AssetCenter
Section 179 calculator
Work out the first-year tax deduction on equipment, machinery and vehicles you buy for your business: the Section 179 deduction, bonus depreciation on the rest and regular MACRS depreciation on what is left. Updated for the 2025 and 2026 limits under the One Big Beautiful Bill Act.
First-year deduction
Deductions by tax year
| Tax year | Section 179 | Bonus | MACRS | Total |
|---|
Section 179 and bonus depreciation limits by year
The Section 179 limit is the most you can expense in a tax year. It is reduced dollar for dollar once the cost of the qualifying property you place in service that year passes the phase-out threshold, so in 2026 it is gone entirely at $6,650,000. The One Big Beautiful Bill Act doubled the limits from 2025 and made 100% bonus depreciation permanent for property acquired after January 19, 2025.
| Tax year | Section 179 limit | Phase-out starts | Heavy SUV limit | Bonus depreciation | Bonus, acquired before Jan 20, 2025 |
|---|---|---|---|---|---|
| 2026 | $2,560,000 | $4,090,000 | $32,000 | 100% | 20% |
| 2025 | $2,500,000 | $4,000,000 | $31,300 | 100% | 40% |
| 2024 | $1,220,000 | $3,050,000 | $30,500 | 60% | 60% |
| 2023 | $1,160,000 | $2,890,000 | $28,900 | 80% | 80% |
Sources: IRC §179 and §168(k) as amended by Pub. L. 119-21; Rev. Procs. 2022-38, 2023-34 and 2025-32; IRS Notice 2026-11. Years are tax years beginning in that year; bonus percentages are by the year property is placed in service.
How the first-year deduction is worked out
The three deductions are taken in a fixed order, each from what the one before leaves:
Basis = cost × business use
1. Section 179: up to the year’s limit and your taxable business income
2. Bonus = (basis − Section 179) × bonus percentage
3. MACRS = (basis − Section 179 − bonus) × the first-year table rate
With the example figures, an $85,000 machine placed in service in 2026 can be expensed entirely under Section 179. Skip Section 179 and 100% bonus depreciation deducts the same $85,000. Elect out of both and 7-year MACRS gives $12,146.50 in the first year, with the rest spread over the next seven.
Section 179 or bonus depreciation?
- Section 179 is chosen asset by asset and amount by amount. You can expense part of a purchase and depreciate the rest. It is limited to your taxable business income, with the excess carried forward, and it is subject to the dollar limit and phase-out.
- Bonus depreciation has no dollar limit and can create a loss. But it applies to a whole class of property for the year: electing out covers every asset in that class you placed in service.
- Section 179 needs more than 50% business use, and so does bonus depreciation on vehicles and other listed property. If business use later drops to 50% or less, part of the deduction is recaptured as income.
- States differ. Many states don’t follow federal bonus depreciation, and some cap Section 179 at a lower amount, so the state return may need its own schedule.
What the calculator leaves out
It treats the purchase as a single asset. It doesn’t apply the yearly depreciation caps on passenger cars under 6,000 lb, the rules for property used 50% or less for business, real property, or the reduced bonus percentages for long-production property. Check your figures with a tax professional before you file Form 4562.
Section 179 FAQ
$2,560,000 for tax years beginning in 2026, reduced dollar for dollar once the cost of Section 179 property you place in service during the year passes $4,090,000. For 2025 the limit was $2,500,000 with a $4,000,000 threshold. A heavy SUV is capped at $32,000 in 2026.
Yes, for property acquired after January 19, 2025. The One Big Beautiful Bill Act made 100% bonus depreciation permanent for that property. Property acquired earlier, including under a binding contract signed earlier, stays on the old phase-down: 40% if placed in service in 2025 and 20% in 2026.
With 100% bonus depreciation back, both can deduct the whole cost in the first year. Section 179 can be chosen asset by asset and for part of a cost, but it can’t exceed your taxable business income. Bonus depreciation has no dollar limit and can create a loss, but electing out of it applies to a whole class of property. State rules often differ, which can decide it.
Yes, if the vehicle is used more than 50% for business. SUVs with a gross vehicle weight of 6,001 to 14,000 lb are capped at the heavy SUV limit, and passenger cars and light trucks under 6,000 lb are held to yearly depreciation caps that this calculator doesn’t apply. Pickups with a cargo bed at least six feet long, and cargo vans with no seating behind the driver, are not subject to the heavy SUV cap.
Section 179 is elected and bonus depreciation reported on Form 4562, Depreciation and Amortization, filed with your return for the year the property was placed in service. Placed in service means ready and available for use, not just bought or paid for.
Keep each purchase on the asset record
AssetCenter records what each asset cost, when it went into service and who has it, so the facts your accountant needs at year end are already in one place. It doesn’t replace your tax software. Free for up to 25 assets.