Small business owners can now write off $2.56 million in purchases in 2026, and this deduction is the one everyone is talking about now

Small businesses have a much larger Section 179 deduction available in 2026. The maximum amount a business can elect to expense is $2.56 million, up from $2.5 million in 2025.

The number sounds enormous. For most small businesses, though, the more useful part of the change is not the headline limit. It is the ability to deduct the cost of qualifying equipment much sooner instead of spreading the expense over several years.

Section 179 applies to qualifying property bought for business use and placed in service during the tax year. That can include equipment, machinery, computers and other eligible business property.


The deduction is meant to let businesses recover the cost of certain purchases in the year they put those assets to work. It can be particularly useful when a company is making a large equipment purchase and has enough taxable business income to use the deduction.

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The $2.56 million figure doesn't apply without a ceiling on total investment. For 2026, the Section 179 deduction begins to phase down once a business places more than $4.09 million of qualifying property in service during the year. The deduction is reduced dollar for dollar for costs above that threshold.

A business that puts $4 million of qualifying property into service can still be within the range for the full $2.56 million deduction, assuming the other requirements are met. Once the qualifying investment passes $4.09 million, the available Section 179 amount starts shrinking.

At $6.65 million of qualifying purchases, the $2.56 million deduction would be reduced to zero under the investment limitation. So this isn't simply a promise that every business can write off $2.56 million. The amount depends on what the business buys, how much it spends and whether it meets the other Section 179 rules.

There is another limit that can be easy to overlook. The Section 179 deduction generally can't exceed the taxpayer's taxable income from the active conduct of a trade or business for the year.

That means a company could buy several million dollars of qualifying equipment and still be unable to use the entire deduction immediately if its taxable business income isn't high enough.

Certain disallowed Section 179 deductions can be carried forward, subject to the rules that apply to the particular property and deduction.

Section 179 isn't the only depreciation rule that changed. The IRS says qualifying business property acquired after Jan. 19, 2025, can generally qualify for 100% additional first-year depreciation under the updated rules, subject to the requirements for that provision.