Section 179 lets a practice deduct the cost of qualifying equipment in the year it is placed in service. For tax years beginning in 2026, the federal limit is $2,560,000, reduced dollar for dollar once purchases pass $4,090,000. Bonus depreciation at 100% can cover the rest. It changes when you deduct, not what the equipment costs. California allows only $25,000 and no bonus depreciation. Confirm with your CPA.
I am not a CPA, tax attorney or investment adviser, and this page does not tell you what you can deduct. It shows how the 2026 federal rules and California's rules work on example numbers. Your CPA decides what goes on your return, based on your entity, income, elections and state.
Section 179 calculator
The default equipment cost is $420,000. That is the Alithos estimator's premium package for a five-operatory office: $58,000 of equipment per operatory plus a $130,000 imaging package with CBCT. These are planning assumptions from my cost estimator, not prices you will pay. Replace them with your own numbers. Results update as you type.
Educational estimate for tax years beginning in 2026. Not tax advice. Confirm with your CPA.
The calculator follows the order the rules use. It applies Section 179 first, up to the 2026 limit after any phase-out and up to your business income if you enter it. Then it applies 100% bonus depreciation to whatever cost is left. The federal tax effect is the first-year deduction times the marginal rate you pick, which is a simplification: a large deduction can pull income down through more than one bracket. The 10% to 37% options are the 2026 individual federal rates in Rev. Proc. 2025-32.
Worked example: a startup year with low income
A new office often has little taxable income in its first year, because it opens partway through the year and spends months ramping up. Say the $420,000 package goes in and the practice shows $150,000 of business taxable income before Section 179. Here is how the federal numbers move.
| Line | No income limit entered | $150,000 of business income |
|---|---|---|
| Section 179 deduction | $420,000 | $150,000 |
| Bonus depreciation (100%) | $0 | $270,000 |
| First-year federal deduction | $420,000 | $420,000 |
| Federal tax effect at 35% | $147,000 | $147,000 |
| California Section 179 (if a CA return) | $0 | $0 |
With bonus depreciation at 100%, the income limit changes the label on the deduction more than its size. California is the bigger surprise. Because $420,000 is $220,000 over the $200,000 threshold, the $25,000 California limit phases out to zero. Bonus depreciation can also push a return into a loss, and loss rules are their own topic. That is a CPA conversation, not a calculator one.
What is Section 179?
Section 179 of the Internal Revenue Code lets a business elect to expense the cost of qualifying property in the year it is placed in service, instead of depreciating it over several years. IRS Publication 946 is the plain-language guide, and the election is made on Form 4562.
Three limits shape it. There is a dollar limit, $2,560,000 for tax years beginning in 2026. There is a phase-out: the limit drops one dollar for every dollar of Section 179 property placed in service above $4,090,000, so it is fully gone at $6,650,000. And the deduction cannot exceed taxable income from the active conduct of your business. Any amount you elect above that income carries forward to later years.
The 2026 amounts come from the IRS inflation adjustments in Rev. Proc. 2025-32. The underlying $2,500,000 and $4,000,000 base amounts were set by the 2025 tax law, often called the One Big Beautiful Bill Act, and are indexed for inflation after 2025. If you see "$2.5 million" quoted for 2026, it is the 2025 base, not the 2026 limit.
Two more points matter for dentists. The property must be used more than 50% for business. And if business use later drops to 50% or less, part of the deduction can be recaptured as income. Selling the equipment also has tax consequences, because its tax basis is lower after a large deduction.
What dental equipment qualifies?
Section 179 is written for tangible business property, and most of what goes into a dental equipment budget is exactly that. Publication 946 is the authority. This list is educational, and your CPA classifies each item.
- Clinical equipment. Chairs, delivery units, lights, compressors, vacuum systems, sterilization and lab equipment.
- Imaging. Sensors, panoramic units and CBCT.
- Computers and technology. Workstations, servers and network hardware.
