Section 179 & Bonus Depreciation Calculator
See how much of this year's equipment you can expense immediately under §179 and permanent 100% bonus depreciation — the post-OBBBA rules most calculators haven't caught up to.
Written by Dorothy Ibrahim, 10+ years in banking & finance
Reviewed by Benton Jona, EA (Enrolled Agent) — 2026-07-13
Loading calculator…
How we calculate this
This calculator shows how much of this year's equipment purchases you can deduct immediately under Section 179 and 100% bonus depreciation — the post-OBBBA rules many older calculators haven't caught up to. OBBBA made 100% bonus depreciation permanent for property acquired and placed in service after January 19, 2025, replacing the old 80/60/40% phase-down. The tool applies the 2026 §179 limit ($2,560,000), the phase-out, the heavy-SUV cap, and the rule that §179 cannot create a loss while bonus depreciation can.
The formulas
- §179 available after phase-out
- max(0, §179 limit − max(0, total purchases − phase-out start))For 2026: a $2,560,000 limit that shrinks dollar-for-dollar once purchases pass $4,090,000, hitting zero at $6,650,000. (2025: $2,500,000 / $4,000,000 / $6,500,000.)
- Heavy-SUV cap (per vehicle)
- §179 on a heavy SUV is limited to $32,000 per vehicle for 2026 ($31,300 for 2025); the rest of that SUV's cost flows to bonus depreciationThe §179(b)(5) cap is applied per vehicle, so the "heavy SUV" input models the cost of a single SUV placed in service — enter one SUV's cost (add each additional heavy SUV in its own run).
- §179 deduction
- min(eligible purchases, §179 available, business taxable income)§179 cannot create a loss — it is capped at taxable income before the deduction.
- Bonus depreciation
- 100% × (purchases − §179 deduction)Permanent under OBBBA for property placed in service after January 19, 2025; unlike §179, it CAN create a net operating loss.
- Tax savings
- (§179 + bonus) × your marginal tax rate
Worked example
- Take the defaults: $300,000 of equipment placed in service, no heavy SUVs, $250,000 of business taxable income before the deduction, a 30% marginal rate, tax year 2026.
- Purchases are far below the $4,090,000 phase-out start, so the full $2,560,000 §179 limit is available.
- §179 = min($300,000, $2,560,000, $250,000 income) = $250,000 — the income cap binds, because §179 cannot create a loss.
- The $50,000 remainder takes 100% bonus depreciation, so the total year-1 deduction is the full $300,000.
- At a 30% marginal rate that is worth about $90,000 in tax. Under straight 7-year MACRS instead, year 1 would deduct only 14.29% = $42,870, with the rest spread over the following years.
Rates, benchmarks & sources
- 2026 §179 limit ($2,560,000), phase-out start ($4,090,000), full phase-out ($6,650,000), and heavy-SUV cap ($32,000); 2025 figures: $2,500,000 / $4,000,000 / $6,500,000 / $31,300 — OBBBA §70301; Rev. Proc. 2025-32 §3.02/§4.24
- 100% bonus depreciation made permanent for property acquired and placed in service after January 19, 2025 (and that it can create an NOL) — OBBBA §70401
- MACRS half-year percentages used in the "vs straight MACRS" year-1 comparison (7-year class year 1 = 14.29%) — IRS Pub 946 Table A-1
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- Federal only — many states do not conform to federal bonus depreciation or the §179 limits and require depreciation add-backs, so your state deduction can be far smaller. This is an estimate, not filing advice.
- Eligibility is assumed: the tool does not verify the property is qualifying §179/bonus property (most equipment and off-the-shelf software is; buildings are not, though certain land improvements and qualified improvement property are).
- The luxury-auto first-year cap for passenger vehicles under 6,000 lb GVWR (config carries ~$20,400 for 2026 as a provisional, verify-at-build figure) is handled in the Vehicle Deduction tool, not here — the SUV cap here is the separate heavy-SUV §179 limit.
- Business-use percentage is not modeled; listed property used less than 50% for business loses §179/bonus eligibility.
- The taxable-income limit for §179 has technical wrinkles (aggregation across businesses, carryforward of disallowed amounts) that are simplified to a single income input here.
Frequently asked questions
What is the difference between Section 179 and bonus depreciation?
Both let you deduct equipment immediately, but the guardrails differ. §179 has a dollar limit ($2,560,000 for 2026), phases out for very large purchasers, and cannot take your taxable income below zero. Bonus depreciation is 100% with no dollar limit and can create a net operating loss that carries forward. Since both now allow full expensing, the practical order is §179 up to your income, bonus for the rest — which is exactly how the tool splits it.
I read that bonus depreciation was phasing down to 40% — is that still true?
No — that schedule is obsolete. The old law stepped bonus down 80%/60%/40% through 2026, and many calculators still show it. OBBBA §70401 restored 100% bonus depreciation and made it permanent for property acquired and placed in service after January 19, 2025. Property placed in service before that date falls under the old phase-down, which is one reason the placed-in-service date matters.
Why was my §179 deduction cut off at my income?
By statute, §179 cannot create a loss — it is limited to your business taxable income before the deduction, with the disallowed slice carrying forward. In the default example, $300,000 of equipment against $250,000 of income caps §179 at $250,000. The remainder is not lost: it takes 100% bonus depreciation instead, which has no income limit and can create an NOL.
What is the heavy-SUV rule?
SUVs with a gross vehicle weight rating over 6,000 lb escape the passenger-car luxury-auto caps, but Congress gave them their own §179 ceiling — $32,000 per vehicle for 2026 ($31,300 for 2025). The cost above that cap is not stranded: it qualifies for 100% bonus depreciation. The net effect is that a heavy SUV can still usually be fully expensed in year 1, just routed through two buckets. Because the cap is per vehicle, this calculator models one SUV's election — enter a single SUV's cost, and run it again for each additional heavy SUV.
Should I expense everything now or spread it with MACRS?
The tool shows both so you can weigh them. Full expensing maximizes this year's deduction — worth the most when your marginal rate is high now. Spreading via MACRS preserves deductions for future years, which some owners prefer when they expect much higher rates or income later. That timing choice depends on your multi-year picture, and it is a decision to make with your tax professional, not one this estimate makes for you.
Does my state allow these deductions too?
Often not in full — state conformity is the biggest gap in year-1 expensing math. Many states cap §179 below the federal limit or require bonus depreciation to be added back and deducted over several years instead. This tool computes the federal deduction only, so the state benefit can be materially smaller; check your state's conformity rules before counting the cash savings.
Related calculators
themoneysheet provides educational estimates, not financial, tax, or legal advice. Figures use published rates and formulas current as of the date shown, but your situation may differ. Consult a qualified professional (CPA, attorney, or licensed advisor) before making financial decisions. Federal figures only unless noted. State taxes vary.