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Section 179 Deduction Calculator

See how much of an asset you can expense this year.

Result

$60,000.00
$68,000.00
$85,000.00
$60,000.00
Eligible

How it is calculated

The tool follows IRS Publication 946. First, the election needs business use of more than 50%; at 50% or less the deduction is $0 and the page says so. Otherwise business portion = cost × business use% ÷ 100, and the dollar limit is reduced dollar for dollar by the amount by which the total cost of Section 179 property placed in service this year exceeds the investment threshold: limit after phase-out = limit − (total purchases − threshold), never below zero. Then deduction = smaller of (business portion, limit after phase-out). The form is pre-filled with the 2026 figures, a limit of $2,560,000 and a threshold of $4,090,000; replace them for another tax year. Total purchases is the cost of all Section 179 property placed in service this year and is at least the asset cost. The tool does not restrict the deduction to your taxable income from active business; reduce the limit yourself if that applies. This is a US tax provision; other countries use different rules.

Worked example

You buy $85,000 of equipment that you use 80% for business, and the limit that applies to you is $60,000. Business portion: 85,000 × 80 ÷ 100 = $68,000.00. This is above the limit, so the deduction is capped at $60,000.00. The remaining $8,000 of the business portion is not covered by this calculation and would normally be recovered through regular depreciation. With a $30,000 asset at 80% the business portion would be $24,000.00, below the limit, so the full amount would be deductible. At 50% business use or less the deduction would be $0.00, because the election needs more than 50% business use.

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Common mistakes

  • Leaving the pre-filled 2026 limit and threshold unchanged for another tax year. Both are set per tax year, so enter the figures for the year the asset is placed in service.
  • Using the election for an asset used 50% or less for business. The deduction is $0 unless business use is more than 50%.
  • Entering business use as a decimal. The field is a percent, so 80 means 80%; 0.8 would treat only 0.8% of the asset as business use.
  • Forgetting that the deduction can also be limited by business income. The tool does not apply that limit, so lower the limit yourself.
  • Expecting the deduction to equal the tax saved. The deduction reduces taxable income; the tax saved is that amount times your tax rate.

Sources

About this calculator

Section 179 is a provision of the U.S. tax code that lets businesses deduct the full purchase price of qualifying equipment, vehicles, or software in the year it's placed in service, instead of depreciating it gradually over several years under normal MACRS schedules. The deduction is capped at a maximum dollar amount and phases out once total qualifying purchases exceed a spending threshold for the year, and it can't create or increase a net loss — the deduction is limited to the business's taxable income from active trades.

Small and mid-sized businesses use Section 179 to accelerate tax savings on equipment purchases — manufacturing machinery, business vehicles, computers, and off-the-shelf software commonly qualify — improving cash flow in the year of purchase rather than waiting years for depreciation to catch up. Because the dollar cap and phase-out threshold are set and adjusted by the IRS each tax year, always check the current-year limits before filing.

This calculator takes the cost of your asset, its business-use percentage, the deduction limit and investment threshold you enter (pre-filled with the 2026 figures from IRS Publication 946, $2,560,000 and $4,090,000) and the total cost of Section 179 property you place in service this year. If business use is 50% or less the deduction is $0, because the election needs more than 50% business use. Above the threshold the limit is reduced dollar for dollar. The deduction is the business portion of the cost (cost × business use) or the reduced limit, whichever is smaller. The taxable-income limit is not applied, so reduce the limit you enter if it applies to you.

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