Section 179 Deduction Calculator (US)

Both accelerate deductions, but they differ: Section 179 lets you choose how much to expense (up to an annual dollar limit), is reduced once purchases exceed a phase-out threshold, and can't exceed business taxable income (no loss). Bonus depreciation applies a set percentage to qualifying assets, has no annual dollar cap or income limit (it can create a loss), and is generally taken after Section 179 on the remaining basis. Many businesses use Section 179 first, then bonus on the rest.

Tangible personal property used more than 50% for business — machinery, equipment, business vehicles (with limits on luxury autos and SUVs), computers, off-the-shelf software, and certain qualified improvements to nonresidential buildings. Real property (land, buildings) generally doesn't qualify. The asset must be placed in service during the tax year, not merely purchased.

The annual deduction limit and the purchase phase-out threshold are indexed for inflation and change every year, and bonus depreciation percentages have been scheduled to phase down. Because these figures move annually (and legislation sometimes changes them), this calculator lets you enter the amounts rather than hard-coding them — check the current year's limits in IRS guidance or with your accountant before relying on the numbers.

No — the Section 179 deduction is limited to your aggregate business taxable income; you can't use it to create or increase a loss. Any disallowed amount carries forward to future years. Bonus depreciation, by contrast, has no such income limit and can create a loss, which is one reason the two are often combined: Section 179 up to the income limit, then bonus on the remainder.