What Is the Section 179 Deduction?
The Section 179 deduction is a U.S. tax provision that allows businesses to deduct the full cost of qualifying equipment, software, and certain vehicle purchases in the year the asset is placed in service, rather than depreciating it over several years.
For 2026, the Section 179 deduction limit increases to $2,560,000, making it one of the most powerful tax planning tools available to small and mid-sized businesses.
For small business owners in South Jordan, the landscape of growth just got a significant boost. As we move into 2026, a major shift in tax law has opened a door for companies looking to modernize their operations, expand their fleets, or overhaul their technology.
Under the One Big Beautiful Bill (OBBB), a federal tax law affecting depreciation and expensing rules, the Section 179 deduction —a perennial favorite for tax-smart entrepreneurs—has seen its most substantial increase in history. At Madsen and Company, we’re seeing this as a generational opportunity for Utah businesses to reinvest in themselves while keeping more cash in their pockets.
The Big Number: $2,560,000
For the 2026 tax year, the IRS has raised the Section 179 expensing limit to a staggering $2.56 million.
To put this in perspective, Section 179 allows you to deduct the full purchase price of qualifying equipment and software in the year you buy it, rather than depreciating it over 5 to 7 years. If you buy a $100,000 piece of machinery today, you can potentially subtract that entire $100,000 from your 2026 taxable income.
Key 2026 Limits at a Glance:
| Provision | 2026 Limit |
| Maximum Deduction | $2,560,000 |
| Phase-Out Threshold | $4,090,000 |
| Bonus Depreciation | 100% (Permanent) |
Pro-Tip: The “Phase-Out” means that once you spend more than $4.09 million on equipment in a single year, the deduction begins to reduce dollar-for-dollar. This makes the incentive perfectly tailored for the small-to-mid-sized businesses that drive our South Jordan economy.
What Qualifies for the Upgrade?
This isn’t just for heavy industrial manufacturing. The “Section 179 list” is broader than many business owners realize. If you are a contractor in Daybreak or a tech startup near River Front Parkway, these categories likely apply to you:
- Technology & Software: “Off-the-shelf” software, servers, and computer workstations.
- Business Vehicles: Heavy SUVs, trucks, and vans over 6,000 lbs (GVWR) often qualify for the full deduction. Light vehicles may be subject to different caps but still offer significant savings.
- Office Infrastructure: Furniture, security systems, and even certain HVAC upgrades for non-residential buildings.
- Equipment: Printing presses, medical devices, construction machinery, and specialized tools.
Who Benefits Most From the 2026 Section 179 Increase?
This expanded deduction is especially valuable for:
- S-Corporation owners with strong 2026 profits
- Contractors, construction trades, and service businesses
- Medical, dental, and professional practices
- Technology-driven businesses investing in hardware or AI tools
- Utah-based businesses operating in South Jordan and surrounding areas
Businesses with projected taxable income above $150,000 typically see the greatest benefit from proactive Section 179 planning.
Why South Jordan Businesses Should Act Now
The 2026 tax environment is unique because it combines high Section 179 limits with the permanent 100% bonus depreciation established by the OBBB. This “one-two punch” allows for unprecedented flexibility in tax planning.
- Offset Higher Revenue: If 2026 is shaping up to be a high-income year, an equipment upgrade is the fastest way to lower your tax bracket.
- Modernize Before the Competition: While others are waiting, South Jordan businesses can use tax savings to fund the purchase of AI-integrated tools or more efficient machinery.
- Local Expertise: At Madsen and Company, we specialize in helping S-Corps and service-based businesses in Utah navigate these specific rules to ensure you don’t just spend money, but invest it strategically.
The “Placed in Service” Rule
The most important thing to remember is that the equipment must be purchased and placed in service by midnight on December 31, 2026. Simply signing a contract isn’t enough; the gear must be in your office or on your job site, ready to work.
Section 179 Deduction FAQs for 2026
Can I use Section 179 if I finance the equipment?
Yes. Equipment does not need to be paid in full. As long as it is purchased and placed in service during 2026, it may qualify.
Does Section 179 apply to used equipment?
Yes. Both new and used equipment can qualify, provided it is new to your business.
Is there an income limit to use Section 179?
Yes. The deduction cannot exceed your taxable business income, but unused amounts may be carried forward.
How is Section 179 different from bonus depreciation?
Section 179 allows you to choose specific assets to expense, while bonus depreciation applies automatically. Strategic coordination matters.
Do vehicles qualify for Section 179 in 2026?
Certain trucks, vans, and SUVs over 6,000 lbs GVWR may qualify, subject to IRS rules and caps.
How Madsen and Company Can Help
Tax strategy is about more than just filling out forms; it’s about timing. We help South Jordan entrepreneurs look at their projected income and decide exactly how much to invest to hit the “sweet spot” of tax savings.
Are you planning a major purchase this year?
Would you like me to create a personalized tax-saving projection based on your estimated 2026 equipment spend?