Section 179 Calculator 2026 — Equipment Deduction
Calculate your Section 179 equipment deduction with the 2026 limits: $2,560,000 maximum, dollar-for-dollar phase-out above $4,090,000, business income limitation, and 100% bonus depreciation on the remainder.
Section 179 Deduction Results
For 2026, Section 179 lets businesses expense up to $2,560,000 of qualifying equipment immediately. The limit shrinks dollar-for-dollar once purchases exceed $4,090,000, the deduction cannot exceed business taxable income, and any remaining basis is absorbed by 100% bonus depreciation under the OBBBA.
How It Works
- Enter the total cost of qualifying equipment placed in service
- Enter your business taxable income before the Section 179 deduction
- Choose the tax year, asset class, and bonus depreciation treatment
- Review your allowed deduction, carryforward, and tax savings
Section 179 Deduction in 2026: Limits, Phase-Out, and Planning
Section 179 of the Internal Revenue Code lets businesses deduct the full cost of qualifying equipment, machinery, vehicles, and off-the-shelf software in the year the property is placed in service, instead of depreciating it over several years. For tax years beginning in 2026, the maximum deduction is $2,560,000 and the phase-out threshold is $4,090,000, per IRS Revenue Procedure 2025-32. These amounts reflect the One Big Beautiful Bill Act (OBBBA), which raised the base limits to $2.5 million and $4 million for 2025 and indexed them for inflation.
2026 vs 2025 Section 179 Limits
| Provision | 2025 (OBBBA base) | 2026 (Rev. Proc. 2025-32) |
|---|---|---|
| Maximum deduction | $2,500,000 | $2,560,000 |
| Phase-out begins | $4,000,000 | $4,090,000 |
| Deduction fully phased out | $6,500,000 | $6,650,000 |
| Heavy SUV cap (per vehicle) | $31,300 | $32,000 |
| Bonus depreciation rate | 100% | 100% |
How the Dollar-for-Dollar Phase-Out Works
The Section 179 limit is designed for small and mid-sized businesses, so it shrinks as total purchases grow. Every dollar of qualifying property placed in service above $4,090,000 reduces the $2,560,000 maximum by one dollar. A business placing $5,000,000 of equipment in service in 2026 loses $910,000 of the limit, leaving a $1,650,000 maximum election. Once purchases reach $6,650,000, the Section 179 deduction is zero — but that is rarely a problem in 2026, because 100% bonus depreciation has no dollar cap and can expense the entire amount.
The Taxable Income Limitation and Carryforward
Unlike bonus depreciation, Section 179 cannot create a net loss. Under §179(b)(3), the deduction is limited to your aggregate taxable income from actively conducted trades or businesses — for individuals this includes W-2 wages and pass-through business income. Suppose you buy $400,000 of equipment but your business income before the deduction is only $250,000: you can elect the full $400,000, deduct $250,000 this year, and carry the disallowed $150,000 forward indefinitely to use against future business income. This calculator shows both the allowed deduction and the carryforward separately.
Section 179 vs 100% Bonus Depreciation
| Feature | Section 179 | Bonus Depreciation (OBBBA) |
|---|---|---|
| Annual dollar cap | $2,560,000 (2026) | None |
| Phase-out | Above $4,090,000 of purchases | None |
| Income limitation | Yes — cannot create a loss | No — can create an NOL |
| Asset-by-asset election | Yes | Applies by asset class |
| Used equipment | Eligible | Eligible (new-to-you) |
| Rate in 2026 | 100% of elected amount | 100% permanently |
Because the OBBBA made 100% bonus depreciation permanent for property acquired and placed in service after January 19, 2025, many businesses could skip Section 179 entirely. It still matters in three cases: when you want to create or avoid specific income results asset-by-asset, when your state conforms to Section 179 but not to federal bonus depreciation, and for heavy SUVs where the ordering of the two provisions changes the paperwork. The standard ordering is Section 179 first, then bonus depreciation on the remaining basis, then regular MACRS on anything left. Compare the bonus-only treatment with our Bonus Depreciation Calculator.
Heavy SUVs and Vehicles
Sport utility vehicles with a gross vehicle weight rating between 6,001 and 14,000 pounds are capped at a $32,000 Section 179 election per vehicle in 2026. Because these vehicles are exempt from the §280F passenger automobile caps, the basis above $32,000 generally qualifies for 100% bonus depreciation, so the full purchase price is still deductible in year one for a 100%-business-use vehicle. Passenger cars under 6,001 pounds face the much lower §280F annual caps instead. To see how a large deduction changes your overall business economics, try our Break-Even Calculator.
Worked Example
A consulting firm with $500,000 of business taxable income buys $150,000 of servers and office equipment in March 2026. Total purchases are far below the $4,090,000 threshold, so the full $2,560,000 limit is available. The firm elects Section 179 on the entire $150,000, which is below its income cap, so the whole amount is deductible this year with nothing to carry forward. At a 24% marginal rate, the election saves about $36,000 in federal tax — cash that would otherwise have been spread over a five-to-seven-year MACRS schedule.
Sources: IRC §179; One Big Beautiful Bill Act §70301 and §70401; IRS Revenue Procedure 2025-32 §4.24 (2026 inflation adjustments); IRS Form 4562 instructions.
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