What is the Difference between Section 179 Expensing and Bonus Depreciation for Business Equipment?

While both Section 179 and bonus depreciation allow you to recover the cost of qualifying equipment like POS hardware and off-the-shelf software immediately, they function with different rules and limitations:

1. Maximum Deduction and Phase-Out: Section 179 has a maximum annual deduction limit ($1,220,000 for 2024) and a phase-out threshold ($3,050,000 for 2024). Bonus depreciation has no dollar cap or investment-based phase-out threshold.
2. Income Limitations: Section 179 deductions cannot exceed your business’s taxable income for the year, though disallowed amounts can be carried forward indefinitely. Bonus depreciation has no income limit and can create or increase a net operating loss (NOL).
3. Application Order: When using both, Section 179 is applied first to the cost of the asset. Bonus depreciation is then applied to the remaining basis.
4. Default Status: Section 179 requires an affirmative election on IRS Form 4562. Bonus depreciation applies automatically to qualifying property unless you specifically choose to opt out.
5. Percentage Limits: Section 179 allows for a 100% write-off of the purchase price up to the cap. Bonus depreciation for 2024 is reduced to 60% of the adjusted basis (down from 80% in 2023).

We offer a broad selection of hardware from brands like Clover, Lavu, and Revel that may qualify for these deductions. Merchants must qualify for free or discounted hardware through our promotional programs. Because tax laws are complex, we always recommend consulting a tax professional to align these strategies with your specific business goals.

• Section 179 Tax Deduction for Business Equipment: 2026 Expert Guide