Depreciation Tax Calculator
Compare 100% bonus depreciation, Section 179 and straight line on 2026 rules — the total deduction is identical, and the timing is worth a quarter of the shield.
Depreciation Tax Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Compares straight line rather than the MACRS declining-balance schedule most equipment uses.
- Does not apply the half-year or mid-quarter convention, which shifts the first year.
- State conformity to bonus depreciation varies widely and is not modelled.
- Assumes a constant marginal rate across the whole depreciation life.
In short: A $250,000 asset produces exactly $250,000 of deduction under all three methods. Taken now under 100% bonus depreciation the $60,000 shield is worth $60,000; spread straight line over seven years its present value at 8% is $44,626.03. Waiting destroys $15,373.97 — 25.62% of the shield.
Formula
The three methods deduct identical totals. The only question is when. Because a dollar of tax saved today is worth more than the same dollar in seven years, the timing difference is a real economic gain, not an accounting artefact.
Worked Example
- Note that the total never changes. A $250,000 asset deducts $250,000 in the end, whichever method is used, sheltering $60,000 of tax at a 24% rate.
- Take it all now under bonus depreciation. 100% bonus is permanent under the OBBBA for property acquired after 19 January 2025, with no dollar cap and no income limit. The full $60,000 shield lands in year one.
- Test the Section 179 alternative. The 2026 cap is $2,560,000, but the deduction cannot exceed business taxable income. At $180,000 of income only $180,000 is deductible, carrying $70,000 forward.
- Price the straight-line path. Seven years at $35,714.29 shelters $8,571.43 a year. Discounted at 8%, the stream is worth $44,626.03 today.
- Read the cost of waiting. $60,000 now versus $44,626.03 spread is a $15,373.97 difference — 25.62% of the shield, destroyed by timing alone.
Bonus depreciation is usually the stronger tool because it has no income limitation and can create a loss that carries forward. Section 179 remains valuable for its selectivity: you choose which assets it applies to, which matters in the many states that do not conform to federal bonus depreciation.
Strengths & Limits Of This Model
Where this engine is strong
- Makes the central point explicit: the total deduction is identical and only timing differs.
- Applies all three Section 179 limits, including the income limitation most tools omit.
- Values the deferral in present-value terms rather than comparing raw deduction totals.
Where it stops
- Cannot determine whether your specific asset is qualified property.
- Does not model recapture on early disposal, which can reverse the benefit.
- Ignores the interaction with the excess business loss limitation.
Practical Use Cases
Deciding whether to buy equipment before year end
Placing an asset in service before the year closes moves the entire deduction forward a year. Here that timing shift is worth $15,373.97.
Choosing between bonus and Section 179
If business income is below the asset cost, bonus wins outright because it can create a loss. Section 179 stops at your income.
Modelling a heavy vehicle purchase
Heavy SUVs above 6,000 lb GVWR face a separate $32,000 Section 179 cap for 2026, with bonus available on the remainder. See the Vehicle Tax Calculator.
Planning around a state that does not conform
Many states decouple from federal bonus depreciation. Section 179 selectivity is the usual answer. Check the entity-level position with the Business Tax Calculator.
Methodology & Editorial Standards
The One Big Beautiful Bill Act restored 100% bonus depreciation under IRC 168(k) for qualified property acquired after 19 January 2025 and made it permanent, removing the prior phase-down to 20% in 2026 and zero in 2027. Bonus applies to new and used property new to the taxpayer, has no dollar cap and no taxable income limitation, so it can create or increase a net operating loss. Section 179 for tax years beginning in 2026 has a $2,560,000 cap under IRC 179(b)(1), phasing out dollar for dollar above $4,090,000 of qualifying purchases per Rev. Proc. 2025-32, and is separately limited to aggregate taxable income from the active conduct of a trade or business, with unused amounts carried forward indefinitely. Heavy SUVs between 6,000 and 14,000 lb GVWR face a separate $32,000 Section 179 cap. This engine models straight line for the comparison rather than the MACRS declining-balance conventions that apply to most personal property, and it does not apply the half-year or mid-quarter convention. Present value is computed on end-of-year cash flows. State conformity to bonus depreciation varies widely and is not modelled. The engine implements the standard published formula for this calculation. Inputs are validated for domain and sign before evaluation, and any undefined case returns an em-dash rather than a spurious value.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Depreciation Tax Calculator — 20 Expert FAQs
20 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
Is bonus depreciation still 100% in 2026?
Yes. The OBBBA restored 100% bonus depreciation for property acquired after 19 January 2025 and made it permanent, cancelling the scheduled phase-down.
What is the Section 179 limit for 2026?
$2,560,000, phasing out dollar for dollar once total qualifying purchases exceed $4,090,000, and fully gone at $6,650,000.
Which is better, Section 179 or bonus depreciation?
Bonus usually, because it has no income limitation and can create a loss. Section 179 wins where you want to choose specific assets, particularly in non-conforming states.
Can Section 179 create a loss?
No. It is capped at your aggregate taxable income from active business. Any unused amount carries forward indefinitely.
How much does spreading the deduction cost me?
In this example $15,373.97, or 25.62% of the shield, purely because the deduction arrives over seven years instead of one.
Does used equipment qualify for bonus depreciation?
Yes, provided it is new to you and acquired after 19 January 2025. That has been the rule since the TCJA and the OBBBA retained it.
What is the heavy SUV cap?
$32,000 of Section 179 for 2026 on vehicles between 6,000 and 14,000 lb GVWR. Bonus depreciation can cover the remaining cost.
Do states follow federal bonus depreciation?
Many do not. Decoupled states require an addback and a separate state schedule, which is a common reason to prefer Section 179.
What happens if I sell the asset early?
Depreciation is recaptured as ordinary income under section 1245 to the extent of gain, which can reverse much of the original benefit.
Should I always take the deduction as early as possible?
Usually, but not always. If you expect a materially higher marginal rate in future years, deferring the deduction into those years can be worth more.
Is real property eligible for bonus depreciation?
Buildings are not, though qualified improvement property is. The OBBBA also added qualified production property for certain manufacturing facilities.
What is the excess business loss limitation?
It caps how much business loss can offset non-business income — $256,000 for a single filer in 2026, with the excess becoming a net operating loss.
Does the deduction differ for a company car?
Yes. Passenger autos face separate luxury caps, roughly $20,400 in the first year with bonus claimed for 2026, far below the full cost.
Can I combine Section 179 and bonus depreciation?
Yes. Section 179 is applied first, then bonus depreciation covers the remainder, which is the standard approach for a heavy vehicle purchase.
Does the asset have to be in service by year end?
Yes. Purchase alone is not enough — the property must be placed in service before the tax year closes to be deductible in that year.
Is this depreciation tax calculator free to use?
Yes. It is free, requires no account, and has no usage limits. ApexConverter is funded by contextual advertising, never by selling user data.
Is my data sent to a server?
No. The engine runs as Vanilla JavaScript inside your browser under our Zero-Server Client-Side Execution model. Your figures are computed locally and are never transmitted, logged, or stored.
How accurate is this calculator?
It applies the standard closed-form formula in IEEE-754 double precision, rounding only at the display layer. The engine is reconciled against an independent reference implementation before release.
Does it work on mobile?
Yes. The interface is mobile-first with numeric keypad hints and is tested down to a 320-pixel viewport with no horizontal scrolling.
Can I use it offline?
Largely, yes. Because computation is client-side, the page continues to calculate without a network connection once it has loaded.