Section 179 Equipment & Software Deduction Calculator
Calculate immediate equipment expensing, bonus depreciation phase-down, and tax savings under IRC Section 179.
How Much Equipment and Software Can Your Business Expense Under Section 179?
What Are Your Projected First-Year Tax Savings and Net Costs?
Acquiring business equipment before bonus depreciation phases down? Download our IRS Form 4562 preparation worksheet and state tax adjustment guide.
What Is the Section 179 Capital Recovery Matrix?
Objective: Maximize immediate first-year tax deductions on capital equipment and software before bonus depreciation phases down to zero percent.
- Step 1: Verify Equipment Eligibility and Business Use: Confirm the property is qualifying tangible property or off-the-shelf software placed in service with greater than 50% business use.
- Step 2: Allocate Up to the Expensing Cap: Deduct up to the statutory Section 179 dollar limit ($2,560,000 in 2026) directly against aggregate business taxable income.
- Step 3: Apply Phasing Bonus Depreciation: Apply the remaining eligible bonus depreciation rate (20% in 2026, expiring in 2027) to any capital expenditure basis exceeding the Section 179 allocation.
- Step 4: Depreciate Residual Basis Under MACRS: Transition any residual asset value into standard MACRS depreciation schedules over 5 to 7 years.
How Do Section 179 Limits and Bonus Depreciation Phase Down Through 2027?
Statutory caps and phase-out parameters enacted under IRC Section 179 and modified by TCJA Section 13201. Dollar-for-dollar phase-out occurs for purchases exceeding the spending threshold.
| Tax Year | Section 179 Max Expense | Spending Phase-Out Cap | Complete Phase-Out Threshold | Bonus Depreciation Rate |
|---|---|---|---|---|
| 2024 | $1,220,000 | $3,050,000 | $4,270,000 | 60% |
| 2025 | $1,250,000 | $3,130,000 | $4,380,000 | 40% |
| 2026 (Projected) | $2,560,000 | $4,090,000 | $6,650,000 | 20% |
| 2027 (Post-TCJA Reversion) | $2,640,000 | $4,210,000 | $6,850,000 | 0% (Expired) |
How Do Section 179 Expensing and Bonus Depreciation Differ in 2026 vs. 2027?
IRC Section 179 allows qualifying business entities to deduct the entire cost of eligible tangible property and off-the-shelf software in the taxable year placed in service, bypassing standard 5-year or 7-year MACRS recovery schedules.
For acquisitions exceeding the annual expensing threshold ($2,560,000 in 2026), any basis that cannot be written off under Section 179 is eligible for bonus depreciation (20% in 2026) before the remaining unrecovered cost enters standard MACRS depreciation.
What Are the Most Common Section 179 Questions and Objections?
Can Section 179 create a net operating loss (NOL)?
No. Unlike bonus depreciation, Section 179 deductions are capped at the taxpayer's aggregate net taxable business income for the tax year. Any disallowed deduction amounts are carried forward indefinitely to subsequent tax years.
Does off-the-shelf software qualify for Section 179?
Yes. Computer software placed in service during the tax year qualifies if it is readily available for purchase by the general public, subject to a non-exclusive license, and has not been substantially modified.
What happens if business use drops below 50% in subsequent years?
If business use of the asset falls to 50% or below at any time during the recovery period, the taxpayer must recapture the excess Section 179 deduction as ordinary income on IRS Form 4797.
Which Business Tax Filing and Equipment Financing Partners Support Section 179?
How Do State Commercial Tax Models and Real Estate Exchanges Coordinate?
Coordinate capital expenditure expensing with state income tax schedules and Section 1031 like-kind exchange deferrals.
Which Commercial Vehicles Qualify for Section 179 Deductions Across the 25 Fleet Models?
Explore vehicle-specific Section 179 tax deduction calculations, bonus depreciation write-offs, and GVWR specifications across all 25 qualifying commercial trucks, vans, and SUVs.