Section 179 Deduction Calculator for Business Equipment

How to use: Introduction to Section 179 deduction estimates

This Section 179 deduction calculator helps you estimate how much of a qualifying business equipment purchase may be written off in the first year under Section 179, how much bonus depreciation can apply to the remaining basis, and how much cost is left for regular depreciation. It is most useful when you want to compare a purchase against the annual limit, the phase-out threshold, and the taxable-income cap before you finalize a spending plan.

Important: Section 179 tax year context

Because Section 179 limits and bonus depreciation depend on the tax year, acquisition timing, and elections, the defaults below reflect the values currently entered on this page: a $2,560,000 maximum Section 179 expense deduction, a $4,090,000 phase-out threshold, and a 100% bonus depreciation rate. If you are modeling another year, a partial bonus rate, or a state-specific planning estimate, replace those defaults with the numbers that apply to your situation.

Section 179 deduction inputs (what each field means)

• Equipment Cost ($): total cost of qualifying Section 179 property you want the calculator to model for the year, usually the full business basis of the purchases placed in service.
• Section 179 Limit ($): the annual maximum deduction before any phase-out reduction is applied.
• Phase-Out Threshold ($): the purchase level where the Section 179 cap begins to shrink dollar for dollar.
• Business Taxable Income ($): the income cap that can limit the current-year Section 179 deduction. Amounts that cannot be used right away may generally carry forward, subject to the rules that apply.
• Bonus Depreciation Rate (%): the percentage applied to the basis left after Section 179, if the property qualifies and the chosen tax year allows that rate.

Section 179 deduction formulas used

1) Phase-out reduces the available Section 179 limit

Let:

• C = equipment cost (total qualifying purchases modeled)
• L = statutory Section 179 limit
• P = phase-out threshold

The reduction amount is max(0, C − P), and the available limit is:

2) Section 179 deduction is limited by cost, available limit, and taxable income

Let I = business taxable income. Then:

D₁₇₉ = min(C, L_avail, I)

3) Bonus depreciation applies to remaining basis after Section 179

Let r = bonus depreciation rate as a decimal (e.g., 80% → 0.80). Then bonus depreciation is:

B = (C − D₁₇₉) × r

4) Remaining basis for regular depreciation

R = C − D₁₇₉ − B

5) Total first-year deduction shown by this calculator

Total = D₁₇₉ + B

That sequence is what this calculator uses to split a business equipment purchase into an immediate Section 179 deduction, any bonus depreciation, and the balance left for the regular depreciation schedule.

How to interpret the Section 179 deduction results

For a Section 179 deduction calculation, the results table breaks the first-year write-off into components:

• Section 179 deduction: the immediate expense amount allowed after the annual cap, phase-out, and taxable-income limit are applied.
• Bonus depreciation: an extra first-year deduction on any basis that remains after Section 179, if the property qualifies.
• Remaining basis: the part of the purchase cost that is not deducted immediately and is usually recovered later through regular depreciation.
• Total deduction: Section 179 plus bonus depreciation, which is the calculator’s estimate of the first-year expensing total.

When taxable income is lower than the Section 179 amount you want to use, the calculator will show a smaller current-year deduction and a larger balance left for later depreciation. If the purchase cost is small enough to be fully covered by Section 179, bonus depreciation may have nothing left to claim.

Worked example: a $50,000 Section 179 deduction

Assume the following inputs for a straightforward Section 179 deduction example:

• Equipment Cost, C = $50,000
• Section 179 Limit, L = $2,560,000
• Phase-Out Threshold, P = $4,090,000
• Business Taxable Income, I = $80,000
• Bonus Depreciation Rate = 100% → r = 1.00

Step 1: Phase-out
Since C ($50,000) is below P ($4,090,000), the reduction is zero, so L_avail = $2,560,000.

Step 2: Section 179
Compute D₁₇₉ = min(50,000; 2,560,000; 80,000) = $50,000.

Step 3: Bonus depreciation
Remaining basis after Section 179 is $0, so B = $0 even with a 100% bonus rate.

Step 4: Remaining basis
R = 50,000 − 50,000 − 0 = $0.

Interpretation: in this Section 179 example, the purchase is fully expensed in year one through Section 179 alone because taxable income is high enough and the cost is well below the annual limit. Bonus depreciation does not change the result because there is no basis left after the Section 179 deduction.

Comparison: Section 179 deduction outcomes under common scenarios

Section 179 limitations & assumptions (read before relying on results)

• Eligibility not validated: this calculator assumes the property qualifies for Section 179 and/or bonus depreciation under the rules that apply to your return. Some property types and ownership situations are excluded or limited.
• Placed-in-service timing matters: the result depends on the year the asset is placed in service, not just when it is bought.
• Business-use percentage: if an asset is partly personal use, the deductible basis can be reduced. This calculator assumes 100% business use unless you adjust the cost yourself.
• Total purchases vs. a single item: the phase-out is based on total qualifying purchases for the year. If you enter only one asset while your total purchases are higher, the available Section 179 limit may be overstated.
• Taxable-income limitation: the calculator applies a single taxable-income cap to the Section 179 amount. Treatment can vary by entity type and by return position; carryforward rules can apply.
• State taxes not included: states may decouple from federal Section 179 or bonus depreciation rules.
• Regular depreciation not computed: the remaining basis is not further depreciated by this tool; recovery period, method, convention, and special rules are outside this calculator’s scope.
• Estimates only: outputs are simplified planning estimates. Consult IRS guidance and/or a qualified tax professional for filing decisions.

Official reference: IRS Publication 946, How To Depreciate Property.