Definition
A tax provision that lets a business deduct the full cost of qualifying equipment, machinery, vehicles, software, and certain building improvements in the year they are put into use, instead of depreciating the cost over several years. The deduction is limited to the business's taxable income for the year, so it cannot create a loss, and it is subject to an annual dollar cap the IRS adjusts, with tighter limits for passenger vehicles.
Why it matters
Section 179 does not create a bigger deduction, it moves it earlier: the same total is deducted either way, but a large deduction now is worth more than the same deduction spread over seven years. The equipment has to be used more than half for business, and selling it early can claw part of the deduction back.