For qualifying property a corporation places in service during its 2025 tax year, the One Big Beautiful Bill Act increased the maximum IRC Section 179 expensing election and its corresponding investment-based phase-out threshold. What are the new figures, and at what total qualifying-property investment level is the deduction completely phased out?
- A $1,000,000 maximum deduction with a $2,500,000 phase-out threshold, unchanged from the limits that had applied since the Tax Cuts and Jobs Act
- A $2,500,000 maximum deduction, phasing out dollar-for-dollar once qualifying property placed in service exceeds a $4,000,000 threshold, and fully phased out at $6,500,000 of such property
- A $500,000 maximum deduction with a $2,000,000 phase-out threshold, reflecting the original limits set when Section 179 expensing was first indexed for inflation
- An unlimited deduction with no phase-out threshold at all, since the One Big Beautiful Bill Act eliminated the Section 179 dollar caps in favor of the new 100% bonus depreciation regime
Why B? And why not the others?
Correct answer: B. A $2,500,000 maximum deduction, phasing out dollar-for-dollar once qualifying property placed in service exceeds a $4,000,000 threshold, and fully phased out at $6,500,000 of such property
The One Big Beautiful Bill Act raised the maximum IRC Section 179 expensing election to $2,500,000 and raised the investment-based phase-out threshold to $4,000,000, both effective for property placed in service in tax years beginning after December 31, 2024; the deduction is reduced dollar-for-dollar once qualifying property placed in service for the year exceeds the $4,000,000 threshold, reaching a full phase-out once such property reaches $6,500,000. The option describing a $1,000,000 deduction and $2,500,000 threshold states the prior, pre-existing Tax Cuts and Jobs Act era limits that the new law superseded rather than left unchanged. The option describing a $500,000 deduction and $2,000,000 threshold describes an older, smaller set of figures that predates the current statutory framework entirely. The option claiming there is no cap at all is wrong because Section 179 retains its own explicit statutory dollar cap and phase-out mechanism, which is separate from, and unaffected by, the unrelated 100% bonus depreciation provision under Section 168(k).
Source: IRC Section 179, as amended by the One Big Beautiful Bill Act, Pub. L. 119-21 (2025)