Section 179 Equipment & Software Tax Deduction Calculator 2026-2027
Calculate immediate equipment expensing, bonus depreciation phase-down, and tax savings under IRC Section 179.
Capital Expenditure Parameters
Tax Savings & Net Cost Output
Acquiring business equipment before bonus depreciation phases down? Download our IRS Form 4562 preparation worksheet and state tax adjustment guide.
Statutory Section 179 Limits & Bonus Depreciation Schedule (2024-2027)
Statutory caps and phase-out parameters enacted under IRC Section 179 and modified by TCJA Section 13201. Dollar-for-dollar phase-out occurs for purchases exceeding the spending threshold.
| Tax Year | Section 179 Max Expense | Spending Phase-Out Cap | Complete Phase-Out Threshold | Bonus Depreciation Rate |
|---|---|---|---|---|
| 2024 | $1,220,000 | $3,050,000 | $4,270,000 | 60% |
| 2025 | $1,250,000 | $3,130,000 | $4,380,000 | 40% |
| 2026 (Projected) | $2,560,000 | $4,090,000 | $6,650,000 | 20% |
| 2027 (Post-TCJA Reversion) | $2,640,000 | $4,210,000 | $6,850,000 | 0% (Expired) |
IRC Section 179 & TCJA Bonus Depreciation Mechanics
IRC Section 179 allows qualifying business entities to deduct the entire cost of eligible tangible property and off-the-shelf software in the taxable year placed in service, bypassing standard 5-year or 7-year MACRS recovery schedules.
For acquisitions exceeding the annual expensing threshold ($2,560,000 in 2026), any basis that cannot be written off under Section 179 is eligible for bonus depreciation (20% in 2026) before the remaining unrecovered cost enters standard MACRS depreciation.
Frequently Asked Questions
Can Section 179 create a net operating loss (NOL)?
No. Unlike bonus depreciation, Section 179 deductions are capped at the taxpayer's aggregate net taxable business income for the tax year. Any disallowed deduction amounts are carried forward indefinitely to subsequent tax years.
Does off-the-shelf software qualify for Section 179?
Yes. Computer software placed in service during the tax year qualifies if it is readily available for purchase by the general public, subject to a non-exclusive license, and has not been substantially modified.
What happens if business use drops below 50% in subsequent years?
If business use of the asset falls to 50% or below at any time during the recovery period, the taxpayer must recapture the excess Section 179 deduction as ordinary income on IRS Form 4797.
Business Tax Filing & Equipment Financing Partners
TurboTax Premier & Live CPA
File complex investments, crypto gains, and small business returns with dedicated CPA review.
TaxSlayer Pro
Low-cost electronic filing with comprehensive support for investment and self-employment schedules.
Mercury Startup Banking
FDIC-insured business checking, treasury yield, and automated runway management for founders.
State Commercial Tax Models & Real Estate Exchanges
Coordinate capital expenditure expensing with state income tax schedules and Section 1031 like-kind exchange deferrals.
Qualifying Commercial Vehicles & Section 179 Deduction Models (25 Vehicles)
Explore vehicle-specific Section 179 tax deduction calculations, bonus depreciation write-offs, and GVWR specifications across all 25 qualifying commercial trucks, vans, and SUVs.