Section 179 Calculator
First-year write-off with Section 179, bonus depreciation and MACRS
Section 179 lets a business deduct the cost of qualifying equipment, vehicles and software in the year it is placed in service instead of depreciating it over several years. For tax years beginning in 2026 the limit is $2,560,000, reduced dollar for dollar above $4,090,000 of purchases ($2,500,000 and $4,000,000 for 2025). On top of it, 100% bonus depreciation covers most property acquired after January 19, 2025.
Last updated October 2026
Method: Section 179 first (dollar limit after the phase-out, SUV cap, business income limit), then bonus depreciation on the remaining basis, then regular MACRS with the half-year percentages from IRS Publication 946, Table A-1. Limits: P.L. 119-21 and Rev. Proc. 2025-32; passenger auto caps: Rev. Proc. 2025-16 and 2026-15. Tax saved = first-year deduction × your federal plus state rate.
Included: 2025 and 2026 limits, the phase-out, 3- to 15-year property, the SUV and passenger auto caps, business use, the more-than-50% test, income-limit carryovers and a year-by-year comparison with regular MACRS.
Not included: The mid-quarter convention, 39-year real property, state depreciation rules, self-employment tax effects and recapture on a later sale. Estimates, not tax advice.
🚜 Your purchase
✍️ Elections
Property acquired under a written binding contract before January 20, 2025 stays on the old phase-down: 40% if placed in service in 2025, 20% in 2026. 40% is also available by election for your first tax year ending after January 19, 2025.
📏 Limits and tax rate
Active trade or business income, wages included, before depreciation on this asset.
Used for the $4,090,000 phase-out test.
🚜 First-year deduction (2026)
📋 How the deduction is built
| Business cost ($80,000 × 100%) | $80,000 |
| Section 179 dollar limit | $2,560,000 |
| Section 179 elected | $80,000 |
| Business income left for Section 179 | $250,000 |
| Section 179 deducted this year | $80,000 |
| Bonus depreciation (100% of $0) | $0 |
| MACRS year 1 (14.29% of $0) | $0 |
| First-year deduction | $80,000 |
⚖️ Compared with regular depreciation
| Year | With your elections | MACRS only |
|---|---|---|
| 1 | $80,000 | $11,432 |
| 2 | $0 | $19,592 |
| 3 | $0 | $13,992 |
| 4 | $0 | $9,992 |
| 5 | $0 | $7,144 |
| 6 | $0 | $7,136 |
| 7 | $0 | $7,144 |
| 8 | $0 | $3,568 |
Both columns add up to the same $80,000: expensing changes when you deduct, not how much.
Section 179 and bonus depreciation explained
A contractor buys an $80,000 machine in 2026. Depreciated the regular way as 7-year property, it yields $11,432 of deductions in the first year. Expensed under Section 179, it yields the full $80,000, which at a 24% federal and 5% state rate saves $23,200 of tax this year instead of $3,315.28. This calculator works out that first-year deduction for equipment, vehicles and improvements, checks every limit the IRS applies, and shows how the deductions shift between years.
How the three deductions stack
Cost recovery happens in a fixed order. Section 179 comes first and reduces the basis; bonus depreciation applies to what remains; regular MACRS depreciates the rest over the recovery period:
Business basis = cost × business-use % Bonus = (basis − Section 179) × bonus rate MACRS year 1 = (basis − Section 179 − bonus) × table % Tax saved = first-year deduction × marginal rate The half-year table percentages for the first year are 33.33% for 3-year, 20% for 5-year, 14.29% for 7-year, 10% for 10-year and 5% for 15-year property. Section 179 also cannot exceed your taxable income from active trades or businesses, wages included, figured before Section 179 but after other deductions. That is why the calculator asks for business income before this purchase: bonus and MACRS on the same asset use up income first.
2025 and 2026 limits at a glance
| Limit | 2025 | 2026 |
|---|---|---|
| Section 179 maximum | $2,500,000 | $2,560,000 |
| Phase-out starts at purchases of | $4,000,000 | $4,090,000 |
| Section 179 cap on an SUV | $31,300 | $32,000 |
| Car, year 1 with bonus / without | $20,200 / $12,200 | $20,300 / $12,300 |
| Car, years 2 / 3 / later | $19,600 / $11,800 / $7,060 | $19,800 / $11,900 / $7,160 |
| Bonus rate, acquired after Jan 19, 2025 | 100% | 100% |
P.L. 119-21 raised the Section 179 limit from $1,250,000 to $2,500,000 for tax years beginning after 2024, with inflation adjustments from 2026, and restored 100% bonus depreciation for property acquired after January 19, 2025. Property bought under a binding contract before January 20, 2025 stays on the old phase-down: 40% if placed in service in 2025 and 20% in 2026 (IRS Notice 2026-11).
