tax · 2026-05-01
Compute Section 179 immediate expensing for business equipment vs MACRS depreciation, including phase-out at the $3.13M cap (2024).
| Equipment cost | $250,000 |
| Total qualifying purchases | $250,000 |
| Marginal tax rate % | 32% |
| MACRS recovery years | 5 |
| Eligible Section 179 deduction | $250,000 |
| MACRS year 1 tax saved | $16,000 |
| Year 1 cash advantage | $64,000 |
Section 179 lets businesses immediately deduct the FULL cost of qualifying equipment in the year placed in service, instead of depreciating over 5-39 years. For 2024: up to $1.22M with phase-out starting at $3.13M total qualifying purchases.
If total qualifying purchases exceed $3.13M:
For business owners with positive income: Section 179 typically wins. For NOL situations: bonus depreciation is better.
No — Section 179 is limited to taxable business income. If you'd be in a loss after the deduction, the unused portion carries forward. Bonus depreciation has no such limit and CAN create or expand a net operating loss.
Partially. Vehicles over 6,000 lbs GVW (most full-size SUVs and trucks) qualify for up to $30,500 (2024) in Section 179, plus bonus depreciation on the rest. Vehicles under 6,000 lbs are subject to luxury auto limits — Section 179 capped at ~$12,400 first year. Verify GVW on the door sticker before relying on the deduction.
Yes — you elect it on Form 4562. The IRS won't auto-apply. Elect when income is high (current bracket value > expected future bracket value). Don't elect when you're in a low-income year and depreciation deductions would be more valuable spread across higher-income future years.