# Section 179 for servers and computer equipment

Expense up to $2,560,000 of equipment placed in service in 2026, if you elect it and your business income covers it. General information, not tax advice. Talk to your tax advisor about your situation.

## Section 179 limits

| Tax years beginning in | Dollar limit | Reduced above | Zero at |
| --- | --- | --- | --- |
| 2025 | $2,500,000 | $4,000,000 | $6,500,000 |
| 2026 | $2,560,000 | $4,090,000 | $6,650,000 |

[Publication 946](https://www.irs.gov/publications/p946), What's New; [Rev. Proc. 2025-32](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf), section 4.24. The limit drops dollar for dollar once section 179 property placed in service that year costs more than the threshold. It applies per taxpayer: a married couple filing jointly shares one.

## The rules

Servers are eligible property. Section 179 covers tangible personal property bought, not inherited or bought from a related person, for use in your trade or business and used more than 50% for business in its first year. Computers are no longer listed property.

Rental property is the first question. Publication 946 excludes property held only to produce income, naming rental property “if renting property is not your trade or business.” For someone buying servers to rent out, that is where to start with an advisor.

The deduction cannot exceed business income. After the dollar limit, it is capped at taxable income from the active conduct of any trade or business, wages included. What you could not deduct carries over to the next year. Bonus depreciation has no such limit ([bonus vs section 179](https://managedgpus.com/guides/accelerated-depreciation/bonus-depreciation-vs-section-179)).

You pick the items and the amount. Elect on Form 4562, Part I, with the return for the year the property is placed in service. Whatever you do not expense is depreciated; the [MACRS calculator](https://managedgpus.com/macrs-depreciation-calculator) shows the rest of the schedule. You can revoke the election by amended return, and a revocation is final.

It can come back. If business use falls to 50% or less during the recovery period, part of the deduction is recaptured as ordinary income. On a sale it counts as depreciation for [section 1245 recapture](https://managedgpus.com/guides/accelerated-depreciation/depreciation-recapture). States can set lower limits: California allows $25,000 ([state conformity](https://managedgpus.com/guides/accelerated-depreciation/state-conformity)).

## Who can use it

| Owner | Rule | Source |
| --- | --- | --- |
| Individual, partnership-taxed LLC, or S corporation leasing equipment out | Not on leased property, unless it made the property, or the lease with renewals is under half the class life (under 3 years for computers) and its ordinary business deductions on the property exceed 15% of the rent in the first 12 months | [IRC 179(d)(5)](https://www.law.cornell.edu/uscode/text/26/179) |
| C corporation leasing equipment | The lessor rule does not apply | Publication 946 |
| Estate or trust | Not allowed | [IRC 179(d)(4)](https://www.law.cornell.edu/uscode/text/26/179) |
| Partnership or S corporation | Limits apply to the entity and again to each owner | [IRC 179(d)(8)](https://www.law.cornell.edu/uscode/text/26/179) |

Computers have a 6-year class life (asset class 00.12). Whether renting GPU capacity by the hour is a lease for this rule is a question for your advisor; see [lease vs buy](https://managedgpus.com/guides/accelerated-depreciation/lease-vs-buy-depreciation) and the other [accelerated depreciation guides](https://managedgpus.com/guides/accelerated-depreciation).

## Questions about section 179

**Can I take section 179 on GPUs I rent out?**

It depends on who owns them and how. Property held only to produce income does not qualify, and a lessor that is not a corporation can use it on leased property only in two narrow cases (IRC 179(d)(5)).

## Planning to buy GPU servers?

- A call with our CTO about what you need
- Ballpark costs and timelines for your budget
- A straight answer if it’s not a fit

Prefer email? [hello@amcompute.com](mailto:hello@amcompute.com)

## Want to own GPU servers? We'll run them.

[Plan a deployment](https://managedgpus.com/guides/accelerated-depreciation/section-179-computer-equipment#discuss)

Source: https://managedgpus.com/guides/accelerated-depreciation/section-179-computer-equipment