Section 179 Calculator
Calculate your maximum Section 179 deduction for business equipment purchases, including phase-out reductions, income limitations, and combined first-year write-off with bonus depreciation.
About this calculator
This calculator computes your Section 179 deduction -- the lesser of your equipment cost or an available limit -- then layers bonus depreciation and MACRS on top for anything Section 179 doesn't cover. The 2024 maximum deduction is $1,220,000, reduced dollar-for-dollar once Total Assets Placed in Service exceeds a $3,050,000 phase-out threshold (per Rev. Proc. 2023-34).
At this calculator's default $200,000 equipment purchase, you're nowhere near that phase-out or the separate active-income limitation (the deduction can't exceed Business Taxable Income), so Equipment Cost is the only input that moves Section 179 Deduction, Total First-Year Write-Off, and Net After-Tax Equipment Cost -- both the phase-out reduction and the income-limitation carryforward stay at zero across a moderate change in cost. Equipment Cost and Marginal Tax Rate move Tax Savings by an identical share at these defaults, since Tax Savings is a straightforward product of the two (Total First-Year Write-Off x Marginal Rate). Tax Year, which sets the bonus depreciation rate applied to any basis left over after Section 179, has no visible effect here either, because full expensing under Section 179 already covers the entire equipment cost, leaving nothing for bonus depreciation to apply to. This model doesn't cover Section 179's separate, tighter dollar caps on vehicles, nor does it apply Section 179 differently for real estate improvements like roofs or HVAC systems.
Tax Disclaimer
This calculator provides estimates based on general tax rules and may not reflect your specific situation. Tax laws vary by jurisdiction and change frequently. Consult a qualified tax professional or CPA for advice tailored to your circumstances.
Inputs
Results
Section 179 Deduction
$200,000.00
≈ 13 used cars
Total First-Year Write-Off
$200,000.00
≈ 13 used cars
Figures current as of 2024. Source: IRC § 179; IRS Rev. Proc. 2023-34, § 3.25 (2024 inflation-adjusted amounts: $1,220,000 maximum deduction under § 179(b)(1), reduced dollar-for-dollar above a $3,050,000 phase-out threshold under § 179(b)(2))
How to Use This Calculator
- Enter Equipment Cost for the qualifying business asset (must be tangible property used >50% for business).
- Set Total Assets Placed in Service — the Section 179 limit phases out dollar-for-dollar above $3.05M (2024).
- Enter Business Taxable Income — Section 179 cannot create a loss; the deduction is capped at business income.
- Set Marginal Tax Rate % for tax savings calculation.
- Select Tax Year for the applicable bonus depreciation rate on remaining basis.
- Review Year 1 Deduction and Tax Savings — Section 179 + bonus depreciation often allows full expensing in year 1.
How the result changes with Equipment Cost ($)
| Equipment Cost ($) | Section 179 Deduction | Total First-Year Write-Off |
|---|---|---|
| $100,000.00 | $100,000.00 | $100,000.00 |
| $150,000.00 | $150,000.00 | $150,000.00 |
| $300,000.00 | $300,000.00 | $300,000.00 |
| $500,000.00 | $300,000.00 | $436,000.00 |
What each input means
- Equipment Cost ($)
- Cost of the qualifying equipment or property you want to expense under Section 179.
- Total Assets Placed in Service ($)
- Total cost of all business assets placed in service this year. Phase-out begins at $3,050,000.
- Business Taxable Income ($)
- Active trade or business taxable income. Section 179 deduction cannot exceed this amount.
- Marginal Tax Rate (%)
- Your combined federal and state marginal income tax rate.
- Tax Year
- Determines the bonus depreciation rate applied to the remaining basis after Section 179.
What each result means
- Section 179 Deduction
- Your Section 179 deduction after phase-out and income limitations.
- Total First-Year Write-Off
- Combined Section 179 + bonus depreciation + MACRS first-year deduction.
- Tax Savings
- Estimated tax savings from the total first-year write-off.
- Net After-Tax Equipment Cost
- Effective cost of equipment after tax savings from depreciation.
- Bonus Depreciation
- Additional first-year depreciation on the basis remaining after Section 179.
- Section 179 Carryforward
- Deduction amount exceeding business income, carried forward to future years.
- Remaining Depreciable Basis
- Basis left to depreciate under MACRS in future years.
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersEquipment Cost ($) = 200000, Total Assets Placed in Service ($) = 200000, Business Taxable Income ($) = 300000, Marginal Tax Rate (%) = 24 = 5 input(s) provided
- Calculate Section 179 DeductionSection 179 Deduction = min(equipmentCost, availableLimit)200000 = $200,000
- Calculate Total First-Year Write-OffTotal First-Year Write-Off = section179Deduction + bonusDepreciation + macrsFirstYear200000 = $200,000
- Calculate Tax SavingsTax Savings = totalFirstYearWriteOff * (marginalRate / 100)48000 = $48,000
- Calculate Net After-Tax Equipment CostNet After-Tax Equipment Cost = equipmentCost - taxSavings152000 = $152,000
Figures and sources
- 2024 Section 179 expensing limit and phase-out threshold (2024) — IRC § 179; IRS Rev. Proc. 2023-34, § 3.25 (2024 inflation-adjusted amounts: $1,220,000 maximum deduction under § 179(b)(1), reduced dollar-for-dollar above a $3,050,000 phase-out threshold under § 179(b)(2))
Engine last updated . Checked against 2 independently-derived tests — how we verify calculators. Built by Paul Gunder, a software engineer, not a licensed financial, medical, or legal professional.
Frequently Asked Questions
When does the Section 179 phase-out actually reduce my deduction?
Only once Total Assets Placed in Service exceeds $3,050,000 for 2024 -- the deduction is then reduced dollar-for-dollar above that line, hitting zero once total purchases reach $4,270,000. At the default $200,000 in equipment, you're far below the phase-out threshold, so Equipment Cost alone determines your Section 179 Deduction with no reduction applied.
Why does Marginal Tax Rate move Tax Savings by about the same amount as Equipment Cost?
Tax Savings is calculated as Total First-Year Write-Off multiplied directly by Marginal Tax Rate -- a plain product of the two. Since Total First-Year Write-Off itself scales directly with Equipment Cost at these defaults (Section 179 covers the full amount, with no phase-out or income limit binding), both Equipment Cost and Marginal Tax Rate end up moving Tax Savings by a comparable proportional share.
Why doesn't changing the Tax Year affect my numbers at the default inputs?
Tax Year sets the bonus depreciation rate applied to whatever basis is left AFTER the Section 179 deduction. At the default $200,000 equipment cost and $300,000 business income, Section 179 alone covers the entire equipment cost, leaving a $0 remaining basis -- so there's nothing left for bonus depreciation to apply to, and the bonus rate you select makes no difference until Equipment Cost exceeds the $1,220,000 Section 179 cap.
What happens if my Section 179 deduction exceeds my business income?
Section 179 Carryforward absorbs the difference. The deduction cannot exceed active trade or business taxable income (Business Taxable Income) in the year taken -- any excess that would otherwise be lost is instead carried forward to future years, per the active income limitation rule, rather than reducing your deduction below what your income can support.
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