Section 179 Expense Deduction — 2025 Publ 225 (PDF)

You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. This is the section 179 expense deduction. You can elect the section 179 expense deduction instead of recovering the cost by taking depreciation deductions.

This part of the chapter explains the rules for the section 179 expense deduction. It explains what property qualifies for the deduction, what property does not qualify for the deduction, the limits that may apply, how to elect the deduction, and when you may have to recapture the deduction.

For more information, see chapter 2 of Pub. 946.

What Property Qualifies?

To qualify for the section 179 expense deduction, your property must meet all the following requirements.

It must be eligible property.
It must be acquired primarily for business use.
It must have been acquired by purchase.

Eligible Property

To qualify for the section 179 expense deduction, your property must be one of the following types of depreciable property.

Tangible personal property.
Other tangible property (except buildings and their structural components) used as:

a. An integral part of manufacturing, pro duction, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services;

b. A research facility used in connection

with any of the activities in (a), earlier; or

c. A facility used in connection with any

of the activities in (a) for the bulk storage of fungible commodities.

Single-purpose agricultural (livestock) or horticultural structures.
Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum.
Qualified real property. (Special rules apply to qualified real property that you elect to treat as qualified section 179 real property. For more information, see chapter 2 of Pub. 946, and section 179(f) of the Internal Revenue Code.)
Off-the-shelf computer software that is readily available for purchase by the general public, is subject to a nonexclusive lease, and has not been substantially modified.

Tangible personal property. Tangible personal property is any tangible property that is not real property. It includes the following property.

Machinery and equipment.
Property contained in or attached to a building (other than structural components), such as milk tanks, automatic feeders, barn cleaners, and office equipment.
Gasoline storage tanks and pumps at retail service stations.
Livestock, including horses, cattle, hogs, sheep, and goat used for draft, breeding or dairy purposes.
Mink and other fur-bearing animals.

Facility used for the bulk storage of fungi- ble commodities. A facility used for the bulk storage of fungible commodities is qualifying property for purposes of the section 179 expense deduction if it is used in connection with any of the activities listed earlier in item 2c under Eligible Property . Bulk storage means the storage of a commodity in a large mass before it is used.

Grain bins. A grain bin is an example of a storage facility that is qualifying section 179 property. It is a facility used in connection with the production of grain or livestock for the bulk storage of fungible commodities.

Single-purpose agricultural or horticultural structures. A single-purpose agricultural (livestock) or horticultural structure is qualifying property for purposes of the section 179 expense deduction.

Agricultural structure. A single-purpose agricultural (livestock) structure is any building or enclosure specifically designed, constructed, and used for both the following reasons.

To house, raise, and feed a particular type of livestock and its produce.
To house the equipment, including any replacements, needed to house, raise, or feed the livestock.

For this purpose, livestock includes poultry.

Single-purpose structures are qualifying property if used, for example, to breed chickens or hogs, produce milk from dairy cattle, or produce feeder cattle or pigs, broiler chickens, or eggs. The facility must include, as an integral part of the structure or enclosure, equipment necessary to house, raise, and feed the livestock.

Publication 225 (2025) Chapter 7 Depreciation, Depletion, and Amortization 41

Horticultural structure. A single-purpose horticultural structure is either of the following.

A greenhouse specifically designed, constructed, and used for the commercial production of plants.
A structure specifically designed, constructed, and used for the commercial production of mushrooms.

Use of structure. A structure must be used only for the purpose that qualified it. For example, a hog barn will not be qualifying property if you use it to house poultry. Similarly, using part of your greenhouse to sell plants will make the greenhouse nonqualifying property.

If a structure includes work space, the work space can be used only for the following activities.

Stocking, caring for, or collecting livestock or plants or their produce.
Maintaining the enclosure or structure.
Maintaining or replacing the equipment or stock enclosed or housed in the structure.

Note: The treatment of qualified improvement property placed in service after December 31, 2017, has been changed to 15-year property under MACRS. See chapter 3 of Pub. 946 for more information.

Qualified real property. Qualified real property is any qualified improvement property described in section 168(e)(6), and any of the following improvements to nonresidential real property placed in service after the date such qualified real property was first placed in service.

Roofs.
Heating, ventilation, and air conditioning.
Fire protection and alarms.
Security systems.

Property Acquired by Purchase

To qualify for the section 179 expense deduction, your property must have been acquired by purchase. For example, property acquired by gift or inheritance does not qualify. Property acquired from a related person (that is, your spouse, ancestors, or lineal descendants) is not considered acquired by purchase. New or used equipment you acquired by purchase during the current tax year qualifies for the section 179 deduction.

Example. You are a farmer. You purchased two tractors, one from your sibling and one from your parent. You placed both tractors in service in the same year you bought them. The tractor purchased from your parent does not qualify for the section 179 expense deduction because you are a related person (as defined above). The tractor purchased from your sibling does qualify for the deduction because you are not a related person (as defined above).

What Property Does Not Qualify?

Land and improvements. Land and land improvements do not qualify as section 179 property. Land improvements include swimming pools, paved parking areas, wharves, docks, bridges, and nonagricultural fences. However,

certain additions to agricultural land are considered to be an integral part of agricultural production so they may qualify as section 179 property. For example, agricultural fences used to confine livestock do qualify as section 179 property. Similarly, field drainage tile also qualifies as section 179 property.

Excepted property. Even if the requirements explained in the preceding discussions are met, farmers cannot elect the section 179 expense deduction for the following property.

Certain property you lease to others (if you are a noncorporate lessor).
Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging.
Property used by a tax-exempt organization (other than a tax-exempt farmers’ cooperative) unless the property is used mainly in a taxable unrelated trade or business.
Property used by governmental units or foreign persons or entities (except property used under a lease with a term of less than 6 months).

How Much Can You Deduct?

Your section 179 expense deduction is generally the cost of the qualifying property. However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. These limits apply to each taxpayer, not to each business. However, see Married individuals under Dollar Limits , later. Also, see the special rules for applying the limits for partnerships and S corporations under Partnerships and S Corporations , later.

If you deduct only part of the cost of qualifying property as a section 179 expense deduction, you can generally depreciate the cost you do not deduct.

Use Part I of Form 4562 to figure your section 179 expense deduction.

Partial business use. When you use property for business and nonbusiness purposes, you can elect the section 179 expense deduction only if you use it more than 50% for business in the year you place it in service. If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. Use the resulting business cost to figure your section 179 expense deduction.

Trade-in of other property and like-kind ex- changes. If you acquire qualified property in a like-kind exchange, only the excess basis of the acquired property is eligible for the section 179 deduction. For more information, see Pub. 551.

Like-kind exchanges beginning after