Bonus depreciation vs section 179
Both can deduct the cost of a server in its first year. Bonus applies by default with no cap; section 179 is elected item by item, within limits. General information, not tax advice. Talk to your tax advisor about your situation.
Side by side
| Bonus depreciation (168(k)) | Section 179 | |
|---|---|---|
| How it applies | Automatic unless you elect out, by class of property | Only if you elect it, item by item |
| Amount | 100% of basis if acquired after Jan. 19, 2025 | Any amount you choose, within the limits |
| Dollar limit | None | $2,560,000 (2026), reduced above $4,090,000 |
| Business income limit | None | Capped at business taxable income; the excess carries over |
| Property held only for income | Can qualify | Does not qualify |
| Noncorporate lessor | No special rule | Generally not allowed (179(d)(5)) |
| Estates and trusts | No special rule | Not allowed (179(d)(4)) |
| Used property | If you never used it and bought it from an unrelated party | If bought from an unrelated party |
| Undoing it | Revoking an election out needs IRS consent | Revocable by amended return |
| Form 4562 | Part II, line 14 | Part I |
Publication 946, chapters 2 and 3; IRC 168(k); IRC 179.
One purchase, three schedules
$3,000,000 of servers placed in service in March 2026, acquired after January 19, 2025, the owner's only property that year. The section 179 column assumes the business income covers it.
| Tax year | 100% bonus | Section 179 ($2,560,000) | Neither |
|---|---|---|---|
| 2026 | $3,000,000 | $2,648,000 | $600,000 |
| 2027 | $0 | $140,800 | $960,000 |
| 2028 | $0 | $84,480 | $576,000 |
| 2029 | $0 | $50,688 | $345,600 |
| 2030 | $0 | $50,688 | $345,600 |
| 2031 | $0 | $25,344 | $172,800 |
Section 179 column: elected out of bonus, the rest under MACRS (Publication 946, Table A-1). Every column totals the same cost; only the timing differs.
What decides it for GPU owners
You can use both. Section 179 comes off the cost first, bonus applies to what is left, and MACRS depreciates the rest. Try your numbers in the MACRS calculator.
Who owns the servers. A trust cannot use section 179, and most lessors that are not corporations cannot use it on leased property (section 179 for servers). Bonus has neither rule.
Your other income and your state. Section 179 cannot exceed business taxable income. California follows neither federal bonus depreciation nor the federal section 179 limit (state conformity).
Resale. Both count as depreciation when a gain on a sale is taxed as ordinary income (depreciation recapture). The rest of the rules are in the accelerated depreciation guides.
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