Worked example 1: an $80,000 machine
The contractor's machine is 7-year property used 100% for business, with $250,000 of business income and no other purchases. The full $80,000 fits under the $2,560,000 limit and the income limit, so Section 179 covers it all and nothing remains for bonus or MACRS. The first-year deduction is $80,000 and the tax saved at 29% is $23,200. Regular MACRS would deduct $11,432, then $19,592, $13,992, $9,992, $7,144, $7,136, $7,144 and $3,568 over the next seven years, the same $80,000 spread over eight tax years. Expensing adds $68,568 of deductions now and $19,884.72 of tax savings this year.
Worked example 2: when business income is low
A newer business buys $120,000 of 7-year equipment but expects only $50,000 of income before depreciation. With 100% bonus available, the best answer skips Section 179: bonus deducts the full $120,000 and leaves a $70,000 net operating loss to carry forward. Electing out of bonus, the calculator picks $38,329.25 of Section 179 so that it plus $11,670.75 of MACRS on the rest equals the $50,000 of income, with nothing carried forward.
The trap is electing Section 179 on top of bonus. Elect $50,000 of Section 179 and take bonus on the other $70,000, and the bonus alone exceeds the income. None of the Section 179 can be deducted this year, the $50,000 carries forward, and the first-year deduction falls to $70,000.
Worked example 3: a heavy SUV used 80% for business
A consultant buys a $75,000 SUV rated at 7,000 pounds and uses it 80% for business, so the basis is $60,000. Section 179 is capped at $32,000 for an SUV in 2026, and 100% bonus covers the remaining $28,000, so the whole $60,000 is deducted and saves $17,400 at 29%. Electing out of bonus gives $32,000 plus 20% of $28,000, or $37,600. Regular 5-year MACRS alone would allow $12,000.
Vehicles and the 6,000 pound line
Gross vehicle weight rating (GVWR), printed on the driver's door label, decides the rules. A car, truck or van rated 6,000 pounds or less is a passenger automobile: all depreciation, Section 179 and bonus included, is capped at $20,300 in the first year for 2026 with bonus, or $12,300 without, times the business-use percentage. A $50,000 sedan used 100% for business gets $20,300 instead of $10,000 from MACRS, with the rest recovered slowly afterward.
An SUV rated over 6,000 and up to 14,000 pounds escapes those caps but its Section 179 portion is limited to $32,000. Three kinds of heavy vehicles avoid even that limit: those seating more than nine people behind the driver, those with a cargo area at least 6 feet long that is not reachable from the passenger compartment, and fully enclosed cargo vans with no seating behind the driver and no hood reaching more than 30 inches ahead of the windshield. Vehicles are listed property, so business use has to exceed 50% and you need a mileage log.
The phase-out for large buyers
Once the year's Section 179 purchases exceed the threshold, each extra dollar spent cuts the limit by a dollar. Bonus depreciation has no such phase-out.
| Section 179 property placed in service | 2025 limit | 2026 limit |
|---|---|---|
| $4,000,000 or less | $2,500,000 | $2,560,000 |
| $4,090,000 | $2,410,000 | $2,560,000 |
| $4,250,000 | $2,250,000 | $2,400,000 |
| $4,500,000 | $2,000,000 | $2,150,000 |
| $5,000,000 | $1,500,000 | $1,650,000 |
| $5,500,000 | $1,000,000 | $1,150,000 |
| $6,000,000 | $500,000 | $650,000 |
| $6,500,000 | $0 | $150,000 |
| $6,650,000 or more | $0 | $0 |
First-year deduction for sample purchases
Each row is computed for 2026 with 100% business use and enough business income: the best mix of Section 179 and 100% bonus, the result with bonus elected out, and regular MACRS alone.
