Vehicle Details
Enter your vehicle info based on 2026 tax year limits.
Estimate your first-year Section 179 tax deduction for purchasing a business vehicle. Your deduction depends on the Gross Vehicle Weight Rating (GVWR) and business use percentage.
Enter your vehicle info based on 2026 tax year limits.
The Section 179 Deduction Calculator is a critical tax-planning tool for small to medium-sized business owners. Enacted by the US government to encourage economic growth, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year.
Instead of capitalizing an asset and depreciating it a little bit at a time over 5 to 7 years, Section 179 allows you to write off the entire purchase price in the very first year. By inputting the total cost of your equipment and your estimated corporate tax rate, this calculator reveals exactly how much cash you will save on your tax bill and determines the true "Net Cost" of the equipment after those tax savings are applied.
The mathematics of Section 179 are designed to immediately lower your taxable income, thereby freeing up cash flow that can be reinvested back into your business.
For the 2024 tax year, the IRS allows a maximum Section 179 deduction of $1,220,000. However, this deduction is phased out for larger businesses. Once a business purchases more than $3,050,000 in equipment in a single year, the deduction limit is reduced dollar-for-dollar. If your total equipment purchases exceed $4,270,000, the Section 179 deduction is completely eliminated for your business.
If your business is profitable, the deduction lowers your taxable income. We calculate your actual cash savings using this formula:
Cash Savings = Equipment Cost × Corporate Tax Rate
For example, if you buy a $100,000 machine and your business is taxed at a 21% flat corporate rate, the deduction lowers your tax bill by exactly $21,000 in cash.
The most powerful way to look at Section 179 is to calculate the "Net Cost" of your investment. By subtracting the Cash Savings from the original Equipment Cost, you discover what the equipment actually cost your business after the government effectively subsidized a portion of it.
A mid-sized construction company has had a highly profitable year and expects to pay taxes in the 35% bracket (combined federal and state). They desperately need a new bulldozer that costs $150,000. If they buy and put the bulldozer into service before December 31st, they can take the full $150,000 Section 179 deduction. This deduction lowers their taxable income by $150,000, resulting in $52,500 in actual cash tax savings ($150,000 × 35%). The true "Net Cost" of the bulldozer to the business is only $97,500. By buying the equipment now instead of next year, they kept $52,500 out of the hands of the IRS and put an income-producing asset to work immediately.
An HVAC repair company needs to buy three new work vans. The total cost for the vehicles is $120,000. Because the vans are over 6,000 lbs (Gross Vehicle Weight Rating) and are used 100% for business purposes, they qualify fully for Section 179. The company's effective tax rate is 24%. By claiming the deduction, they save $28,800 in taxes. The Net Cost of the three vans drops to $91,200. Note: Passenger vehicles under 6,000 lbs are subject to severe deduction limits, so buying heavy-duty "work" vehicles is a common Section 179 strategy.
Yes! Unlike Bonus Depreciation (which historically required the equipment to be brand new, though this rule has shifted in recent years), Section 179 explicitly allows you to deduct the cost of "new-to-you" used equipment, as long as it is put into service during the tax year.
Absolutely, and this is one of the most powerful strategies for small businesses. You can take the full deduction for the total cost of the equipment in year one, even if you only made a few monthly loan payments. In many cases, the tax savings in year one far exceed the total out-of-pocket cash paid for the loan payments.
No. Section 179 deductions are limited to your business's taxable income for the year. You cannot use Section 179 to drive your business income below zero. However, any unused deduction amount can be carried forward to the next tax year.
Qualifying property generally includes tangible personal property used in business. This covers heavy machinery, office furniture, computers, off-the-shelf software, and heavy work vehicles (over 6,000 lbs). Real estate, land, and inventory do not qualify.