How to Elect the Section 179 Deduction (2026): Filing Guide

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Updated: February 2026

Making the decision to take advantage of Section 179 tax deductions can significantly impact your business’s financial position. However, the election process requires careful attention to detail and proper documentation. This comprehensive guide walks you through how to elect, document, and file for the Section 179 deduction—helping you navigate the process with confidence.

The Section 179 election is a powerful tax strategy that allows you to expense qualifying business property immediately rather than depreciating it over time. This is not an automatic benefit—you must carefully document your decision and file the proper forms with your tax return. By electing Section 179, you can potentially realize substantial current-year tax savings and enjoy greater strategic flexibility in managing your cash flow.

For an overview of how the deduction works, please refer to The Section 179 Deduction.

A quick “How To” guide follows to help you get started.

What Does It Mean to Elect Section 179?

Electing Section 179 is an active, annual decision made on an asset-by‑asset basis. This process allows you to expense qualifying business property immediately rather than spread the deduction over several years. By choosing which assets to expense right away, you can tailor your tax strategy to better match your current financial situation. Remember, this election is not automatic—you must deliberately document your choice and file the proper forms to claim the deduction.

Note: You are not required to elect Section 179 for every eligible asset purchased during the year, giving you the flexibility to selectively apply the deduction based on your business’s strategic needs.

2026 Section 179 Deduction Limits – Quick Reference

Note: 2026 dollar limits (including the SUV cap) are from IRS Rev. Proc. 2025-32. These limits apply to tax years beginning in 2026. Always verify current limits with the IRS, since rules and thresholds can change.

These dollar limits are updated annually for inflation. For the full current-year limits and examples, see our Section 179 Deduction page. For background on recent legislative changes and effective dates, see our Legislative History page.

Note: The Section 179 deduction phases out dollar-for-dollar when the total cost of qualifying property placed in service exceeds $4,090,000 and is fully phased out at $6,650,000.

Step‑by‑Step Guide to Making the Election

Essential Pre‑Election Requirements
Before making your Section 179 election, gather these critical items:

• Detailed Purchase Documentation:
  • Record the purchase/finance date, cost (including sales tax and installation if applicable), and proof of payment.
  • Maintain clear records of when the asset was installed or placed in service.
• Business Use Verification:
  • Document that the asset is used more than 50% for business purposes.
  • Keep logs or records detailing the hours of use, location, and function of the asset in your operations.
• Income Threshold Confirmation:
  • Verify that your current taxable income is sufficient to support the deduction.
  • Review your profit and loss statements and projected income, considering other deductions that may impact your taxable income.

If your Section 179 deduction is limited by taxable income in the current year, the disallowed amount can generally be carried forward to future tax years.

• Qualifying Property Verification:
  • Ensure the asset meets Section 179 requirements (e.g., type of property, new or used status, placed in service date, and business use percentage).
  • For more details on what qualifies, see our Property That Qualifies page.

Form 4562 Completion
Form 4562 is the official document for electing Section 179. Here’s how to complete it properly:

• Required Sections:
  • Complete Part I of Form 4562, listing each qualifying asset with its description, cost, and Section 179 election amount.
  • Ensure that your totals do not exceed the annual deduction limits and that you account for any business income limitations.
• Asset‑Specific Information:
  • Include details such as the date the asset was placed in service, its total cost (with all applicable charges), and the percentage of business use.
• Common Errors to Avoid:
  • Missing signatures or incomplete asset descriptions.
  • Incorrect placement of dates or mathematical errors.
  • Failure to adjust for variations in business use percentages.
• Supporting Documentation:
  • Keep purchase records, invoices, and business-use logs with your tax records to substantiate your election.

Filing Procedures
Timing and proper submission are critical:

• Submission Timing:
  • File Form 4562 with your tax return by the regular due date (or the extended deadline, if applicable).
  • Ensure the asset is placed in service during the tax year for which you’re claiming the deduction, and file the election with your timely filed return (including extensions).
• Attachment and Record Retention:
  • Attach Form 4562 (and any required schedules) to your timely filed tax return; keep supporting documentation with your records.
  • Retain copies of all documents as required by IRS guidelines.
• State Filing Considerations:
  • Some states have specific rules regarding the Section 179 election. For state-specific details, see our Section 179 by State page.

Making Smart Election Decisions

Strategic planning is essential for maximizing the benefits of Section 179:

• Partial Elections:
  • You may choose to apply the Section 179 deduction to some assets while depreciating others. This approach lets you balance current tax savings with future deductions.
• Multiple Asset Coordination:
  • Prioritize which assets to expense immediately by considering their impact on your overall tax position.
  • Evaluate the useful life and business use percentage of each asset.
• Business Income Considerations:
  • Align your election with your current-year taxable income to ensure you maximize the allowable deduction.
  • Consider the potential effects of alternative minimum tax (AMT) and how your decision may impact future years.

For further guidance on state-specific implications, see our Section 179 by State page.

