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Free Section 179 Deduction Calculator

Last updated: 2026-03-31

Estimate your first-year tax savings from equipment and software purchases using Section 179 expensing and bonus depreciation. Enter the equipment cost, your taxable business income, and tax rate to see the maximum deduction, tax savings, and net after-tax cost of the purchase. Updated for the 2026 limits and bonus depreciation phase-down. 100% free, no signup required.

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Section 179 cannot exceed business income
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Equipment Purchases

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Total Equipment Cost$0

First-Year Deduction Breakdown

Total Equipment Cost$0
Section 179 Deduction$0
Bonus Depreciation (60% of $0 remaining)$0
Regular MACRS Depreciation (first-year)$0
Total First-Year Deduction$0
$0
Tax Savings
$0
Net Cost After Tax Savings
0%
First-Year Write-Off

2026 Section 179 & Bonus Depreciation Limits

Section 179 Maximum$1,250,000
Phase-out Threshold$3,130,000
Bonus Depreciation Rate60%
Bonus Depreciation 202740% (decreasing)

How to Use This Section 179 Calculator

Enter the total cost of qualifying equipment or software you plan to purchase (or have already purchased) this tax year. Input your expected taxable business income — this matters because Section 179 cannot exceed your business income. Select your combined federal and state tax rate, and the calculator shows your maximum first-year deduction, total tax savings, and net cost after the write-off.

The calculator automatically applies the 2026 Section 179 limit ($1,250,000), phase-out threshold ($3,130,000), and the current bonus depreciation rate (60% for 2026). If your equipment cost exceeds the Section 179 limit, the remaining cost is run through bonus depreciation, then standard MACRS depreciation — giving you a complete picture of your first-year and multi-year deductions.

For vehicle purchases, toggle the vehicle option to apply the appropriate SUV or passenger vehicle limits. All calculations run in your browser. For the official IRS guidance, see IRS Publication 946 and Form 4562 instructions.

Frequently Asked Questions

What is the Section 179 deduction?
Section 179 of the Internal Revenue Code allows businesses to deduct the full purchase price of qualifying equipment and software in the year it's placed in service, instead of depreciating it over several years. For 2026, the maximum deduction is $1,250,000 (indexed for inflation). This means if you buy a $50,000 piece of equipment, you can deduct the entire $50,000 in the current tax year rather than spreading it over 5–7 years.
What is the 2026 Section 179 deduction limit?
For tax year 2026, the Section 179 deduction limit is $1,250,000. The spending cap (phase-out threshold) is $3,130,000 — once your total equipment purchases exceed this amount, the deduction begins to phase out dollar-for-dollar. If your purchases exceed $4,380,000, the Section 179 deduction is completely phased out. These limits are adjusted annually for inflation by the IRS.
What property qualifies for Section 179?
Qualifying property includes tangible personal property used in your business: machinery, equipment, computers, software (off-the-shelf), office furniture, vehicles (with limitations), and certain improvements to nonresidential real property (roofs, HVAC, fire protection, alarm systems, and security systems). The property must be purchased (not leased from a related party) and placed in service during the tax year. It must be used more than 50% for business.
What is bonus depreciation and how does it work with Section 179?
Bonus depreciation (under IRC §168(k)) allows businesses to deduct a percentage of new and used qualifying assets in the first year. Under the Tax Cuts and Jobs Act phase-down schedule, bonus depreciation is 60% for 2026 (down from 80% in 2024 and 100% in 2022). You can use Section 179 first (up to the limit), then apply bonus depreciation to the remaining cost. Bonus depreciation has no dollar cap and can create a net operating loss, unlike Section 179.
What are the Section 179 vehicle limits?
Passenger vehicles (under 6,000 lbs GVWR) have special limits under the luxury auto rules. For 2026, the first-year depreciation cap (including Section 179 and bonus depreciation) is approximately $20,400 for passenger autos. However, SUVs and trucks with a GVWR over 6,000 lbs but under 14,000 lbs can deduct up to $30,500 under Section 179, plus bonus depreciation on the remainder. Vehicles over 14,000 lbs (like heavy-duty trucks) have no cap.
Can I use Section 179 if my business has a loss?
Section 179 cannot create or increase a net operating loss — your deduction is limited to your taxable business income for the year. However, any Section 179 amount you can't use in the current year carries forward to future tax years. This is where bonus depreciation differs: bonus depreciation CAN create a net operating loss, which can then be carried forward. Use this calculator to optimize the combination of both deductions.
Does Section 179 apply to used equipment?
Yes. Since the Tax Cuts and Jobs Act of 2017, both Section 179 and bonus depreciation apply to new AND used equipment, as long as the property is 'new to you' (your business hasn't used it before). This was a significant change — prior to 2018, bonus depreciation only applied to brand-new property. The equipment must still be purchased in an arm's-length transaction and placed in service during the tax year.
How do I claim Section 179 on my tax return?
Report your Section 179 deduction on IRS Form 4562 (Depreciation and Amortization). Part I of the form is specifically for Section 179. You'll list each property, its cost, and the elected deduction amount. The form also handles bonus depreciation in Part II and regular MACRS depreciation in Parts III–V. The total flows to your business tax return (Schedule C for sole proprietors, Form 1120S for S-Corps, Form 1065 for partnerships, etc.).

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