USA Tax Depreciation Guide (2024-2026)

For US business owners, depreciation is a powerful tax shield. The IRS allows you to write off the cost of assets over time (MACRS) or immediately (Section 179).

1. Modified Accelerated Cost Recovery System (MACRS)

MACRS is the standard depreciation method for most business assets. It assigns a specific "recovery period" to each asset class.

Asset Class	Recovery Period	Examples
3-Year Property	3 years	Tractor units, racehorses
5-Year Property	5 years	Cars, trucks, computers, copiers
7-Year Property	7 years	Office furniture, fixtures, equipment
Residential Rental	27.5 years	Apartment buildings, rental homes
Non-Residential	39 years	Office buildings, warehouses

2. Section 179 Deduction

Section 179 allows you to deduct the full cost of qualifying equipment in the year you buy it, rather than depreciating it over years.

2024 Limit: $1,220,000 (Spending Cap: $3,050,000)
2025 Limit: $1,250,000 est. (Spending Cap: $3,130,000 est.)
2026 Limit: TBD - typically announced late 2025
Requirement: Asset must be used more than 50% for business.

Try our Section 179 Calculator →

3. Bonus Depreciation

Bonus depreciation is an additional first-year allowance. The Tax Cuts and Jobs Act of 2017 allowed 100% bonus depreciation, but it is now phasing down.

2023: 80%
2024: 60%
2025: 40%
2026: 20%
2027: 0% (unless Congress extends it)

Important Note on Luxury Cars

Passenger vehicles (under 6,000 lbs) are subject to strict caps (Section 280F). You cannot write off a $100,000 car entirely in year 1 using Section 179.
Vehicles over 6,000 lbs (like heavy SUVs and trucks) are often exempt from these low caps.

Last updated: January 2026. Tax laws change frequently - consult a qualified CPA for your specific situation.