Buy a laptop, a camera rig, or a delivery vehicle for the business, and the IRS gives solo owners two big levers for writing it off in the same year instead of over five or seven: Section 179 and bonus depreciation. The short version: use Section 179 first, on the assets you can fully justify against this year’s business income, then let bonus depreciation mop up whatever is left — because bonus depreciation, currently sitting at 100% for eligible property acquired after January 19, 2025 under the One Big Beautiful Bill Act, has no dollar cap of its own and applies after Section 179 under the IRS’s own ordering rule.
This comparison is for freelancers, consultants, creators, and other business-of-one owners who bought or are about to buy equipment, software, or a vehicle for the business. It is not for anyone hoping for a single universal answer — the “right” choice shifts with your business income, whether the asset is a vehicle, and how much you have already spent on qualifying property this year. Run your specific numbers past a CPA before you elect anything; this is the map, not the filing.
What is the real difference between Section 179 and bonus depreciation?
Both let you deduct the cost of a business asset in the year you place it in service instead of spreading it across its useful life. The mechanics diverge in three ways that matter for solos.
Section 179 is elective and asset-specific — you choose which purchases to expense, up to an annual dollar cap, and the deduction cannot exceed your business’s taxable income for the year, though unused amounts can carry over in some situations. Bonus depreciation, formally the “additional first year depreciation deduction” under section 168(k), is not limited by a dollar cap the same way, and it is not limited by business income. The IRS’s ordering rule is explicit: Section 179 comes first, bonus depreciation is applied to whatever basis remains, and regular MACRS depreciation handles anything left after that.
The third difference is software and vehicles. Off-the-shelf computer software generally qualifies for Section 179; if it does not meet that test, it is typically amortized straight-line over 36 months instead. Vehicles carry their own dollar limits under the listed-property rules, and business use has to be more than 50% before either Section 179 or bonus depreciation is even on the table.
How much can you actually write off in 2026?
For tax years beginning in 2026, the maximum Section 179 deduction is $2,560,000, with the phaseout starting once qualifying property placed in service for the year exceeds $4,090,000 — figures that moved up from the 2025 cap of $2,500,000, phased out above $4,000,000, so double-check which tax year you are filing before you quote a number. Bonus depreciation, per IRS guidance issued in early 2026, sits at 100% for eligible property acquired after January 19, 2025, and current guidance describes that rate as permanent rather than a temporary phase-down — though “permanent” in tax law has a way of meaning until the next bill, so treat this as the checked-as-of-August-2026 figure, not gospel for 2029.
| Feature | Section 179 (tax years beginning 2026) | Bonus depreciation (property acquired after Jan 19, 2025) |
|---|---|---|
| Annual dollar cap | $2,560,000 | No dollar cap |
| Phaseout trigger | $4,090,000 of qualifying property placed in service | Not capped this way |
| Deduction rate | Elective, up to 100% of basis per asset | 100% under current IRS guidance |
| Limited by business income? | Yes, cannot exceed taxable business income | No income limitation |
| SUV/vehicle cap (2026) | $32,000 for qualifying SUVs | Passenger-auto dollar limits still apply |
| Ordering | Applied first | Applied after Section 179, before regular depreciation |
The four-question decision tree
Skip the feature list. Here is the sequence that actually decides which write-off applies to your purchase.
1. Is the asset even eligible property?
Equipment, machinery, off-the-shelf software, and qualifying vehicles are in play for both Section 179 and bonus depreciation. Buildings, land, and most intangibles are not — if what you bought does not fit the qualifying-property definition, neither lever applies and you are into a different depreciation schedule entirely.
2. Is it a vehicle or other listed property?
If yes, check business-use percentage before anything else. Business use has to be more than 50% for Section 179 or bonus depreciation to apply to listed property at all. Clear that bar, and you still run into passenger-automobile dollar limits and, for SUVs placed in service in 2026, a $32,000 Section 179 cap specifically.
3. Does your business have enough taxable income to absorb Section 179?
Section 179 cannot create or increase a business loss — the deduction is capped at your business’s taxable income for the year. If income is thin, the disallowed portion may carry over, but that mechanic is specific enough that it is worth confirming with a CPA or the Form 4562 instructions rather than assuming.
4. Was the asset acquired under the current bonus-depreciation window?
If it was acquired after January 19, 2025 and otherwise qualifies, bonus depreciation is available at 100% per current IRS guidance, and it is taken after whatever you elected under Section 179. When both are available on the same purchase, Section 179 is usually the first lever to pull — it is targeted and elective — with bonus depreciation cleaning up any remaining basis.
