Section 179 Deduction Calculator

What Is the Section 179 Deduction?

Section 179 of the Internal Revenue Code allows businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. Instead of depreciating an asset over several years, you can write off the entire cost in the year it is placed in service.

2026 Section 179 Limits (Estimated)

• Maximum deduction: $1,250,000
• Phase-out threshold: $3,130,000 in total equipment purchases
• The deduction reduces dollar-for-dollar once total purchases exceed the threshold, and is fully eliminated at $4,380,000.

Phase-Out Rules

If your total qualifying purchases for the year exceed $3,130,000, the $1,250,000 limit is reduced by the excess amount. For example, if you purchase $3,230,000 of equipment, your Section 179 limit drops to $1,150,000 ($1,250,000 minus the $100,000 excess).

Taxable Income Limitation

The Section 179 deduction cannot exceed your taxable business income for the year. In other words, you cannot use Section 179 to create or increase a net operating loss. Any amount that exceeds your income can generally be carried forward to future tax years.

What Qualifies for Section 179?

• Machinery and equipment
• Office furniture and fixtures
• Computers and off-the-shelf software
• Business vehicles (with limitations)
• Certain improvements to nonresidential real property

Section 179 vs. Bonus Depreciation

Both Section 179 and bonus depreciation let you accelerate deductions, but they work differently. Section 179 has a dollar cap and an income limitation, while bonus depreciation (when available at 100%) has no dollar limit and can create a loss. Many businesses use both strategies together to maximize first-year write-offs.