Home / Section 179 deduction calculator
Section 179 deduction calculator
Estimate how much of your equipment cost you could expense under Section 179 and what it might save in tax. This uses the IRS limits for 2026 ($2,560,000 maximum, phase-out above $4,090,000) and for 2025.
The limits this calculator uses
| Item | 2026 | 2025 |
|---|---|---|
| Maximum Section 179 deduction | $2,560,000 | $2,500,000 |
| Phase-out begins when equipment placed in service exceeds | $4,090,000 | $4,000,000 |
| Deduction fully phased out at | $6,650,000 | $6,500,000 |
| Heavy SUV cap (6,000 to 14,000 lbs GVWR) | $32,000 | $31,300 |
- IRS Rev. Proc. 2025-32: 2026 inflation adjustments (section 4.24, Section 179)
- IRS Publication 946 (2025): How To Depreciate Property
How the estimate is built
- Business cost = equipment cost times your business-use percentage. Property used 50% or less for business does not qualify.
- Heavy SUV cost is capped at the SUV limit for Section 179 purposes. Other equipment is not capped.
- The dollar limit is reduced dollar for dollar by the amount your total Section 179 property placed in service exceeds the phase-out threshold.
- The deduction cannot exceed your taxable income from the active conduct of your businesses. Anything above that is carried to the next year (IRS Publication 946).
- Estimated tax savings = deduction times the tax rate you enter.
Worked example
Equipment costing $300,000 used 100% for business, with $500,000 of business taxable income and a 30% rate: the limit is $2,560,000, so the whole $300,000 can be expensed, for an estimated tax saving of $90,000.
Things this calculator does not do
- It does not apply bonus depreciation, regular depreciation, state rules or passenger-automobile limits. The IRS provides for a permanent 100% additional first year (bonus) depreciation deduction for qualified property acquired after January 19, 2025, which may apply to cost that is not expensed under Section 179. Which one to use, and in what order, is a question for your tax professional.
- It does not know whether your property qualifies. Qualifying property generally must be tangible personal property (and some other listed types) acquired by purchase for business use. Land does not qualify.
- It assumes the equipment is purchased, or financed under an agreement the IRS treats as a purchase. A true lease is generally a rent deduction instead; see the loan vs lease guide.
- Your state may not follow the federal limits.
- IRS Rev. Proc. 2025-32: 2026 inflation adjustments (section 4.24, Section 179)
- IRS Publication 946 (2025): How To Depreciate Property
- 26 U.S.C. 179: Election to expense certain depreciable business assets
- IRS news release IR-2026-06: 100% additional first year depreciation (Notice 2026-11)
- IRS: About Form 4562, Depreciation and Amortization
Common questions
Does the equipment have to be paid off to claim Section 179?
Section 179 is tied to when qualifying property is placed in service for business use, and to whether you are treated as the purchaser, not to whether the loan is paid off. Confirm the details of your own agreement with a tax professional.
What happens if my taxable income is lower than the deduction?
The deduction is limited to your taxable income from your active businesses. The disallowed amount can be carried to the next year, according to IRS Publication 946.
Is the 2026 limit different from 2025?
Yes. The 2026 maximum is higher (see the table above), because the One, Big, Beautiful Bill raised the base limit and the limit is adjusted for inflation starting with tax years that begin after 2025.