Three solos, three purchases: the scenario math
Numbers illustrate the tree better than rules do.
Persona A — the $45,000 side hustler. Buys $6,000 of qualifying equipment and $3,000 of off-the-shelf software: $9,000 total. If taxable business income is at least $9,000, Section 179 can potentially expense the entire purchase in year one, no bonus depreciation needed. If income runs lower than that, bonus depreciation can typically absorb whatever basis Section 179 could not reach — though the exact result still depends on eligibility and the rest of the return.
Persona B — the $90,000 consultant. Buys a $28,000 bundle: workstation, camera, editing gear. The whole purchase sits comfortably under the 2026 Section 179 cap, and these are ordinary qualifying assets, so Section 179 first is the likely default if income supports it. If income or cash flow is less certain heading into year-end, leaning on bonus depreciation for some or all of the basis preserves more flexibility, since it is not capped by income the way Section 179 is.
Persona C — the $180,000 agency-of-one. Buys a qualifying vehicle and $40,000 of production gear. The equipment lane is simple: Section 179 first, bonus second, same as everyone else. The vehicle lane is the trap — both Section 179 and bonus depreciation are constrained by passenger-automobile dollar limits and the over-50%-business-use test, so the vehicle almost never gets the clean full write-off the equipment does.
Section 179: where it earns its keep, and where it does not
Section 179 works well when you know your business income for the year, the asset is unambiguously qualifying property, and you want to choose exactly which purchases get expensed rather than accepting a blanket rate. It is also the more familiar lever for a CPA to model against your specific return, since it is elective per asset rather than automatic.
Where it struggles: thin or negative business income limits how much you can actually use, the annual cap and phaseout matter once purchases scale toward six figures, and vehicles get routed into a separate, stingier set of limits regardless of how the rest of your equipment is treated.
Skip Section 179 if you expect little or no business income this year, the purchase is a passenger vehicle you have not yet confirmed passes the over-50%-business-use test, or the asset simply is not qualifying property under the IRS definition.
Bonus depreciation: where it earns its keep, and where it does not
Bonus depreciation is the cleaner tool when a purchase exceeds what Section 179 can absorb, when business income is too thin for Section 179 to apply fully, or when you would rather not track which specific assets got elected — bonus, once available, generally applies more broadly to eligible property in the class. Current IRS guidance puts the rate at 100% for eligible property acquired after January 19, 2025 under the One Big Beautiful Bill Act.
The tradeoff: bonus depreciation still requires the underlying asset to be eligible under section 168(k), vehicle and listed-property dollar limits do not disappear just because bonus applies, and taking 100% now means there is nothing left to depreciate later if a future high-income year could have used the deduction more.
Skip bonus depreciation if the asset does not meet the section 168(k) eligibility tests, or you would specifically rather spread the deduction into future years for planning reasons — that is a call worth making with a CPA rather than defaulting into it.
What about regular MACRS depreciation?
Regular MACRS — spreading the deduction across the asset’s useful life instead of taking it all in year one — is the fallback, not the villain. It is the right call when you would rather smooth deductions across years than front-load them, when the asset does not clear the eligibility bar for either accelerated option, or when you are managing income levels across multiple years and full expensing now would waste the deduction against income that is not there yet.
Skip MACRS if you are trying to maximize this year’s deduction and the asset is cleanly eligible for Section 179 or bonus — there is rarely a reason to choose the slow path on purpose in that situation.
Where this fits in your financial OS
Section 179 and bonus depreciation live in the Foundation layer of a solo’s financial stack — they are tax-return mechanics, not banking or insurance decisions, but they only work if your bookkeeping is clean enough to know your business income and asset basis in the first place. They pair naturally with how you are reporting the purchase on Form 4562, with how you are handling a business vehicle specifically in our guide to vehicle deductions for the self-employed, and with the entity-level question of whether an S-corp election changes how the deduction flows through to your personal return. If you have not compared the two elections side by side before, our deeper Section 179 explainer is a useful next stop before you file.
Bottom line
For most solo owners buying ordinary equipment and software in 2026, Section 179 first, bonus depreciation second is the sequence the IRS itself uses, and it is a reasonable default to start modeling from. The exception that catches almost everyone is the vehicle: passenger-automobile limits and the over-50%-business-use test apply regardless of which deduction you reach for. Every number here — the $2,560,000 cap, the $4,090,000 phaseout, the $32,000 SUV limit, the 100% bonus rate — is current as of tax years beginning in 2026 and checked against IRS guidance in August 2026; these figures move, so confirm the live number before you file, and bring the specific facts of your purchase to a CPA before you elect anything.