Section 179 Calculator (2026) — Bonus Depreciation vs §179 First-Year Deduction

Combined is usually best — Section 179 first (capped at $2.56M and your taxable income), then bonus depreciation on whatever's left. Section 179 alone is preferable when you want to be selective about which assets you fully expense (you choose which items). Bonus depreciation is automatic if applicable — you have to formally elect out via Form 4562 if you don't want it on a property class.

The 2026 §179 cap is $2,560,000 (per IRS Revenue Procedure 2025-32, implementing the One Big Beautiful Bill Act's $2.5M base plus inflation indexing). Phase-out begins at $4,090,000 of qualifying purchases — for every dollar above $4,090,000, the §179 cap drops dollar-for-dollar. Above ~$6.65M in qualifying purchases, §179 fully phases out and you're bonus-only. Verify current-year IRS-published numbers before filing.

100% for qualified property acquired and placed in service after January 19, 2025 — the One Big Beautiful Bill Act (P.L. 119-21) restored full first-year bonus depreciation, reversing the TCJA phase-down (which had run 80% in 2023, 60% in 2024, 40% in 2025, and was scheduled to hit 20% in 2026 before 0% in 2027). This calculator uses that restored 100% rate — verify against IRS Publication 946 before relying on it for a filing decision.

Yes — both Section 179 and bonus depreciation apply to qualifying new and used equipment placed in service during the tax year, as long as the used equipment is 'new to you' (i.e., not previously used by you or a related party). Auctions, dealer trade-ins, and private-party purchases all qualify if you can document a clean basis.

Tangible personal property used in business: machinery, equipment, vehicles (subject to luxury-auto caps and the 6,000+ lb GVWR SUV cap of $32,000 for 2026), office furniture, computers, off-the-shelf software. Real property qualifies only in limited cases (qualified improvement property, roofs, HVAC on non-residential real). Land never qualifies. Inventory and supplies are deducted as COGS or current expenses, not depreciated.

SUVs with GVWR between 6,000 lbs and 14,000 lbs are capped at $32,000 of §179 expensing in 2026 (indexed). Vehicles above 14,000 lbs GVWR or work-purpose vehicles without rear seating are exempt from the SUV cap and can be fully §179'd up to the overall limit. Passenger vehicles under 6,000 lbs GVWR fall under the much lower §280F 'luxury auto' caps.

State conformity to bonus depreciation varies — California doesn't conform at all (no bonus, lower §179 cap of $25K), New York partially conforms, many states fully conform. Section 179 conformity is more common but caps often differ from federal. Verify your state's rules before applying federal numbers to state planning — this calculator runs federal only.

No — §179 is limited to business taxable income (you can't drive taxable income below zero with §179). Disallowed §179 carries forward indefinitely to future years when taxable income exists. Bonus depreciation has no income limitation — it can create or expand a net operating loss (NOL) that carries forward under current rules. If you have a loss year, bonus may be the only first-year path.