The Section 179 deduction lets businesses immediately expense the full cost of qualifying equipment and software in the year of purchase — up to $1,220,000 in 2025 — instead of depreciating it over multiple years. Combined with 60% bonus depreciation for 2025, businesses can write off a substantial portion of equipment costs in year one, significantly reducing taxable income.
Equipment Details
Section 179 requires >50% business use for listed property (vehicles)
All business equipment purchased in 2025 (for phase-out check). If only this asset, same as cost above.
Section 179 is limited to taxable business income (bonus depreciation is not)
Total First-Year Write-Off (2025)
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Depreciation Breakdown (2025)
Disclaimer: This is an estimate based on 2025 Section 179 and bonus depreciation rules. It does not account for all qualifying property rules, luxury auto limits, state conformity, or passive activity limitations. Always consult a tax professional before making decisions.
How to Use the Section 179 Deduction Calculator
Section 179 and bonus depreciation are two of the most powerful tools available to business owners for reducing taxable income in the year equipment is purchased. Instead of deducting a small percentage each year over the asset's useful life, businesses can immediately expense much or all of the cost. This Section 179 calculator helps you estimate your 2025 first-year write-off for business equipment, software, vehicles, and qualified improvement property.
Step 1: Enter the Equipment Cost and Business Use
Enter the full purchase price of the equipment placed in service during 2025 and the percentage it is used for business. Section 179 and bonus depreciation only apply to the business-use portion. For listed property (like vehicles), business use must exceed 50% to qualify for Section 179. Also enter your total qualifying equipment purchases for 2025 — this determines whether the Section 179 phase-out applies.
Step 2: Select Property Type
Property type affects which limits apply. Regular business equipment and software can receive the full Section 179 deduction up to $1,220,000. Heavy SUVs (GVWR over 6,000 lbs) are capped at $30,500 of Section 179. Passenger autos have even stricter annual limits. Qualified improvement property (QIP) — interior improvements to non-residential buildings — qualifies for both Section 179 and bonus depreciation.
How Section 179 and Bonus Depreciation Work Together
Section 179 is applied first to reduce the asset's cost basis. Bonus depreciation (60% for 2025) then applies to the remaining basis. For example, on $100,000 of equipment: take $100,000 of Section 179 (subject to business income limit) and the remaining basis is $0. If Section 179 is limited to $60,000 of business income, the remaining $40,000 gets 60% bonus depreciation ($24,000), leaving only $16,000 to depreciate over MACRS. The key difference: Section 179 is limited to taxable business income, while bonus depreciation is not and can create a net operating loss.
Bonus Depreciation Phase-Down Schedule
Bonus depreciation is declining under current law: 80% in 2023, 60% in 2024–2025, 40% in 2026, 20% in 2027, and 0% in 2028 (for property placed in service after December 31, 2027). Congress has periodically extended bonus depreciation, but planning should account for the scheduled decline. Act in 2025 to take advantage of 60% bonus depreciation before the rate falls further.
FAQ
Is this Section 179 calculator free?
Yes, completely free with no signup required. All calculations run locally in your browser — your data is never transmitted to any server.
What is the Section 179 deduction limit for 2025?
For 2025, the Section 179 deduction limit is $1,220,000. The phase-out begins when total equipment purchases exceed $3,050,000 — the deduction is reduced dollar-for-dollar above that threshold, reaching zero at $4,270,000 in purchases. These limits are adjusted for inflation annually.
What is bonus depreciation for 2025?
Bonus depreciation (also called first-year expensing under IRC §168(k)) allows immediate deduction of a percentage of qualified property cost. For 2025, the bonus depreciation rate is 60%. This is down from 80% in 2023 and 60% from 2024. It continues declining: 40% in 2026, 20% in 2027, and 0% in 2028 unless Congress extends it.
What types of property qualify for Section 179?
Qualifying Section 179 property includes tangible personal property (equipment, machinery, computers, off-the-shelf software, office furniture), certain listed property (vehicles used more than 50% for business), and qualified improvement property (QIP — improvements to the interior of non-residential real property). Land, buildings, and inventory do not qualify.
What is the Section 179 SUV limitation?
For heavy SUVs with a gross vehicle weight rating (GVWR) over 6,000 lbs, Section 179 is capped at $30,500 for 2025. This limitation prevents businesses from immediately expensing very expensive luxury SUVs. Smaller vehicles (GVWR 6,000 lbs or less) have stricter luxury auto limits, while vehicles used 100% for business may have different rules.
Can I use Section 179 and bonus depreciation on the same property?
Yes, you generally apply Section 179 first to reduce the cost basis of the property, then apply bonus depreciation to the remaining basis. This calculator combines both methods to maximize your first-year deduction. Section 179 is limited to taxable business income; bonus depreciation is not and can create a net operating loss.
What happens to the remaining depreciable basis after Section 179 and bonus depreciation?
The remaining basis (cost minus Section 179 minus bonus depreciation) is depreciated using MACRS (Modified Accelerated Cost Recovery System) over the property's recovery period — typically 5 or 7 years for equipment. This remaining basis is deductible over the MACRS recovery period using the applicable depreciation method.
Is this calculator accurate for tax filing?
This tool provides a solid estimate based on 2025 Section 179 and bonus depreciation rules. It does not account for all qualifying property types, at-risk rules, passive activity limitations, or state conformity differences. Always consult a tax professional before making business equipment purchases.