Modifying or Revoking Your Election

Sometimes circumstances change, and you may need to amend your Section 179 election:

• Amendment Procedures:
  • If errors are discovered or circumstances change, you can file an amended return along with a revised Form 4562.
  • Provide a written explanation for any changes made.
  • Note: The Section 179 election (or any specification within it) can be made, changed, or revoked by filing an amended return within the time prescribed by law for the applicable tax year. The amended return must include Form 4562 and any resulting adjustments to taxable income.
• Revocation Requirements:
  • The Section 179 election (or any specification within it) can be revoked without IRS approval by filing an amended return within the time prescribed by law. Once revoked, the revocation is irrevocable for that tax year.
• Time Limitations:
  • Be aware of strict deadlines for making any modifications. Changes must be requested within the IRS-prescribed timeframe.

If you’re not comfortable completing Form 4562 yourself, consider consulting a qualified tax professional or preparer for guidance.

Real‑World Election Scenarios

Practical examples can illustrate how the election process works in different situations:

• ABC Company purchases a new CNC machine for $95,000 in March 2026.
  • Purchase price: $95,000
  • Installation cost: $5,000
  • Total eligible cost: $100,000
  • Business use: 100%
  • Election amount: $100,000
    Result: The full cost is expensed in the year the asset is placed in service.
• Multiple Asset Election Strategy:
  Example:
  XYZ Manufacturing acquires several assets:
  • Production equipment: $200,000
  • Office furniture: $15,000
  • Computer systems: $25,000
    Strategy:
  • Elect Section 179 for computer systems ($25,000)
  • Partially elect for production equipment ($175,000)
  • Depreciate office furniture conventionally
  • Total election: $200,000
• Vehicle Election Specifics:
  Example:
  An architect firm purchases a luxury SUV for $75,000.
  • Maximum Section 179 allowance for certain SUVs (2026 cap): $32,000
  • Remaining basis: $43,000
    Solution:
  • Elect Section 179 for $32,000 and depreciate the remaining cost using bonus or regular depreciation methods.

Avoiding Common Election Mistakes

To ensure your Section 179 election is successful, watch for these pitfalls:

• Documentation Errors:
  • Incomplete purchase records or business use logs.
  • Insufficient detail in asset descriptions.
• Timing Mistakes:
  • Missing placed‑in‑service deadlines.
  • Late filing of election forms.
• Calculation Missteps:
  • Exceeding annual deduction limits.
  • Errors in adjusting for business use percentages.
• Filing Oversights:
  • Unsigned forms or missing supporting schedules.
  • Incomplete asset listings that could trigger IRS scrutiny.

For more information on common Section 179 issues, see our Section 179 FAQs.

Section 179 Election Resources

Take advantage of these tools to optimize your election process:

• Section 179 Calculator:
  Use our Section 179 Calculator to estimate your potential tax savings and compare different election scenarios.
• Form 4562 Guidance:
  Access line‑by‑line instructions, common error prevention tips, and filing recommendations.
• Documentation Templates:
  Use a simple documentation checklist (purchase invoice, placed-in-service date, business-use records, and financing agreements) so your files support the deduction if the IRS asks later.
• Professional Consultation:
  Consider seeking guidance from a qualified tax professional for personalized advice tailored to your business needs.

Frequently Asked Questions

Can I elect Section 179 for only part of an asset’s cost?
Yes. You can choose to expense a portion of an eligible asset’s cost under Section 179, while the remainder is subject to regular depreciation rules.

What happens if I sell an asset after taking Section 179?
If you sell the asset before the end of its depreciation period, you may have to recapture part or all of the deduction as ordinary income.

Can I change my election after filing?
Often, yes — by filing an amended return within the time prescribed by law and including an updated Form 4562 and any resulting adjustments. If you revoke a Section 179 election, the revocation is irrevocable for that tax year. Consult a tax professional before amending.

Election Timeline and Next Steps

Before you finalize your Section 179 election, review these key steps:

• Key Deadlines Checklist:
  • Purchase / finance: by the end of your tax year (December 31 for most calendar-year taxpayers).
  • Placed in service: by the end of your tax year (December 31 for most calendar-year taxpayers).
  • Filing deadline: Regular tax return due date (or extended deadline, if applicable).
• Documentation Preparation:
  • Gather all purchase records and update your asset management system.
  • Ensure your business use documentation is complete.
  • Complete and double‑check Form 4562.
• Annual Review Recommendations:
  • Schedule periodic tax planning meetings.
  • Review asset acquisition plans and update depreciation schedules.
  • Monitor business income projections and adjust your strategy accordingly.

Ready to maximize your tax savings? Use our Section 179 Calculator to instantly estimate your deduction and strategically plan your equipment investments.

By following this comprehensive guide, you can confidently navigate the complexities of electing Section 179 deductions—maximizing your tax benefits and supporting your overall financial strategy. For further resources and support, please explore the related pages linked throughout this guide.

Disclaimer: This information is provided for educational purposes only and does not constitute tax or legal advice. Always consult with a qualified tax professional for advice specific to your situation.

Sources: Rev. Proc. 2025-32 (2026 inflation adjustments); IRS Notice 2026-11 (bonus depreciation guidance); Instructions for Form 4562.