Section 179 Deduction Calculator
Section 179 lets businesses deduct qualifying equipment in year one rather than depreciating over years. 2026 cap: $1.22M, with phaseout starting at $3.05M total purchases.
phaseout starts at $3.05M
caps the deduction
Allowed deduction
$145,000
first-year expense
Tax savings
$46,400
Phased-out limit
$1,220,000
2026 cap: $1.22M
Carryforward to next year
$0
Section 179 mechanics
Section 179 lets businesses deduct the cost of qualifying equipment in year one rather than depreciating over years. 2026 limit: $1.22M. Phase-out: dollar-for-dollar reduction once total purchases exceed $3.05M; gone entirely at $4.27M.
Income limitation: deduction can't exceed taxable business income (excluding 179). Excess carries forward indefinitely. After Section 179, bonus depreciation can apply to the remaining basis.
How to Use
- Enter the cost of equipment you're buying.
- Enter total Section 179 qualifying purchases for the year (drives phaseout).
- Enter your taxable business income before the 179 deduction (caps the allowed amount).
- Enter your marginal tax rate.
- Read the allowed deduction and tax savings — anything above income limitation carries forward.
Frequently Asked Questions
What qualifies for Section 179?
Most tangible business personal property: machinery, equipment, vehicles (with limits for SUVs and luxury cars), computers, off-the-shelf software, and qualified improvement property. New or used both qualify.
How does Section 179 differ from bonus depreciation?
Section 179 has a hard dollar cap and phaseout; bonus depreciation has no cap. 179 has an income limitation; bonus doesn't. 179 is elective per-asset; bonus applies automatically. Many businesses use Section 179 first, then bonus on excess.
What about vehicles?
Heavy SUVs (over 6,000 lbs GVWR) limited to $30,500 (2026 estimate) of 179. Passenger vehicles have separate luxury auto caps. Certain trucks and large vans without 'luxury' classification can take full 179. Rules are complex — verify for your specific vehicle.
Can I claim Section 179 on rental property?
Generally no for the building itself. Personal property used in a trade or business that incidentally relates to a rental (active rental management) may qualify. Passive landlord rentals usually don't qualify.
Related Calculators
Bonus Depreciation Calculator
Apply bonus to remaining basis after Section 179.
Cost Segregation Calculator
Identify property eligible for accelerated treatment.
Depreciation Schedule Calculator
Year-by-year MACRS schedule.
Self-Employment Tax Calculator
Section 179 reduces SE income and SE tax.
Quarterly Estimated Tax Calculator
Adjust estimates after big 179 deduction.
Tax Bracket Calculator
Find marginal rate to size tax savings.