Section 179 Deduction Calculator

Under the Section 179 tax deduction, you are able to deduct a maximum of $1 million in fixed assets and equipment as a form of business expense. This stipulation can reduce your tax bill more significantly than if you were to depreciate your assets over a prolonged period. You can use this Section 179 deduction calculator to estimate how much tax you could save under Section 179. All you need to do is input the details of the equipment, select your tax bracket from the options available, and click on the "Calculate" button to compute the savings.

Please note: This calculator has been fully updated for the 2019/20 tax year.

Section 179 Calculator

What is a Section 179 Deduction?

Section 179 is a form of tax deduction that relates to the depreciation of assets. It is named after the section in which the depreciation allowances are outlined in the existing tax laws: Internal Revenue Code Section 179. Under the provisions of Section 179, businesses are able to deduct the entire cost of property and equipment from their profit. This can help to significantly reduce taxes in the year that the assets are purchased.

When businesses apply the 179 deduction, they subtract the entire cost of any new equipment, fleet, cars, and other fixed assets up to a maximum value of $1 million total in the year the asset was first used by the organization. Essentially, the business writes off the full cost of any assets in the year they were bought as opposed to spreading the depreciation over the lifespan of the asset.

In many regards, you can consider Section 179 to represent a form of accelerated depreciation. As opposed to deducing the costs of assets over several years, you can opt to deduct the asset from your tax bill in the year in which it was bought. As such, Section 179 is ideal for organizations that are looking to maximize tax savings.

Section 179 Tax Deduction Qualifications

Not all assets can be deducted under Section 179. The following rules apply:

  1. Under the 2019 version of Section 179, businesses cannot deduct more than $1,000,000 in assets.
  2. Under the 2019 version of Section 179, the deduction threshold in terms of the value of new equipment purchases is $2,500,000.
  3. Once a business has bought assets valued in excess of $2,500,000, the 179 deduction is decreased on a dollar for dollar basis.
  4. Once a company buys assets valued at over $3,500,000, the 179 deduction is no longer applicable.
  5. The majority of new and used equipment, including software, qualifies for the deduction under Section 179.
  6. The bonus depreciation is 100% on both used and new assets.
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