Section 179 Deduction Calculator
Section 179 lets businesses immediately expense the full cost of qualifying equipment in the year it is purchased, rather than depreciating it over multiple years. For 2025, the deduction limit is $1,220,000, phasing out dollar-for-dollar above $3,050,000 of total property placed in service. This calculator applies the business-use percentage to the asset cost, caps the result at the annual limit (adjusted for the phase-out), and shows your maximum allowable Section 179 deduction and the tax savings at your marginal rate.
Section 179 deduction formula (2025)
Eligible Cost = Asset Cost * Business Use %
Phase-Out Reduction = max(0, Total Property - $3,050,000)
Annual Cap = max(0, $1,220,000 - Phase-Out Reduction)
Section 179 Deduction = min(Eligible Cost, Annual Cap)
Tax Savings = Deduction * Marginal Rate
Example: Asset $80,000, 100% business use, total property $80,000 (below phase-out). Phase-out reduction = $0. Deduction = min($80,000, $1,220,000) = $80,000. Tax savings at 32% = $25,600.
Section 179 planning tips
- The deduction is limited to your net taxable business income; excess carries forward indefinitely.
- If you have multiple assets, prioritise Section 179 on assets with the highest cost that fit within your income limit.
- If total assets placed in service exceed $3,050,000, the deduction phases out dollar-for-dollar: at $4,270,000 of total property the Section 179 deduction becomes zero.
- Vehicles have separate lower limits for Section 179. Confirm limits for the specific vehicle type in IRS Publication 946.
Frequently asked questions
What is the Section 179 deduction?
Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and software in the year it is placed in service, rather than depreciating it over several years. This provides an immediate tax benefit and improves cash flow.
What is the 2025 Section 179 limit?
For tax year 2025, the Section 179 deduction limit is $1,220,000. This limit is reduced dollar-for-dollar when total equipment placed in service exceeds the phase-out threshold of $3,050,000 (per IRS Rev. Proc. 2024-40).
What property qualifies for Section 179?
Qualifying property includes tangible personal property (machinery, equipment, computers, vehicles under 6,000 lbs), off-the-shelf software, and certain improvements to nonresidential buildings. Real property like land and buildings generally does not qualify.
Can the Section 179 deduction exceed my business income?
No. The Section 179 deduction cannot exceed your net taxable business income for the year. Any excess deduction is carried forward to future years. Bonus depreciation (which has different income limits) can be used alongside Section 179.
How does Section 179 relate to bonus depreciation?
Both allow accelerated expensing of assets. Section 179 is limited by the annual cap and business income. Bonus depreciation has no per-business dollar cap but the bonus percentage changes over time (it was 60% for 2024, reducing further in subsequent years). Many businesses use Section 179 first, then bonus depreciation for the remainder.
Official sources
- IRS Publication 946: How to Depreciate Property (Section 179 rules).
- IRS Rev. Proc. 2024-40: 2025 inflation adjustments including Section 179 limits.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.