December shopping is not tax planning. It's shopping with a hashtag.
Section 179 and bonus depreciation are the two main ways the tax code lets you pull the cost of business equipment into the year you place it in service, instead of dripping it over five or seven years.
They overlap. They have different limits, different "taxable income" tests, and different vehicle rules. The percent for bonus depreciation also moves with Congress. Copying a 100% bonus clip from a few years ago onto today's purchase is how you miss the return.
If you're under $400K, you can still use these tools for real equipment the business needs. Don't buy a second SUV to "create" a deduction. Make more, then save more. The write-off doesn't print cash. It only changes tax on profit you already have (or will have).
Plain English: two doors, same hallway
Section 179: you elect to expense qualifying property up to an annual dollar cap, with a phase-out if you place too much property in service, and generally you can't create a loss from 179 alone the way people think. Income limitation is real.
Bonus depreciation: automatic unless you elect out, on qualifying new or used property (rules depend on the year), at whatever bonus percentage the law sets for that placed-in-service year. It can create or increase a loss in a way 179 often cannot.
Example: A $90K/month agency (that's $1.08M revenue, not profit) buys $40,000 of computers and lighting in October because the team actually needs them. Whether that $40K hits this year's return through 179, bonus, or a mix depends on profit, other property placed in service, and current bonus rates. The owner who buys a $90,000 truck they barely use for business and hopes "Section 179" erases the tax bill is playing a different game. Vehicle luxury caps and business-use percentages still exist.
Not knowing your numbers is like driving without GPS. You can't elect 179 on a spreadsheet guess of profit.
Side-by-side
| Factor | Section 179 | Bonus depreciation |
|---|---|---|
| How you use it | Election, dollar cap, income limit | Default on qualifying property unless you elect out |
| Loss | Generally limited by taxable income from the business | Can flow into a loss more freely |
| Phase-out | Big spenders can lose 179 | Different property tests, not the same phase-out |
| Vehicles | Special caps and SUV rules | Also constrained; not a blank check |
| Planning | Useful when you want control | Useful when bonus % is high and you want speed |
A tax plan is like a personal trainer's worksheet. 179 and bonus are the lifts. Someone still has to implement the election on the return. That's the CPA side, not a tweet.
What actually qualifies
Common: machinery, equipment, off-the-shelf software, certain qualified improvement property, business furniture. Placed in service this year. Used more than 50% in the business for the stuff that cares about business use.
Not automatic:
- Inventory you resell
- Land and most buildings (that's depreciation and maybe cost segregation)
- Personal Amazon hauls labeled "content"
- A car with 12% business miles and a 179 dream
Coordinate with year-end planning. Buying on December 30 only works if it is placed in service, not sitting in a box in the garage.
Who this is for
Use it if: the business needs the asset, profit exists (or bonus-created losses are actually useful in your facts), and you'll track business use.
Skip the stunt if: you're hunting a deduction instead of a tool, or you're still mixing personal and business cards. Start with monthly bookkeeping.
S-corp owners: the company buys the asset. You don't 179 your personal laptop and call it the corp. Reasonable salary is a different lever.
The short version
- 179 is an election with caps and income limits. Bonus is a percentage that changes with the law.
- Real equipment, placed in service, business use. Not a shopping holiday.
- Vehicles have extra rules. Read them or get them read.
- Under $400K, buy what you need. Over that, model 179 vs bonus against QBI, estimates, and next year's profit.
- Limits and bonus rates for the year you're in belong on the return, not in a 2021 screenshot.
FAQs
What is Section 179?
An election to deduct the cost of qualifying property in the year you place it in service, subject to a dollar cap, a spending phase-out, and a taxable income limit.
What is bonus depreciation?
An additional first-year depreciation allowance on qualifying property at a percentage set by law for that year. You can often elect out.
Can I use both on the same asset?
Often you apply 179 first, then bonus on remaining basis, depending on the asset and elections. This is return-prep, not a slogan.
Does Section 179 work if I have a loss?
179 is generally limited by business taxable income. Unused amounts can carry forward. Bonus can behave differently. Model it. Don't assume.
Can I Section 179 a G-Wagon?
Heavy SUVs and trucks have their own caps and business-use tests. "I posted a video from the driver's seat" is not 100% business use.
When do I have to buy by?
Placed in service by year-end for a calendar-year business. Ordered and sitting at the dealer in January is next year's problem.
References
- IRS — Publication 946, How To Depreciate Property
- IRS — Instructions for Form 4562
- IRS — Electing the Section 179 Deduction
What to do next
About to buy gear "for taxes" before December, or sitting on invoices you never coded?
At CEOHAVEN, we help entrepreneurs and real estate investors with tax planning, tax preparation, and bookkeeping. You should expense what the business actually uses, at the election that fits this year's numbers.
Book a call. We'll look at profit, the asset list, and whether 179, bonus, or patience wins.
It's not about how much you make. It's about how much you keep.