produce identical answers. But the differences between them decide whether you can use them at all, and whether you owe tax later if your business changes shape.

Here is the practical decision tree for self-employed people in 2026, after the One Big Beautiful Bill Act restored 100% bonus depreciation permanently.

What both provisions do

Normally, when you buy a piece of equipment with a useful life of more than one year, you "capitalize" it — it goes on a depreciation schedule, and you write off a slice of the cost each year via the Modified Accelerated Cost Recovery System (MACRS). A 5-year MACRS asset, for example, deducts roughly 20%, 32%, 19%, 12%, 11%, and 6% across six tax years.

Section 179 and bonus depreciation are accelerations of that schedule. Both let you deduct a large chunk (or all) of the asset's cost in year one, instead of stretching it out. The asset still gets a depreciable basis on your books, but for tax purposes it's already mostly or entirely written off. Both are reported on the same form: Form 4562 (Depreciation and Amortization).

Section 179 in 2026 — the limits

For tax year 2026, the Section 179 maximum deduction is $2,560,000 (per IRS Rev. Proc. 2025-32; OBBBA dramatically raised the cap from $1,250,000 in 2025). This is the most equipment cost any one taxpayer can elect to expense under §179 in a single year.

The deduction begins to phase out dollar-for-dollar once total qualifying property purchases exceed roughly $4.09 million in the year. Most freelancers will never approach either ceiling, but two narrower limits matter constantly:

• Taxable income limitation. You cannot use §179 to create or increase a net operating loss. If your business profit before §179 is $40,000 and you try to expense a $50,000 piece of equipment, you'll only get $40,000 deducted this year. The remaining $10,000 carries forward to future years.
• Heavy-vehicle cap. SUVs and trucks with a Gross Vehicle Weight Rating (GVWR) above 6,000 pounds qualify for an enhanced §179 cap of approximately $32,000 for 2026 (adjusted annually). Lighter vehicles fall under the much smaller "luxury auto" depreciation caps — roughly $12,400 in year one, even with §179.

Other §179 quirks worth knowing: the asset must be "actively used" in the trade or business (not investment property), it must be more than 50% business-use, and §179 can be applied to specific assets — you don't have to take it on everything you bought.

Bonus depreciation in 2026 — back to 100%

Bonus depreciation was created to be a no-questions-asked first-year write-off for new equipment. The 2017 TCJA put it at 100% through 2022, then began phasing it down: 80% in 2023, 60% in 2024, 40% for property placed in service Jan 1–19, 2025 (with 20% scheduled for 2026 and full sunset in 2027 — both now nullified by OBBBA, see below).

Then the OBBBA, signed in 2025, restored bonus depreciation to 100% permanently for property acquired and placed in service after January 19, 2025. So for 2026, bonus depreciation is back to a clean 100% — no taxable-income limit, no per-asset cap (other than vehicle limits, which still apply), and it can create a loss.

The "placed in service" date is what matters, not the purchase date. If you ordered a $30,000 piece of equipment in November 2025 but it didn't ship and start being used until February 2026, it's a 2026 deduction.

The key differences, side by side

What qualifies (and what doesn't)

Both provisions cover roughly the same categories of "tangible personal property used in a trade or business":

• Computers, monitors, printers, peripherals.
• Office furniture (desks, chairs, file cabinets).
• Cameras, lighting, audio equipment, podcasting gear.
• Tools and machinery.
• Vehicles (with the caps noted above).
• Off-the-shelf software.
• Qualified Improvement Property — interior, non-structural improvements to non-residential real estate.

What doesn't qualify:

• Land (never depreciable).
• Buildings themselves (only certain interior improvements).
• Inventory.
• Property held for investment (rental real estate is depreciated, not §179'd, with narrow exceptions).
• Property used 50% or less for business.

Many of these costs also live on the broader freelancer deductions checklist — but anything over a few hundred dollars typically gets capitalized, then immediately expensed via §179 or bonus, rather than just plopped into "supplies" on Schedule C.

The recapture trap

This is the part nobody warns you about. If you take §179 (or bonus) on an asset and your business use drops below 50% before the end of its normal MACRS recovery period, you have to recapture the excess deduction as ordinary income — and pay tax on it the year your usage drops.

