Section 179 and bonus depreciation allow Florida small businesses to deduct the full cost of equipment, vehicles, and certain improvements in the year of purchase rather than depreciating over 5–39 years. These provisions can generate $10,000–$100,000+ in immediate tax deductions for businesses making significant capital investments. Here's how to use them effectively in 2026.
Section 179 allows a business to expense (immediately deduct) the cost of qualifying property in the year placed in service, rather than depreciating it over multiple years. 2026 limit: $1,220,000 (inflation-adjusted from $1,160,000 in 2025 — verify final IRS figure). Phase-out begins at $3,050,000 in total 2026 property purchases. Section 179 cannot create a loss — deductions are limited to taxable income from active business. Unused Section 179 can be carried forward indefinitely. Florida conforms to federal Section 179 for corporate returns, with some historical differences — verify with a Florida CPA.
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Bonus depreciation allows immediate expensing of a percentage of qualifying property cost. After 100% bonus depreciation through 2022, the rate has phased down: 2023: 80%, 2024: 60%, 2025: 40%. For 2026: 20% (unless Congress extends or restores higher rates — watch for legislative changes). Unlike Section 179, bonus depreciation can create a loss (no income limitation). It applies to both new and used property that is new to the taxpayer. The combination of Section 179 and bonus depreciation can fully expense most equipment acquisitions.
Section 179 qualifying property includes: machinery and equipment, computers and servers, office furniture, business vehicles (with limitations for passenger vehicles), software, and certain qualified improvement property (QIP — interior improvements to nonresidential buildings). Does NOT qualify: real property (land), buildings, inventory, property held for sale, and property acquired from related parties. HVAC, roofing, and fire protection systems in nonresidential buildings qualify as QIP under current law.
Section 179 and bonus depreciation are most valuable when: your business has high taxable income in the current year; you need equipment anyway (don't buy equipment solely for the deduction); and you have sufficient business income to absorb Section 179 (which cannot create a loss). If you expect higher income next year, it may be strategic to delay a December purchase to January to apply the deduction against higher future income. Conversely, if income is high this year, accelerate purchases before December 31.
Florida's corporate income/franchise tax conforms to many federal tax provisions, including Section 179 and depreciation. However, Florida has historically had different bonus depreciation conformity — Florida sometimes required adding back federal bonus depreciation for Florida corporate tax purposes. This primarily affects C-corporations paying Florida corporate income tax. S-corps, partnerships, and sole proprietors flowing through to individual Florida residents are not subject to Florida income tax regardless. Verify current Florida conformity status with a Florida CPA before large capital acquisitions.
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