| Purchase (class) | Cost | 179 + bonus | No bonus | MACRS only |
|---|---|---|---|---|
| Laptops and monitors (5-yr) | $6,500 | $6,500 | $6,500 | $1,300 |
| Office furniture (7-yr) | $18,000 | $18,000 | $18,000 | $2,572.20 |
| Sedan, 6,000 lb or less (5-yr) | $48,000 | $20,300 | $12,300 | $9,600 |
| Heavy SUV (5-yr) | $78,000 | $78,000 | $41,200 | $15,600 |
| Pickup, 6.5 ft bed, over 6,000 lb (5-yr) | $62,000 | $62,000 | $62,000 | $12,400 |
| Excavator, construction (5-yr) | $145,000 | $145,000 | $145,000 | $29,000 |
| CNC machine, metal shop (7-yr) | $350,000 | $350,000 | $350,000 | $50,015 |
| Interior build-out, QIP (15-yr) | $220,000 | $220,000 | $220,000 | $11,000 |
Only the vehicles differ between the first two columns. The sedan is held to the passenger auto caps either way, and the SUV gets $32,000 of Section 179 plus 20% MACRS on the remaining $46,000 when bonus is elected out. The asset classes follow Publication 946: construction equipment is asset class 15.0 (5-year) and metal fabrication machinery is 34.0 (7-year).
What qualifies and what does not
Section 179 covers tangible personal property used in a business: machinery, equipment, vehicles, computers, furniture and off-the-shelf software. You can also elect it for qualified real property: qualified improvement property (interior improvements to nonresidential buildings) and roofs, heating and air-conditioning, fire protection and alarm systems, and security systems added to nonresidential buildings. Land and land improvements such as paved parking areas and fences do not qualify, nor do buildings and their structural components outside the qualified real property list, property used predominantly outside the United States, property received by gift or inheritance or bought from a related person, and, for noncorporate owners, most property leased to others. Investment property never qualifies; rental property qualifies only if renting is your trade or business.
How to use this calculator
- Pick the tax year the property goes into service and enter the price.
- Choose the MACRS class, the vehicle type if any, and the business-use share.
- Set the elections. Best picks the largest first-year deduction without stranding Section 179; Amount tests a specific election; None shows bonus and MACRS alone.
- Enter business income, other purchases and your tax rates to see the deduction, the tax saved and the year-by-year comparison.
Key terms
- Placed in service: ready and available for its specific use, the date that decides the tax year.
- MACRS: the standard depreciation system, with recovery periods and percentage tables in Publication 946.
- Half-year convention: treats property as placed in service mid-year, so year 1 gets half a year of depreciation.
- Listed property: vehicles and similar assets with personal-use potential, subject to the more-than-50% test.
- Recapture: prior deductions taken back into income when business use drops or the asset is sold.
Limitations
The calculator uses the half-year convention. If more than 40% of the year's depreciable basis is placed in service in the last three months, the mid-quarter convention changes the MACRS portion. It treats one asset at a time, values savings at the rates you enter without self-employment tax, and does not model state depreciation rules, roofs and other 39-year property, or recapture when you sell. Married couples filing separately split one limit, 50% each unless they elect otherwise.
Related calculators
- For straight-line, declining-balance and sum-of-years schedules, use the Depreciation Calculator.
- To see the income tax effect of a large deduction, use the Income Tax Calculator; sole proprietors can check the Self-Employment Tax Calculator.
- To compare entity structures, use the S Corp Tax Calculator; for a home-based business, the Home Office Deduction Calculator.
- To finance the purchase, try the Business Loan Calculator.
Sources
- U.S. Government Publishing Office, Public Law 119-21, sections 70301 (100% bonus depreciation) and 70306 (Section 179 limits).
- IRS, Revenue Procedure 2025-32: $2,560,000, $4,090,000 and $32,000 for 2026.
- IRS, Publication 946 (2025), How To Depreciate Property: qualifying property, business income limit, property classes, Table A-1.
- IRS, Instructions for Form 4562 (2025): SUV cap and exceptions, passenger automobile limits, line 11 income limit.
- IRS, Revenue Procedure 2025-16 and Revenue Procedure 2026-15: passenger automobile depreciation caps.
- IRS, Notice 2026-11: interim guidance on bonus depreciation after P.L. 119-21, including the old 20-point annual phase-down for property acquired before January 20, 2025.
⚠️ Common mistakes & edge cases
Electing Section 179 when bonus already wipes out income
In example 2, electing $50,000 of Section 179 next to bonus on the rest strands the whole election as a carryover and cuts the first-year deduction from $120,000 to $70,000.
Buying in December, installing in January
The deduction follows the placed-in-service date, not the order or payment date. Equipment that is not ready for use by year end belongs to next year.