- Off-the-shelf software. Software that is generally available to the public and not custom-built can qualify. Subscriptions are usually an operating expense instead.
- Furniture. Reception, office and staff furniture.
- Certain building improvements, by election. Qualified improvement property, meaning interior improvements to a nonresidential building, plus roofs, HVAC, fire protection, alarm and security systems, can be elected as Section 179 property.
That last item matters for a ground-up build or a leasehold build-out. Whether an improvement qualifies depends on what it is, when it is placed in service, and who owns it. In a lease, the tenant and the landlord can each pay for parts of the same improvements, so the answer can split between them. Bring your lease and your construction cost breakdown to your CPA. Used equipment can also qualify for Section 179, generally as long as it is new to you and you did not get it from a related party. That is relevant when a relocation mixes moved, used and new equipment.
Section 179 vs bonus depreciation: what is the difference?
Bonus depreciation, under Section 168(k), is a separate first-year deduction. The 2025 law made it 100% and permanent for qualified property acquired and placed in service after January 19, 2025, as the IRS explains in Notice 2026-11. Property under a binding contract before January 20, 2025 stays on the older, lower phase-down schedule.
| Feature | Section 179 | Bonus depreciation |
|---|---|---|
| How much, 2026 | Up to $2,560,000 | 100% of the remaining cost |
| Phase-out | Above $4,090,000 of purchases | None |
| Business income limit | Yes; excess carries forward | No; can create a loss |
| How it applies | Elected item by item | Automatic by class; you can elect out |
| Business use rule | More than 50% | Rules differ; ask your CPA |
| California | $25,000, phase-out above $200,000 | Not allowed |
| Order | Applied first | Applied to what is left |
With bonus depreciation at 100%, many readers ask why Section 179 still matters. The usual reasons are control, since Section 179 can be elected for specific items, and state returns, since some states follow Section 179 but not bonus depreciation. Which combination fits your year is a choice your CPA makes with your full return in view.
What is "placed in service," and why does December matter?
Both deductions belong to the tax year the property is placed in service. Publication 946 defines that as ready and available for its specifically assigned use. It is not the day you sign the order, pay the deposit or take the loan.
That is why December is crowded. If your tax year is the calendar year, equipment has to be delivered, installed and ready to use by December 31 to count for 2026. A unit that sits in a crate, or waits on plumbing or a city inspection, may fall into 2027. Construction schedules slip, so I never build a budget that depends on a December deduction.
Two other timing points are worth asking about. For a startup, ask your CPA whether equipment installed before you open counts as placed in service for a business that has not yet begun. And for any cost you depreciate the regular way, such as the California portion, placing more than 40% of the year's depreciable property in service in the last quarter triggers the mid-quarter convention, which lowers first-year depreciation. The Form 4562 instructions cover both conventions.
How do states treat Section 179?
States choose whether to follow the federal rules, and many do not follow them fully. California is the example I know best, since I am based there and many readers file there. According to the California Franchise Tax Board, California limits Section 179 to $25,000, reduced once qualifying purchases pass $200,000, and does not conform to federal bonus depreciation.
| $420,000 of equipment in 2026 | Federal | California |
|---|---|---|
| Section 179 limit | $2,560,000 | $25,000 |
| Phase-out threshold | $4,090,000 | $200,000 |
| Section 179 allowed here | $420,000 | $0 (fully phased out) |
| Bonus depreciation | Available | Not available |
| Cost left for later years | $0 | $420,000, depreciated over time |
The California return still recovers the cost. It just takes years instead of one. The result is a federal and a state depreciation schedule that differ for the life of the equipment, which your CPA tracks. Other states vary, and their rules change. I do not publish a 50-state table, because a wrong row costs a reader real money. Ask your CPA how your state treats both deductions in 2026.
Why is a deduction not a reason to buy?
A deduction lowers the tax you pay on income. It does not make equipment free. At a 35% federal rate, a $130,000 imaging package can produce about $45,500 of first-year federal tax effect, and you still spend $130,000, plus interest if you finance it. That is federal only and illustrative.
