Section 179 Deduction Calculator
Estimate your first-year Section 179 expensing deduction, the phase-out above the spending cap, and the tax it saves versus depreciating over time.
How it works
Cap = $1,220,000 (2024), reduced dollar-for-dollar above $3,050,000 of purchases · Deduction = min(cost, cap, business income) · Excess over income carries forward
Section 179 lets a business expense the full cost of qualifying equipment and software in the year it is placed in service instead of depreciating it over years. The 2024 deduction cap is $1,220,000, and it phases out dollar-for-dollar once total purchases exceed $3,050,000. The deduction also cannot exceed your business taxable income for the year; any excess carries forward to future years.
Worked example
A firm buys $200,000 of equipment and has $150,000 of business income. The full $200,000 is under the cap, but the deduction is limited to the $150,000 of income, so it expenses $150,000 this year (saving $36,000 at 24%) and carries $50,000 forward.
Frequently asked questions
What qualifies for Section 179?
Tangible business equipment, off-the-shelf software, machinery, and certain vehicles and building improvements placed in service during the year. Real estate and inventory do not qualify.
How is it different from bonus depreciation?
Section 179 is capped and limited to business income, and you choose how much to expense. Bonus depreciation has no income limit and applies automatically to a percentage of eligible cost — the two are often combined.
Can it create a loss?
No. Section 179 cannot exceed your aggregate business taxable income, so it cannot push you into a loss. The unused amount carries forward instead.
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Educational estimate using simplified US federal rules — ignores state tax, credits and your full situation. Not tax advice; confirm with a CPA or IRS guidance.