Section 179 vs Bonus Depreciation Planner

Quantify how much of your equipment spend can be expensed immediately under Section 179, how bonus depreciation fills the gap, and what basis must roll into MACRS once phase-out thresholds and income limits apply.

Sum all qualifying Section 179 equipment placed in service this tax year.
Use expected taxable income before the Section 179 deduction so the income limit is accurate.
Enter the statutory dollar cap for the year you are modelling (e.g., $1,220,000 for 2024).
Set to the bonus percentage still allowed in the applicable tax year.
Defaults to $2,890,000, the 2024 threshold where Section 179 limits begin to phase out.
Defaults to 20% to mirror 5-year property under the half-year convention.

This planner provides general tax modelling guidance. Confirm eligibility, limits, and state conformity rules with a qualified tax professional before filing.

Examples

  • Equipment $450,000, taxable income $520,000, Section 179 limit $1,000,000, bonus 60% ⇒ Purchases stay below the $2,890,000.00 phase-out threshold, preserving the full $1,000,000.00 limit. Section 179 expensing takes the entire $450,000.00, so no basis remains for bonus or MACRS. First-year deductions remain $450,000.00 with nothing to carry forward.
  • Equipment $1,200,000, taxable income $900,000, Section 179 limit $1,000,000, bonus 40% ⇒ The limit is intact, but taxable income caps Section 179 at $900,000.00, leaving $300,000.00 of basis. Bonus at 40.00% claims $120,000.00 and MACRS at 20.00% adds $36,000.00, producing $1,056,000.00 of first-year deductions and $144,000.00 of MACRS basis for future years.

FAQ

Can leased equipment qualify for Section 179?

Only finance or capital leases that transfer ownership (or include a $1 buyout) qualify. Pure operating leases without a purchase option generally cannot take Section 179 expensing.

How do I change the bonus depreciation percentage for future years?

Adjust the bonus depreciation remaining (%) field to the federal phase-down rate—80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and 0% from 2027 onward unless legislation changes.

What happens to any remaining basis after year one?

The calculator reports the remaining MACRS basis so you can extend the schedule manually or load the value into fixed-asset software for future-year depreciation.

Additional Information

  • Phase-out reduces the Section 179 limit dollar-for-dollar once total purchases exceed the threshold, so large capex programs quickly exhaust the benefit.
  • Bonus depreciation percentage reflects the remaining federal allowance—enter 80%, 60%, 40%, 20%, or 0% depending on the tax year.
  • The MACRS first-year rate should mirror your asset class (e.g., 20% for 5-year property) so the carryforward basis aligns with your depreciation schedule.

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