About the Section 179 Deduction Calculator
This Section 179 calculator estimates how much of a business asset you can write off in the first year for tax year 2026. Section 179 lets you expense the cost of qualifying equipment, machinery, computers, off-the-shelf software, furniture and certain building improvements instead of depreciating it over several years. For 2026 the limit is $2,560,000, reduced dollar for dollar once you place more than $4,090,000 of Section 179 property in service, and heavy SUVs are capped at $32,000 (IRS Rev. Proc. 2025-32).
Section 179 cannot exceed your taxable income from active businesses — anything above that carries forward. Bonus depreciation has no such limit, and the One Big Beautiful Bill Act restored a permanent 100% bonus rate for qualified property acquired after January 19, 2025. Property acquired under a binding contract before January 20, 2025 and placed in service in 2026 gets only 20%. Whatever is left after Section 179 and bonus is depreciated with regular MACRS.
Enter the cost, the business-use percentage and your business income. The calculator applies Section 179 first (only up to your business income when bonus depreciation can absorb the rest), then bonus depreciation, then first-year MACRS under the half-year convention, and shows the tax you save at your marginal rate. Passenger cars under 6,000 lb have separate luxury-auto caps that are not modeled, and if more than 40% of your year’s purchases are placed in service in the last quarter the mid-quarter convention applies instead.
With the default inputs, the total first-year deduction is $80,000.00. Change any value above to recalculate instantly.
How to use the section 179 deduction calculator
- 1Enter the purchase price and pick the type of property.
- 2Set the business-use percentage (over 50% is needed for Section 179).
- 3Enter total Section 179 purchases for the year and your taxable business income.
- 4Choose the bonus depreciation rate based on when you acquired the asset.
- 5Enter your marginal tax rate to see the tax saved this year.
Formula and method
C is the business-use cost. The Section 179 amount is the lesser of C, the 2026 dollar limit ($2,560,000 minus any excess of total Section 179 purchases over $4,090,000) and, for heavy SUVs, $32,000. The deduction allowed this year cannot exceed taxable income from your active trades or businesses; when bonus depreciation is available the calculator elects only that much, and when bonus is off the excess is shown as a carryover.
Bonus depreciation at rate B (100% for property acquired after January 19, 2025; 20% for older binding contracts placed in service in 2026) applies to the basis left after Section 179. Any remaining basis is depreciated with MACRS using the half-year convention: 33.33% (3-year), 20% (5-year), 14.29% (7-year) under 200% declining balance, or 3.33% for qualified improvement property, which must use straight-line over 15 years. Off-the-shelf software is not MACRS property: it qualifies for Section 179 and bonus, but any remainder is amortized straight-line over 36 months. Listed property such as vehicles used 50% or less gets no Section 179 or bonus and uses straight-line ADS.
- C
- Cost × business-use percentage
- S179
- Section 179 expense elected
- B%
- Bonus depreciation rate
- MACRS₁
- First-year MACRS percentage for the recovery period
Worked examples
$80,000 machine, fully expensed
With $150,000 of business income and well under the $2.56 million limit, the whole $80,000 is deducted under Section 179. At a 24% rate that saves $19,200 of tax in 2026.
$200,000 of equipment with only $50,000 of income
Section 179 is limited to the $50,000 of business income, but 100% bonus depreciation has no income limit, so the remaining $150,000 is written off as bonus depreciation. The full $200,000 is deducted, creating a $150,000 loss that can offset other income.
$90,000 heavy SUV, 80% business use, bonus elected out
The business share is $72,000. Section 179 for a heavy SUV is capped at $32,000, leaving $40,000 that is depreciated over 5 years: 20% ($8,000) in year one. The first-year deduction is $40,000 and $32,000 is recovered in later years.
Frequently asked questions
What is the Section 179 limit for 2026?+
For tax years beginning in 2026 you can expense up to $2,560,000 of qualifying property. The limit falls dollar for dollar once total Section 179 property placed in service exceeds $4,090,000, and the cost of a heavy SUV counted toward Section 179 is capped at $32,000.
What is the difference between Section 179 and bonus depreciation?+
Both let you deduct an asset’s cost upfront. Section 179 is elected asset by asset, has a dollar cap and cannot exceed business income. Bonus depreciation is automatic unless you elect out, has no dollar cap and can create a net operating loss.
Is bonus depreciation 100% in 2026?+
Yes, for qualified property acquired after January 19, 2025. The One Big Beautiful Bill Act made 100% bonus depreciation permanent for that property. Property acquired under a written binding contract before January 20, 2025 is still subject to the old phase-down, which is 20% for property placed in service in 2026.
Can I take Section 179 on a vehicle?+
Yes, if it is used more than 50% for business. Heavy SUVs (6,001–14,000 lb gross vehicle weight) are capped at $32,000 for 2026, while pickups with a 6-foot bed, cargo vans and similar work vehicles are not subject to that cap. Lighter passenger cars face the annual luxury-auto depreciation limits.
What happens if I sell the equipment later?+
Section 179 and bonus depreciation reduce the asset’s basis, so selling it later usually triggers depreciation recapture taxed as ordinary income. If business use drops to 50% or less, part of the Section 179 deduction is also recaptured.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.