Georgia does allow the Section 179 depreciation deduction, and the state conforms to the federal dollar limits rather than setting its own lower cap. The two catches worth knowing before you file: Georgia has never adopted bonus depreciation under IRC 168(k), and it doesn’t allow Section 179 for certain qualified real property that the federal rules cover. Everything else about the deduction (the cap, the phase-out, the business-use rules, the carryforward) tracks the federal treatment.
Current Section 179 Dollar Limits in Georgia
For tax years beginning in 2026, the Section 179 maximum deduction is $2,560,000, and the phase-out begins when total qualifying property placed in service exceeds $4,090,000.1IRS.gov. Revenue Procedure 2025-32 – 2026 Adjusted Items The phase-out runs dollar for dollar: every dollar of qualifying equipment above $4,090,000 shrinks your available deduction by the same amount. Once purchases hit $6,650,000, the Section 179 deduction disappears entirely.
Georgia adopts these figures because O.C.G.A. ยง 48-1-2 defines the “Internal Revenue Code” for state tax purposes by reference to a specific date, updated each year through a conformity bill. House Bill 290, signed in May 2025, conforms Georgia to the IRC as enacted through January 1, 2025, and applies to tax years beginning on or after January 1, 2024.2Department of Revenue. 2025 Summary of Enacted Legislation The Department of Revenue confirmed in earlier guidance that the state adopts the federal Section 179 deduction ceiling and phase-out for each conforming year.3Department of Revenue. Income Tax Federal Tax Changes
One timing quirk: Georgia typically passes its conformity bill in the spring, so there’s a window early each year when the state hasn’t officially adopted the latest federal figures for the most recent tax year. If you’re filing before that update, check the Department of Revenue’s federal tax changes page for confirmation.
What Property Qualifies
Most tangible personal property used in your business qualifies: equipment, machinery, office furniture, and off-the-shelf software available to the general public. The asset must be purchased (not leased from a third party) and placed in service during the tax year you claim the deduction.
Where Georgia parts ways with the federal rules is on qualified real property. The state has not adopted Section 179 for real property under IRC 179(d)(1)(B)(ii).3Department of Revenue. Income Tax Federal Tax Changes At the federal level, improvements to the interior of nonresidential buildings, along with roofs, HVAC systems, fire protection, alarm systems, and security systems, can be expensed under Section 179. In Georgia, those costs have to be depreciated over their normal recovery period instead.
Vehicles
Vehicles qualify, but you must use them more than 50% for business. For heavy SUVs weighing between 6,001 and 14,000 pounds gross vehicle weight, a separate cap limits the amount you can expense. The federal SUV cap for 2026 is $32,000.1IRS.gov. Revenue Procedure 2025-32 – 2026 Adjusted Items Trucks and vans that aren’t primarily designed to carry passengers, such as cargo vans or heavy-duty pickups with a full-size bed, aren’t subject to this SUV cap and can be expensed up to the full Section 179 limit.
The Bonus Depreciation Trap
This is where Georgia diverges most sharply from federal treatment, and it’s the source of most errors on Georgia returns. Georgia has never adopted bonus depreciation under IRC 168(k). Not the earlier 30% and 50% rates, and not the 100% rate.3Department of Revenue. Income Tax Federal Tax Changes At the federal level, 100% bonus depreciation was restored for property placed in service in tax years beginning after December 31, 2024. Georgia doesn’t follow that provision.
The practical result: if you claim bonus depreciation on your federal return for an asset that’s also depreciable in Georgia, you have to add the bonus depreciation amount back on your Georgia return and claim regular MACRS depreciation over the asset’s recovery life instead. That creates a timing difference, not a permanent one. You’ll eventually depreciate the full cost, just over more years at the state level. Your Georgia tax bill will be higher in the year of purchase and slightly lower in later years.
Businesses that keep only one depreciation schedule routinely get this wrong. You need separate federal and Georgia depreciation records for any asset where you claimed bonus depreciation federally. Section 179 itself doesn’t trigger this problem, because Georgia follows the federal Section 179 limits. Bonus depreciation on the same return does.
The Business Income Limit and Carryforward
Even when your equipment purchases sit well within the dollar cap, a second limit applies: your Section 179 deduction can’t exceed your net business income for the year. If claiming the full deduction would create or increase a business loss, the excess is disallowed for that tax year.4eCFR. 26 CFR 1.179-3 Carryover of Disallowed Deduction
Any disallowed amount carries forward indefinitely and can be deducted in a future year when your business income supports it. If you have carryforwards from multiple years, the oldest one is used first. This carryforward applies on both federal and Georgia returns, so tracking disallowed amounts year over year matters for accurate state filing.
Recapture If Business Use Drops
Claiming Section 179 comes with a string attached. If the property’s business use later falls to 50% or below, you owe recapture. You add back to your income the difference between what you deducted under Section 179 and what you would have deducted under regular depreciation.5Office of the Law Revision Counsel. 26 USC 179 – Election to Expense Certain Depreciable Business Assets The recapture is reported as ordinary income in the year business use drops below the threshold.
Selling or otherwise disposing of Section 179 property can also trigger recapture, because any gain attributable to the Section 179 deduction is taxed as ordinary income rather than capital gain. Georgia follows the federal separate reporting treatment for Section 179 gains flowing through S-corporations and partnerships, so recapture income passed to shareholders and partners carries through to the Georgia return.3Department of Revenue. Income Tax Federal Tax Changes
Filing Section 179 on Your Georgia Return
Start with Federal Form 4562, which calculates the Section 179 deduction and total depreciation at the federal level.6Internal Revenue Service. Instructions for Form 4562 – Depreciation and Amortization (Including Information on Listed Property) (2025) Because Georgia conforms to the federal Section 179 limits, the Section 179 portion of your deduction transfers to the state return without adjustment. The adjustment you do have to make is for any bonus depreciation claimed federally, which gets added back on Georgia Schedule 1 as part of the reconciliation between federal and state income.
Individual taxpayers and sole proprietors file Georgia Form 500, C-corporations use Form 600, and S-corporations use Form 600S. The Georgia Tax Center handles electronic filing, and most tax software integrates the state schedules once your federal inputs are finalized.7Department of Revenue. 500 Individual Income Tax Return
The most common mistake on Georgia returns isn’t the Section 179 deduction itself. It’s forgetting the bonus depreciation add-back. Because many owners think of Section 179 and bonus depreciation as interchangeable on the federal side, they don’t always catch that only Section 179 flows through cleanly to Georgia. Missing that add-back can generate a notice of adjustment from the Department of Revenue and underpayment penalties.
Adequate records are the other piece. For any asset you expense under Section 179, keep the purchase price, the placed-in-service date, and documentation of business-use percentage. For listed property such as vehicles and computers, that means contemporaneous logs of business versus total use. Without them, you lose the deduction entirely, since listed property that can’t be substantiated gets no depreciation and no Section 179 expense.8Internal Revenue Service. Publication 946 (2024), How To Depreciate Property Georgia auditors can request the same logs to verify the 50% business-use threshold.