Assuming every SUV is a full write-off
A vehicle at or under 6,000 pounds GVWR is capped at $20,300 in year one for 2026, and a heavier SUV's Section 179 portion stops at $32,000. Check the door label.
Forgetting the business-use test
At 50% business use or less there is no Section 179 or bonus for listed property, and a later drop below 51% triggers recapture. Keep a mileage log from day one.
Using the delivery date for the bonus rate
For bonus depreciation, property is not treated as acquired after the date a written binding contract was signed. A contract signed in early January 2025 keeps the property under the old phase-down (40% if placed in service in 2025, 20% in 2026), even if delivery came after January 19.
Expecting the same deduction on the state return
Some states decouple from bonus depreciation or set lower Section 179 limits, so the state deduction can be much smaller than the federal one.
❓ 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 shrinks dollar for dollar once the year's Section 179 purchases pass $4,090,000 and disappears at $6,650,000. For 2025 the figures are $2,500,000 and $4,000,000. The cap on the Section 179 portion of a heavy SUV is $32,000 for 2026 and $31,300 for 2025.
What is the difference between Section 179 and bonus depreciation?
Section 179 is an election you make asset by asset, with a dollar cap, a business income limit and a more-than-50% business use test. Bonus depreciation applies automatically unless you elect out for a class of property, has no dollar cap and no income limit, so it can create a loss. Section 179 is taken first, bonus on the remaining basis next, and regular MACRS on what is left.
Can Section 179 create a business loss?
No. Section 179 cannot exceed your taxable income from active trades or businesses, including wages, and any excess carries forward. Bonus depreciation can create a loss. With $120,000 of equipment and $50,000 of business income, 100% bonus deducts the full $120,000 and leaves a $70,000 loss, while Section 179 alone stops at $50,000.
Is bonus depreciation 100% in 2026?
Yes, for qualified property acquired after January 19, 2025, under P.L. 119-21. Qualified property generally means MACRS property with a recovery period of 20 years or less, new or used. Property bought under a written binding contract signed before January 20, 2025 stays under the old phase-down: 40% if placed in service in 2025 and 20% if placed in service in 2026. You can elect out by class of property.
Does a vehicle qualify for Section 179?
Yes, with caps. An SUV rated over 6,000 and up to 14,000 pounds can expense $32,000 under Section 179 in 2026, and bonus depreciation can cover the rest. Trucks with a cargo bed of at least 6 feet and vans seating more than nine behind the driver avoid that cap. Cars and light trucks at or under 6,000 pounds are limited to $20,300 of total first-year depreciation with bonus, or $12,300 without.
What happens if business use drops to 50% or less?
Section 179 requires more than 50% business use in the year the property is placed in service. If listed property such as a vehicle later falls to 50% or less, you recapture the excess depreciation, including Section 179 and bonus amounts, as income in that year on Form 4797 and switch to straight-line depreciation.
Does equipment have to be paid for by December 31?
It has to be placed in service, meaning ready and available for its specific use, during the tax year. A machine delivered in December but not installed until January counts in January. The deduction is based on cost, so equipment financed with a loan counts at its full price in the year it goes into service.
Can I take Section 179 on used equipment?
Yes, if you acquire it by purchase and not from a related person, such as your spouse, parents, children or a business you control, and not by gift or inheritance. Used property also qualifies for bonus depreciation if you did not use it before.
How much tax does Section 179 save?
Multiply the extra first-year deduction by your marginal tax rate. Expensing an $80,000 machine at a 24% federal and 5% state rate saves $23,200 in the first year, against $3,315.28 from regular 7-year MACRS. Over the asset's life the total deductions are the same; expensing moves them forward, and a later sale can bring part back as ordinary income.
Do states follow Section 179 and bonus depreciation?
Not always. Several states set their own Section 179 limits or decouple from federal bonus depreciation, which means separate state depreciation schedules. The calculator applies your state rate to the federal deduction, so check your state's rules before relying on the state part of the savings.
💡 Good to know
Expensing changes timing, not the total
An $80,000 asset produces $80,000 of deductions whether you expense it now or depreciate it over eight years. The gain is the time value of the tax savings, which is largest when your rate is high this year.
A sale can bring deductions back
When you sell expensed equipment, gain up to the amount you deducted is generally taxed as ordinary income. Plan large write-offs with a likely trade-in or sale in mind.
Pass-through entities apply the limit twice
For a partnership or S corporation the dollar and income limits apply at the entity level and again for each owner, so an owner with several businesses can hit the cap sooner than expected.