What’s New for 2025

Section 179 deduction dollar limits. For tax years beginning in 2025, the maximum section 179 expense deduction is $2,500,000. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $4,000,000. See Dollar Limits in chapter 2.

Also, the maximum section 179 expense deduction for sport utility vehicles placed in service in tax years beginning in 2025 is $31,300.

Phase down of special depreciation allowance for qualified property acquired before January 20, 2025, and certain plants bearing fruits and nuts planted or grafted before January 20, 2025. The special depreciation allowance is limited to 40% for certain qualified property acquired after September 27, 2017, and placed in service after December 31, 2024, and before January 1, 2026 (other than certain property with a long production period and certain aircraft). Property with a long production period and certain aircraft placed in service after December 31, 2024, and before January 1, 2026, is limited to a special depreciation allowance is 60% of the depreciable basis of the property. The special depreciation allowance is also limited to 40% for certain specified plants bearing fruits and nuts planted or grafted after December 31, 2024, and before January 20, 2025. See Certain Qualified Property Acquired after September 27, 2017, and Before January 20, 2025 , and Certain Plants Bearing Fruits and Nuts Planted or Grafted Before January 20, 2025 , under What Is Qualified Property? in chapter 3. Special depreciation allowance for certain qualified property acquired after January 19, 2025, and certain plants bearing fruits and nuts planted or grafted after January 19, 2025. P.L. 119-21, commonly known as the One Big Beautiful Bill Act, reinstated the 100% special depreciation allowance for certain qualified property acquired and placed in service after January 19, 2025 (including long production period property and certain aircraft), and certain specified plants bearing fruits and nuts planted or grafted after January 19, 2025. However, you can elect to take a 40% special depreciation allowance (60% for long production period property and certain aircraft) for this property during first tax year ending after January 19, 2025, instead of taking the 100% special depreciation allowance. See Certain Qualified Property Ac- quired After January 19, 2025 , and Certain Plants Bearing Fruits and Nuts Planted or Grafted After January 19, 2025 , under What Is Qualified Property? in chapter 3. Special depreciation allowance for qualified produc- tion property. P.L. 119-21 added new section 168(n) which allows an elective special depreciation allowance

Publication 946 (2025) Catalog Number 13081F Mar 13, 2026 Department of the Treasury Internal Revenue Service www.irs.gov

for qualified production property. Qualified production property placed in service after July 4, 2025, the construction of which began or that was acquired after January 19, 2025, is eligible for a 100% special depreciation allowance. See Qualified Production Property in chapter 3. Additions to 5-year property. Any qualified facility (as defined in section 45Y(b)(1)(A) of the Internal Revenue Code), any qualified property (as defined in subsection (b) (2) of section 48E of the Internal Revenue Code) which is a qualified investment (as defined in subsection (b)(1) of such section), or any energy storage technology (as defined in subsection (c)(2) of such section) that is placed in service after December 31, 2024, is 5-year property. Removal of solar or wind energy property from the definition of 5-year property. Section 70509 of P.L. 119-21 removed solar or wind energy property from the definition of 5-year property under section 168(e)(3)(B)(vi) of the Internal Revenue Code. This applies to solar or wind energy property beginning construction after December 31, 2024.