Section 179 or bonus depreciation?

Bonus has no dollar cap and no income limit, and it can create a loss. Section 179 lets you choose an exact amount per asset but can't take you below zero. With 100% bonus available, many businesses use bonus and save Section 179 for fine-tuning — or for states that don't conform to bonus.

What counts as business income?

Taxable income from the active conduct of any trade or business, including W-2 wages, figured before the Section 179 deduction. A spouse's business income counts on a joint return.

What property qualifies?

Tangible personal property like equipment, vehicles, furniture, and computers, off-the-shelf software, and some building improvements (roofs, HVAC, security and fire systems, and qualified improvement property). Land and most buildings don't.

What happens if I sell it early?

The Section 179 you took is treated like depreciation, so a gain is ordinary income up to that amount (recapture). And if business use drops to 50% or less, part of the deduction comes back as income. The Depreciation Recapture calculator covers the sale.

TaxesTax years 2025 & 2026

Section 179 Deduction Calculator

How much of a new asset you can write off this year under Section 179 — the dollar limit, the phase-out, the business income limit, the carryforward, and the basis that's left for bonus depreciation and MACRS.

Ben / Reviewed Sep 27, 2026 / v2.0.0

Your numbers

The asset

Tax year placed in service

What it is

Cost

Business use

Is it an SUV over 6,000 lbs?

Amount to expense

The rest of your year

Business income before Section 179

Section 179 you're taking on other property

Total cost of Section 179 property placed in service this year

Unused Section 179 from last year

Results

Showing the numbers you calculated

Heads up

$20,000.00 can't be deducted this year because it's more than your business income — it carries forward. The asset's basis still drops by the full $100,000.00 now. Electing $80,000.00 instead avoids that — bonus depreciation (if the asset qualifies) can take the rest, and it has no income limit.

Section 179 deduction this year: $80,000.00; Form 4562, line 12
Carries forward to next year: $20,000.00; Over the business income limit
Elected for this asset: $100,000.00; Of $100,000.00 business-use cost
Basis left for bonus and MACRS: $0.00; Reduced by the full election, even what carries forward
Most to elect without a carryforward: $80,000.00
Dollar limit for the year: $2,560,000.00; Tax year 2026
Business income limit: $80,000.00

Form 4562, Part I

Form 4562, Part I
Line	What it is	Amount
1	Maximum amount (2026)	$2,560,000.00
2	Total cost of Section 179 property placed in service	$100,000.00
3	Threshold before the limit is reduced	$4,090,000.00
4	Reduction: line 2 − line 3	$0.00
5	Dollar limit for the year	$2,560,000.00
6	Excavator — elected cost	$100,000.00
8	Total elected cost (this asset + other property)	$100,000.00
9	Tentative deduction: smaller of line 5 or line 8	$100,000.00
10	Carryforward from last year	$0.00
11	Business income limit	$80,000.00
12	Section 179 deduction	$80,000.00
13	Carryforward to next year	$20,000.00

What this does

Normally a big purchase — a truck, a machine, computers — gets depreciated over several years. Section 179 lets you write off some or all of it in the year you start using it instead.

There are three limits: a dollar cap, a phase-out for businesses that buy a lot, and your business income. This runs all three the way Form 4562 does, and tells you what carries forward and how much basis is left for bonus depreciation and regular depreciation.

How the math works

First the dollar limit, which shrinks once your total purchases pass the threshold:

dollar limit = maximum − (total Section 179 property − threshold)   (never below zero)

Then the deduction is capped by your business income, so Section 179 can't create a loss:

deduction = smaller of (what you elect + last year's carryforward) or business income
carryforward = the rest

Whatever you elect comes off the asset's basis right away — even the part that has to wait for a later year. Only what's left gets bonus depreciation and MACRS.

With 100% bonus depreciation back for property acquired after January 19, 2025, Section 179 matters less than it used to. It's still useful when you want to pick an exact amount, or your state doesn't follow bonus.

Check my math: a worked example

A $100,000 Excavator at 100% business use, with $80,000 of business income.

