Section 179 Deduction Calculator
Calculate the Section 179 deduction for business equipment purchases. Deduct the full cost of qualifying property in the year you buy it.
📅 Tax Year:
Calculate Section 179 Deduction
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Must be >50% for Section 179
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All qualifying property purchased
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Limits deduction to income
How It Works
Section 179 allows businesses to deduct the full purchase price of qualifying equipment in the year of purchase, rather than depreciating it over several years.
2026 Limits
| Limit | Amount |
|---|---|
| Maximum Deduction | $1,250,000 |
| Phaseout Threshold | $3,130,000 |
Key Rules
- Equipment must be used >50% for business
- Deduction cannot exceed taxable business income
- Phaseout: Deduction reduced dollar-for-dollar when total purchases exceed threshold
- Excess can be carried forward to future years
Qualifying Property
- Equipment and machinery
- Office furniture and computers
- Business vehicles (with limits for SUVs)
- Software (off-the-shelf)
- Qualified improvement property
Not qualifying: Real estate, land improvements, inventory, property used outside the U.S.
Examples
Example: $75,000 Equipment, $100k Income
Full $75,000 deductible (under limits)
Tax savings at 25%: $18,750
Frequently Asked Questions
Section 179 vs Bonus Depreciation?
Section 179 is limited to business income and has caps. Bonus
depreciation has no income limit but is phasing down (80% in 2024, 60% in 2025, etc.). Often
used together for maximum deduction.
What if I don't have enough income?
Section 179 deduction is limited to taxable business income. Excess
deduction carries forward to future years when you have income to offset.
Can I take partial Section 179?
Yes, you can choose to expense any amount up to the limit. You might
depreciate the rest to spread tax benefits across years.
What about vehicles?
SUVs over 6,000 lbs GVWR have a $28,900 Section 179 limit (2024).
Passenger vehicles have separate depreciation limits. Heavy trucks and vans may qualify for
full deduction.
Does used equipment qualify?
Yes! Unlike bonus depreciation until recently, Section 179 has
always allowed both new and used equipment.
How do I claim Section 179?
Report on Form 4562 (Depreciation and Amortization) and attach to
your business tax return. Make the election by the return due date.
Use Cases
- Calculating the maximum Section 179 deduction for new or used business equipment
- Determining if your equipment purchase qualifies for immediate expensing vs depreciation
- Estimating tax savings from deducting the full cost of qualifying property in year one
- Comparing Section 179 with bonus depreciation to optimize your deduction strategy
- Planning year-end equipment purchases to reduce current-year taxable business income
Assumptions & Limitations
- Uses current IRS Section 179 deduction limits and phase-out thresholds for the selected year
- Section 179 deduction cannot exceed your taxable business income for the year
- Phase-out begins when total equipment placed in service exceeds the threshold (dollar-for-dollar reduction)
- Does not combine Section 179 with bonus depreciation calculations in a single result
- Vehicle deductions are subject to separate luxury auto limits
- Both new and used qualifying property is eligible for Section 179
Sources & References
- IRS Publication 946 — How to Depreciate Property
- IRC Section 179 — Section 179 deduction overview and limits
- IRS Form 4562 — Depreciation and Amortization
- IRS Publication 535 — Business Expenses
- IRS Publication 463 — Travel, Gift, and Car Expenses (vehicle limits)
Disclaimer: This calculator provides estimates for educational purposes only. It does not constitute tax advice. Consult a qualified tax professional for advice specific to your situation.