It is also a timing benefit. Deduct the full cost now and there is nothing left to depreciate later. The question that decides a purchase is whether the equipment earns its keep in your practice. I walk through that math for 3D imaging in CBCT or not. Year-end tax pitches are common in equipment sales. Run the case on cash flow first, then let the deduction improve a decision that already works.
The financing side matters just as much. A tax effect arrives when you file. Loan payments start right away. The dental practice financing guide and the loan payment calculator show what equipment does to your monthly payment.
The Budget Plan ($7,500 to $10,000, flat fee, scope in writing) includes Section 179 and tax modeling alongside the line-item equipment budget and debt-service coverage. I build those numbers so your CPA can check them. I do not replace your CPA. For other planning tools, see all calculators, and for terms like depreciation and placed in service, the glossary.
Section 179 questions dentists ask
What is the Section 179 limit for 2026?
For tax years beginning in 2026, the federal Section 179 limit is $2,560,000. It drops dollar for dollar once the Section 179 property you place in service during the year passes $4,090,000, and it is gone at $6,650,000. The IRS published these amounts in Rev. Proc. 2025-32. Confirm your own year with your CPA.
Does dental equipment qualify for Section 179?
Generally, yes. Chairs, delivery units, imaging, sterilization equipment, computers and furniture are the kind of tangible business property Section 179 was written for, if you use them more than 50% for business. Building improvements follow separate rules. Your CPA decides how each item is classified on your return.
Can I take Section 179 on financed equipment?
Generally, yes. IRS Publication 946 ties Section 179 to property you acquire by purchase and place in service, not to how you pay for it, so a loan does not disqualify the equipment. A true lease is different, because you do not own the equipment. Have your CPA read any lease or rent-to-own agreement before you count on the deduction.
What is the difference between Section 179 and bonus depreciation?
Section 179 is an election with a dollar limit, and it cannot exceed your business taxable income. Bonus depreciation is a percentage of cost, 100% for qualified property acquired and placed in service after January 19, 2025, with no dollar cap and no income limit. Section 179 applies first, and bonus depreciation can cover what is left.
Does California allow Section 179?
Yes, but at a much lower level. California limits Section 179 to $25,000, reduced once qualifying purchases pass $200,000, and it does not allow federal bonus depreciation. On a $420,000 equipment year, the California Section 179 amount is zero, and the cost is depreciated over several years instead. Confirm with a CPA who files in California.
Do I have to place the equipment in service by December 31?
To claim it for the 2026 tax year, yes, if your tax year is the calendar year. The test is placed in service, meaning ready and available for its specific use, not purchased or paid for. A chair that is ordered in November but not installed until January generally belongs to the next tax year.
Planning a 2026 equipment purchase and want the budget and the tax timing to agree? Book a free Project Fit Call, and bring your CPA's questions.
Sources
- Internal Revenue Service, Publication 946, "How to Depreciate Property" (2025). irs.gov
- Internal Revenue Service, "Instructions for Form 4562, Depreciation and Amortization" (2025). irs.gov
- Internal Revenue Service, Rev. Proc. 2025-32, 2026 inflation-adjusted amounts including Section 179 (sec. 4.24) and tax rate tables (sec. 4.01) (2025). irs.gov
- Internal Revenue Service, Notice 2026-11, interim guidance on 100% additional first-year (bonus) depreciation under Section 168(k) (2026). irs.gov
- California Franchise Tax Board, "2025 Instructions for Form FTB 3885A, Depreciation and Amortization Adjustments" (2025). ftb.ca.gov
- Alithos Advisory, cost estimator assumptions: equipment $58,000 per operatory (premium) and $130,000 imaging with CBCT (2026). alithos.co
Every figure on this page comes from a cited IRS or California FTB source or is labeled as an Alithos planning assumption. Tax rules change; this page reflects tax years beginning in 2026. How we research and update this page.