Business-use cost: $100,000.00. The 2026 dollar limit is $2,560,000.00.
You elect $100,000.00. Business income caps this year's deduction at $80,000.00.
Deduction this year: $80,000.00. The other $20,000.00 carries forward.
Basis left for bonus depreciation and MACRS: $100,000.00 − $100,000.00 = $0.00 — the carryforward doesn't add it back.
Often better: elect $80,000.00 and take bonus depreciation on the rest if the asset qualifies — no carryforward, and bonus isn't limited by income.

These numbers come straight from the calculator using its example inputs — if the math ever changes, this example changes with it.

Mistakes I see a lot

Electing more than your business income. The extra carries forward, but the basis drops now — you lose depreciation you could have taken this year.
Forgetting the 50% business-use test (and that it can be recaptured if business use drops to 50% or less later).
Expensing an SUV's whole cost. Heavy SUVs have their own cap.
Using the whole price for mixed-use property. Only the business share counts.
Assuming your state follows the federal limits. Many don't.

Questions people ask

Section 179 or bonus depreciation?: Bonus has no dollar cap and no income limit, and it can create a loss. Section 179 lets you choose an exact amount per asset but can't take you below zero. With 100% bonus available, many businesses use bonus and save Section 179 for fine-tuning — or for states that don't conform to bonus.
What counts as business income?: Taxable income from the active conduct of any trade or business, including W-2 wages, figured before the Section 179 deduction. A spouse's business income counts on a joint return.
What property qualifies?: Tangible personal property like equipment, vehicles, furniture, and computers, off-the-shelf software, and some building improvements (roofs, HVAC, security and fire systems, and qualified improvement property). Land and most buildings don't.
What happens if I sell it early?: The Section 179 you took is treated like depreciation, so a gain is ordinary income up to that amount (recapture). And if business use drops to 50% or less, part of the deduction comes back as income. The Depreciation Recapture calculator covers the sale.

Assumptions and limits

Form 4562, Part I. The dollar limit ($2,560,000 for 2026) drops dollar for dollar once the Section 179 property you place in service passes the threshold ($4,090,000 for 2026). It's shared by everything you elect this year.
Only the business-use share of the cost counts, and the property has to be used more than 50% for business in the year it's placed in service.
Heavy SUVs (6,001–14,000 lbs) are capped at the year's SUV limit ($32,000 for 2026).
The deduction can't be more than your taxable income from the active conduct of a trade or business (wages count), figured without Section 179. Anything over carries forward.
The asset's basis drops by the full amount elected (up to the dollar limit) even if part of it carries forward — Reg. §1.179-1(f)(1). What's left goes to bonus depreciation and MACRS.
If your elections exceed the dollar limit, your other property's elections are applied first.
Married filing separately: the dollar limit is split between spouses. Partnerships and S corporations apply the limits at both the entity and owner level. Neither is modeled here.

Ben’s notes on this

Related calculators

MACRS Depreciation
Tax depreciation straight from the IRS tables: every property class, half-year or mid-quarter, rental and commercial buildings by month, with §179, bonus, business use, and the year you sell.
Depreciation Recapture
Sold equipment or a building you depreciated? Split the gain the way Form 4797 does — recapture taxed as ordinary income, unrecaptured §1250 gain at up to 25%, and the rest as Section 1231 gain or loss.
Capitalized Cost
Bought equipment and the invoice has ten other charges on it? Sort what goes into the asset from what's an expense, a prepaid, or a loan cost — with the removal obligation at present value and the entry to book.
Straight-Line Depreciation
Book depreciation the simple way: cost minus salvage, spread evenly over the useful life, starting the month it goes into service — by fiscal year, with the journal entries.

Spot an error?

This is a public notebook and I do make mistakes. If a number looks off, tell me — I fix things and note the change in the changelog.

Disclaimer: Educational and planning use only. Results depend on what you enter and may not match your lender, your tax return, or professional accounting treatment. Informational content + opinions only — not tax/legal advice. Tax rules change and have exceptions this calculator doesn't cover — confirm current rules and your specific facts before relying on the result.