Reasons why the full section 179 expense may not be allowed in ProConnect Tax

You may see a lower section 179 deduction than you expected due to the Business Income Limitation. This is how it works:

• The total qualified section 179 cost that can be deducted is limited to your taxable income from the active conduct of a trade or business during the year. This business income limitation is calculated on Form 4562, line 11.
• If the business income isn't large enough for the full section 179 expense amount to be deducted, a section 179 carryover is calculated on line 13.
• A worksheet will generate for Form 4562, line 11, that shows the different types of income from the active conduct of a trade or business and their respective amounts. 

Refer to the Instructions for Form 4562 for more information about the business income limitation.

What's new for tax year 2025

The One Big Beautiful Bill brings many changes to Section 179 and Special Deprecation Allowance. Here are some of the key updates:

• Qualified production property placed in service after July 4, 2025, the construction of which began after January 19, 2025, may be eligible for a 100% special depreciation allowance.
• Section 179 deduction dollar limits have been increased, including the amount for SUV's.
• For certain qualified property placed in service before January 20, 2025, a phase-down of the special depreciation allowance is in place.
• Certain qualified property placed in service after January 19, 2025 may be eligible for 100% special depreciation allowance or you can elect to take 40%.
• Domestic research and experimental expenditures may be amortized over either a 60 month, or 10-year period. Different periods apply for foreign research.

For full details, review the 4562 instructions.

Instructions for entering this in ProConnect Tax are coming soon. For more information, see Applying the One Big Beautiful Bill changes to Depreciation in ProConnect Tax.