Section 179 is a tax deduction allowing businesses to fully deduct the cost of new or used equipment in the year it’s purchased and placed in service. For instance, a piece of $50,000 machinery used 50% or more for business purposes can be written off in the current year rather than depreciated over five years at $10,000 per year.
Section 179 Tax Deduction Calculator
Section 179 Deduction Summary:
Bonus Depreciation Deduction: $
Normal 1st Year Depreciation: $
Total First Year Deduction: $
Cash Savings on your Purchase: $
Lowered Cost of Equipment (after Tax Savings): $
This deduction was designed to support small businesses in investing in themselves. This tax credit allows small businesses to deduct 100% of the purchase price of a machine bought in 2023.
For tax year 2023, companies can deduct up to $1.16 million in the total cost of eligible machinery purchases. However, if total equipment costs exceed $2.89 million, the Section 179 deduction reduces by this overage amount. As an important note, It’s not possible to apply the Section 179 deduction above annual taxable income.