 dollar limits. So the total amount you can elect to deduct under section 179 for most property placed in service in tax years beginning in 2022 generally cannot be more than 1,080,000. So those are dollar limit quite high oftentimes for small businesses, but larger businesses can hit that limit quite readily, clearly. So if you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 deduction among the items in any way as long as the total deduction is not more than $1,080,000. So this becomes an interesting area as well. You might think that's pretty straightforward, but if you have multiple pieces of property that might be subject to a 179 deduction and those properties have different or varying useful life for normal depreciation, then if you hit the cap of 1,080,000, you might want to think about that like which properties you want to apply the 179 to. You would think as a general rule, you would like to apply the 179 to those properties that have the longest life of depreciation that's applied to them, because then the property that goes over the threshold has the shorter lives hopefully, which means you'll still under normal depreciation rules get to recap the costs earlier than later as a general rule. So that would be if you hit the caps. So it gets a little bit more confusing than just saying well we'll just apply the 179 as willy-nilly until we hit the cap and then go over it. You want to think about it possibly a little bit more in depth because there could be differences in future depreciation depending on the useful life of the property. So you do not have to claim the full 1,080,000 either. So you could claim less than that. Why would you ever do that? If you had a ability to claim the 1,080,000, why would you ever claim some 179 less than that? Well if you claim the 179 less than that then you would think that the depreciable property you would still get a depreciation deduction in the future and you might be in a situation where if you take enough 179 it's going to take you below into a tax bracket that's lower due to our progressive tax system. So you might say hey look I'm going to take enough at this higher tax bracket rate and then maybe I would be better off applying the rest to the future possibly because that will help me out in the future when I'm having a higher tax bracket rate possibly as opposed to taking the deduction earlier. So the general rule we always want the deduction earlier normally but there are exceptions. For example if I have a lower tax rate due to the progressive tax system due to having less income this year or changes in the tax law I expect to happen next year increase in the tax rate then I might want to take the deduction next year if possible maybe. So tip the amount you can elect to deduct is not affected if you place qualifying property in service in a short tax year or if you place qualifying property in service for only a part of a 12 month tax year. Caution after you apply the dollar limit to determine a tentative deduction you must apply the business income limit described later so we'll get into that in it's the other limit right to determine your actual section 179 deduction. So example in 2022 you bought and placed in service $1,080,000 in machinery and a $25,000 circular saw for your business you would elect to deduct $1,055,000 for the machinery and the entire $25,000 for the saw a total of $1,080,000. So you might say so we hit the limit and instead of just saying I'm going to put the full amount on this piece of equipment that costs the same amount as the limit we decided they decided to fully depreciate the $25,000 saw and then apply the rest here so that means that you would expect the difference between you know the price of this first piece here and that $1,055,000 you would still be able to depreciate in the future you would imagine that they could have applied all the $179,000 to the first piece of equipment and then have the whole $25,000 of the saw to go forward what would be the difference between the two why does it matter well they might have depreciation they might have different depreciation lives into the future which could affect how early you get the depreciation under normal depreciation rules so this is the maximum amount you can deduct your $25,000 deduction for the saw completely recovers its cost your basis in depreciation is zero the basis for depreciation in your machinery is $25,000 so you figure this by subtracting your $1,055,000 section 179 deduction for the machinery from the $1,080,000 cost of the machinery and then you would expect that that $25,000 you would be depreciating over you know whatever whatever the normal terms of depreciation would be so situations affecting dollar limit under certain circumstances the general dollar limits on the section 179 deduction may be reduced or increased or there may be additional dollar limits the general dollar limit is affected by any of the following situation the cost of your section 179 property placed in service exceeds 2,700,000 you placed in service a sport utility or certain other vehicles they always mess things up you are married filing a joint or separate a joint or separate return