Section 179 Deduction Calculator
See how much of a new equipment purchase you can write off in the first year with the Section 179 expense election, bonus depreciation and regular MACRS, after the dollar limit, phase-out, SUV cap and business income limit, and what it saves in tax.
Last updated:
Price incl. delivery and installation, minus trade-in credit.
Section 179 is capped for heavy SUVs; bonus is not.
Blank = this purchase only. Used for the phase-out.
100% for property acquired after Jan 19, 2025; 40% for earlier contracts placed in service in 2025.
Section 179 cannot exceed it; the rest carries forward.
How to use the Section 179 Deduction Calculator
- Enter the equipment cost, business-use percentage and MACRS class.
- Enter total Section 179 property placed in service this year if you bought other equipment (for the phase-out).
- Choose the Section 179 amount: maximum, a custom figure, or none.
- Set the bonus rate, your business taxable income and the tax year.
- Enter your tax rates and calculate to see the first-year deduction, tax savings and schedule.
Order of the first-year deduction
- Business basis = cost × business-use % (must be over 50%).
- Section 179 up to the lesser of: the basis, the annual limit minus the phase-out, the SUV cap (if any). The amount allowed this year is limited to business taxable income; any excess carries forward.
- Bonus depreciation = bonus % × (basis − Section 179 elected).
- Regular MACRS on what is left, using the half-year convention (or mid-quarter if over 40% of the year's property was placed in service in the last quarter).
Section 179 limits by year
| Tax year | Maximum deduction | Phase-out starts | Fully phased out | Heavy SUV cap | Bonus rate |
|---|---|---|---|---|---|
| 2024 | $1,220,000 | $3,050,000 | $4,270,000 | $30,500 | 60% |
| 2025 | $2,500,000 | $4,000,000 | $6,500,000 | $31,300 | 100% (acquired after Jan 19, 2025) |
| 2026 | $2,560,000 | $4,090,000 | $6,650,000 | $32,000 | 100% |
Sources: IRS Rev. Proc. 2023-34 and 2025-32, and P.L. 119-21 (2025). Check the current IRS figures before filing on Form 4562.
Things to watch
- Placed in service, not just bought: the equipment must be ready and available for use by December 31.
- Depreciation recapture: when you sell the equipment, the gain up to the deductions taken is taxed as ordinary income.
- State conformity: many states limit Section 179 or do not allow bonus depreciation, so the state deduction may be smaller.
- Front-loading vs spreading: a big first-year write-off is most valuable in a high-income year; in a low-income year, regular MACRS may save more over time.
Frequently asked questions
What is the Section 179 limit for 2026?
For tax years beginning in 2026 the maximum Section 179 deduction is $2,560,000, reduced dollar for dollar once qualifying property placed in service in the year exceeds $4,090,000. The 2025 tax law (P.L. 119-21) set the 2025 figures at $2,500,000 and $4,000,000 and indexes them for inflation.
What is the difference between Section 179 and bonus depreciation?
Section 179 is an election you choose asset by asset up to a dollar limit, and it cannot create a loss: it is limited to business taxable income, with the rest carried forward. Bonus depreciation has no dollar cap or income limit and can create a net operating loss, but it applies to whole classes of property unless you elect out. Section 179 is applied first, then bonus, then regular MACRS on any remaining basis.
Is bonus depreciation 100% in 2026?
Yes. P.L. 119-21 permanently restored 100% bonus depreciation for qualified property acquired after January 19, 2025. Property acquired under a binding contract before January 20, 2025 follows the old phase-down (40% if placed in service in 2025).
Can I use Section 179 on a vehicle?
Yes, if it is used more than 50% for business. SUVs, pickups and vans over 6,000 lb gross vehicle weight are not subject to the passenger car depreciation caps, but SUVs between 6,001 and 14,000 lb have a Section 179 cap ($32,000 for 2026, $31,300 for 2025). Lighter passenger cars have separate annual depreciation limits not modeled here.
What happens if business use drops to 50% or less?
For listed property such as vehicles, if business use falls to 50% or below in a later year, part of the Section 179 or bonus deduction is recaptured as ordinary income, and you must switch to straight-line depreciation.
Does Section 179 work for used equipment?
Yes. Used property qualifies for both Section 179 and bonus depreciation as long as you did not use it before and did not buy it from a related party. Land, buildings (other than certain improvements) and property used outside the US do not qualify.
Is the tax savings figure exact?
It multiplies the deduction by the rates you enter. Real savings depend on your full tax picture, including how the deduction changes your bracket, self-employment tax and the QBI deduction. Taking it all in year 1 also means smaller deductions later.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.