The classic example: you buy a $50,000 heavy SUV in 2026, claim 100% bonus depreciation against 90% business use, then in 2028 you start a salaried W-2 job and only drive it 30% for the dwindling freelance side gig. Your business use dropped below 50%, so you recapture the difference between what you deducted and what you would have under straight-line depreciation. That recapture income hits you in 2028 — usually at the worst possible time.

The same risk applies if you sell, donate, or convert the asset to personal use within the recovery period.

The decision flowchart

For most freelancers, the right answer is simple: take bonus depreciation by default, and use §179 only when you want to expense some assets but capitalize others.

1. Did you have a business loss before the deduction, or could the asset push you into a loss? Use bonus — §179 won't let you go negative.
2. Do you live in a state that doesn't conform to bonus depreciation (California is the big one)? Use §179 to keep your federal and state depreciation aligned and avoid filing two depreciation schedules.
3. Are you buying a heavy SUV (>6,000 lb GVWR) and want a six-figure deduction? Use bonus — §179 is capped at ~$32,000 for SUVs even though heavy trucks like the Toyota 4Runner, Tahoe, and Wrangler Unlimited qualify by weight.
4. Do you want to selectively expense some assets and depreciate others (e.g., to spread deductions across years for tax-rate planning)? Use §179 — you elect it asset-by-asset.
5. Is the asset used 50% or less for business? Neither §179 nor bonus is allowed; you're stuck with straight-line MACRS.

If you use a vehicle for both personal and business, the standard mileage method is often simpler than tracking depreciation at all — see our mileage deduction guide before electing §179 on a car.

A worked example

Marcus, a freelance videographer, has $120,000 of net Schedule C profit projected for 2026 before equipment purchases. In December he buys:

If Marcus uses 100% bonus depreciation on everything, he writes off all $71,900 in 2026, dropping Schedule C profit to $48,100. If he used §179 instead, the cargo van would cap at $32,000 (heavy SUV limit), shrinking his deduction by $12,900. Bonus is the clear winner here, even though both are 100% on paper.

Plug your own numbers into the Quarterly1099 calculator to see how a big year-end purchase swings your federal, state, and SE tax estimate.

Tactical timing tips

• Place in service by December 31. Ordering and paying isn't enough — the asset has to be ready and available for its intended business use. Buying a delivery van that's still on the dealer's lot on January 2 is a 2027 deduction.
• Don't accidentally opt out. Bonus depreciation is the default for qualified property; you have to affirmatively elect out class-by-class on Form 4562 if you don't want it. Tax software sometimes does this for you to "smooth" income — check the form.
• Stack with QBI carefully. A huge §179/bonus deduction lowers your QBI (since QBI starts from net Schedule C profit). The federal income-tax savings from the depreciation usually win, but if you're near the QBI threshold and could push yourself into the SSTB phase-out, run both scenarios.
• Watch state conformity. If your state doesn't conform to bonus depreciation, you'll have a separate state depreciation schedule for years. §179 sidesteps that headache in non-conforming states.

FAQs

Can I use both Section 179 and bonus depreciation in the same year? Yes. The IRS expects §179 to be applied first, then bonus depreciation on the remainder, then regular MACRS on whatever is left.

Does Section 179 reduce self-employment tax? Yes — anything that lowers Schedule C net profit lowers SE tax. That's a meaningful 15.3% on top of the federal income tax savings.

What about a home office? The home office deduction itself isn't §179'd, but office furniture, monitors, and equipment used in your home office are full §179/bonus candidates if they're used more than 50% for business.

I'm a single-member LLC — does that change anything? No. SMLLCs file Schedule C exactly like sole proprietors and use the same Form 4562. Multi-member LLCs and S-corps file at the entity level, then pass the deduction through to owners.

Should I buy stuff just to lower my tax bill? Almost never. A $10,000 purchase saves you maybe $2,500-$3,500 in tax depending on your bracket. You're still down $6,500-$7,500 in cash. Buy what your business actually needs, then time the purchase to the year that maximizes the deduction.