Section 179 or Bonus Depreciation? The Truck Question, Answered
You bought a truck in March. Your last accountant wrote it off and said "Section 179." Fine — but that was a choice, not a formality, and in about a third of the returns we review it was the wrong one.
Here is the distinction in plain terms.
What each one actually does
Section 179 lets you elect to expense qualifying property in the year you place it in service, instead of depreciating it over several years. It is an election you make asset by asset, and you can take part of an asset's cost under 179 and depreciate the rest.
Bonus depreciation is not an election in the same way — it applies automatically to qualifying new and used property unless you formally elect out, class by class.
Both get you a first-year deduction. The difference is in the guardrails.
The three constraints that decide it
| Section 179 | Bonus depreciation | |
|---|---|---|
| Annual dollar cap | Yes, indexed each year | No cap |
| Phases out on heavy purchasing | Yes, above a spending threshold | No |
| Can create a loss | No — limited to business income | Yes |
That last row is the one that bites service businesses.
Section 179 cannot take your taxable business income below zero. If you had a soft year and bought a truck anyway, the 179 deduction gets limited and the unused portion carries forward. You do not lose it, but you do not get it now either — which is usually the entire reason you bought in December.
Bonus depreciation has no such limit. It can drive you to a loss, and that loss can offset other income or carry forward under the usual rules.
Rule of thumb: in a strong year, Section 179 gives you precision. In a weak year — or a year with a large purchase relative to profit — bonus depreciation is what actually delivers the deduction.
Where the vehicle rules complicate it
Service vehicles are their own category, and the answer depends on the truck, not on your intentions.
- Vehicles over 6,000 lbs GVWR that are not "passenger automobiles" under the tax rules generally escape the luxury-auto depreciation caps. A three-quarter-ton work truck usually clears this.
- Vehicles under that weight run into annual depreciation limits that cap what you can take regardless of which provision you use.
- Business-use percentage matters. If the truck is 70% business, your deduction is 70% of the basis — and if business use later drops below 50%, you can face recapture, which means reporting income in a later year to claw back part of what you took.
Check the GVWR on the door jamb sticker before you assume anything. That number, not the price, drives most of the outcome.
What we do instead
For a client with a service fleet, the sequence is usually:
- Project the year's taxable income before the equipment decision.
- Identify which assets are in service by December 31 — "placed in service" means available for use, not ordered or paid for.
- Apply bonus depreciation where we need the deduction to exceed income, Section 179 where we want to fine-tune to a specific number.
- Check state conformity. Several states decouple from federal bonus depreciation entirely, so a federal win can create a state addback you did not plan for.
Step four is the one that surprises people. A deduction is not one number; it is a federal number and a state number, and they often disagree.
The part that matters more than either
A first-year write-off changes when you deduct, not whether you do. Accelerating a deduction into a low-bracket year to save 12% today, when the same deduction would have been worth 24% spread across the next three years, is a loss dressed up as a win.
That calculation needs a multi-year projection, not a December phone call. If nobody has run one for you, that is the actual gap — not which provision you checked on the return.
Dollar caps, thresholds, and the bonus percentage are all set by statute and several are indexed or phased down over time. Confirm the current year's figures against IRS guidance before you rely on them, or ask us and we will pull the numbers for your situation.