Depreciation Tax Calculator 2025 β Section 179 + Bonus Depreciation
Calculate Section 179 deduction and 60% bonus depreciation for 2025. Compare first-year write-off vs MACRS depreciation to maximize your tax savings.
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%
Must be >50% for Section 179 $
Phase-out begins at $3,130,000 $
Section 179 limited to business income $0
Year 1 Deduction
$0
Section 179
$0
60% Bonus Depreciation
$0
Year 1 Tax Savings
Deduction Calculation
How to Use This Depreciation Calculator
Enter the asset cost and business use percentage. The calculator shows the optimal combination of Section 179 and bonus depreciation to maximize your first-year deduction, plus MACRS for any remaining basis.
The Formula
Eligible basis = asset cost Γ business use %
Section 179: min(eligible basis, $1,250,000 limit, business income)
Remaining after S179 = eligible basis β Section 179 taken
Bonus depreciation (2025): remaining Γ 60%
MACRS on remainder: remaining Γ (1 β 60%) using half-year convention
Total Year 1 = Section 179 + Bonus + MACRS Year 1
Tax savings = Total Year 1 Γ marginal tax rate
Section 179: min(eligible basis, $1,250,000 limit, business income)
Remaining after S179 = eligible basis β Section 179 taken
Bonus depreciation (2025): remaining Γ 60%
MACRS on remainder: remaining Γ (1 β 60%) using half-year convention
Total Year 1 = Section 179 + Bonus + MACRS Year 1
Tax savings = Total Year 1 Γ marginal tax rate
Example
Business purchases $80,000 CNC machine, 100% business use, 7-year MACRS, 24% bracket:
Section 179: min($80,000, $1,250,000 limit) = $80,000 (if income allows)
Bonus depreciation on remainder: $0 (fully expensed under S179)
Year 1 deduction: $80,000
Tax savings: $80,000 Γ 24% = $19,200
vs MACRS only: Year 1 = $80,000 Γ 14.29% = $11,432 β savings = $2,744
Section 179: min($80,000, $1,250,000 limit) = $80,000 (if income allows)
Bonus depreciation on remainder: $0 (fully expensed under S179)
Year 1 deduction: $80,000
Tax savings: $80,000 Γ 24% = $19,200
vs MACRS only: Year 1 = $80,000 Γ 14.29% = $11,432 β savings = $2,744
Extended
Section 179 vs Bonus vs MACRS Comparison
Side-by-side comparison of all three methods with year-by-year tax savings
Year-by-year comparison of all three depreciation methods for your asset.
Cumulative Tax Savings by Method
| Year | Section 179 (Year 1) | Bonus + MACRS | MACRS Only |
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Frequently Asked Questions
What is Section 179 and how does it work?
Section 179 allows businesses to immediately deduct the full cost of qualifying equipment and software in the year it is placed in service, rather than depreciating it over several years. The 2025 limit is $1,250,000, with a phase-out beginning at $3,130,000 in total purchases. This applies to tangible personal property, off-the-shelf software, and qualified improvement property.
What is bonus depreciation in 2025?
Bonus depreciation allows an additional first-year deduction on qualifying new and used property. After being 100% in 2022, it phases down: 80% for 2023, 60% for 2024, 40% for 2025, 20% for 2026, 0% after 2026 (unless extended). Unlike Section 179, bonus depreciation is not limited by taxable income and can create a net operating loss.
Should I use Section 179 or bonus depreciation?
Section 179 is usually preferable if your business is profitable (limited to business income). Bonus depreciation works when you want to create a loss or when purchases exceed Section 179 limits. You can use both: Section 179 first up to your income limit, then bonus depreciation on remaining assets. MACRS regular depreciation is used for anything remaining.
What property qualifies for Section 179?
Qualifying property includes: tangible personal property (machinery, equipment, computers, vehicles), off-the-shelf software, qualified improvement property (improvements to the interior of nonresidential buildings), and some listed property. Land, buildings, and property used outside the US do not qualify. The property must be used more than 50% for business.
Is there a vehicle deduction limit under Section 179?
Yes. Passenger automobiles (under 6,000 lbs GVWR) are subject to luxury auto limits. For 2025, the first-year limit is approximately $20,400 with bonus depreciation. SUVs over 6,000 lbs have a Section 179 limit of $30,500 (2025). Heavy vehicles (trucks, vans over 6,000 lbs) used 100% for business can be fully expensed under Section 179 and bonus depreciation.