Section 179 Calculator: What Could That Equipment Purchase Save You?
Estimate the first-year Section 179 deduction and tax savings on a business equipment purchase, see the loan payment if you finance it, and compare cash vs. loan vs. lease side by side. Everything runs in your browser — no sign-up, no email, nothing stored. You supply the current-year cap from irs.gov; we supply the math and the honest caveats.
1. The equipment
Total price of the 179-eligible equipment.
The deduction lands in the year the equipment is installed and ready for use — not the order or delivery date.
Combined federal + state rate on your last dollar of business income.
2. The Section 179 rules for 2026
The cap and phase-out threshold change with inflation and legislation, so we do not hardcode them — enter the current-year figures from irs.gov. The pre-filled values are editable examples, not current-year fact.
Above this total equipment spend, the cap shrinks dollar-for-dollar.
3. How you'd pay for it
Estimated first-year Section 179 result
Est. deduction
$150,000
Est. tax savings
$36,000
Deduction × your 24% marginal rate.
Est. loan payment
$3,150/mo
60 payments · est. total interest $39,017
Note the asymmetry people finance around: in the loan case you could claim the full estimated deduction of $150,000 in year one while paying out roughly $37,803 in cash. Whether that is wise depends on the rest of your return — ask your CPA, not a calculator.
Cash vs. loan vs. lease
Same purchase, three structures. The lease column models a true (FMV-style) lease where payments are deducted as rent; a $1-buyout lease generally behaves like the loan column.
| Structure | First-year cash out | Est. first-year tax savings | Net first-year cash effect | Est. after-tax cost over term | Own at end? |
|---|---|---|---|---|---|
| Pay cash Full price up front; Section 179 estimate applies. | $150,000 | $36,000 | $114,000 | $114,000 | Yes |
| Equipment loanSelected Financed equipment generally still qualifies for Section 179 in year one. | $37,803 | $36,000 | $1,803 | $153,017 | Yes |
| FMV lease True-lease modeling: payments deducted as rent, no Section 179. A $1-buyout lease behaves like the loan column instead. | $34,800 | $8,352 | $26,448 | $132,240 | Buyout / return |
“After-tax cost over term” ignores the time value of money and any equipment resale value, and assumes tax savings are fully usable in the year shown. The FMV lease column excludes any end-of-term buyout you might pay.
Honest caveats — read before relying on any number above
- Estimates only. This is a planning sketch, not tax advice, a quote, or a filing position.
- Verify the caps. The Section 179 cap and phase-out threshold change — pull the current-year figures from irs.gov and enter them above.
- Bonus depreciation is not modeled. It stacks after Section 179 and its percentage has changed repeatedly with legislation — it can significantly change the comparison. Ask your CPA.
- Business-income limit. Section 179 cannot create a loss; unused deduction carries forward. If your taxable business income is below the deduction, your first-year savings will be smaller than shown.
- State treatment varies. Many states cap Section 179 lower than federal or decouple from bonus depreciation entirely.
- Lease classification is facts-and-circumstances. Whether your lease is a true lease or a financed purchase for tax purposes depends on its terms — confirm before counting either column's treatment.
- Placed-in-service matters. Installed and ready for use by year-end — not ordered, not in crates.
Your figures are computed in your browser and are never stored or transmitted.
Next steps
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Check your DSCR →Section 179 Guides
Plain-language coverage of how the deduction works, what qualifies, and the traps.
Read the guides →Equipment Loans, Explained
The hub: loan and lease structures, what lenders check, and financing by industry.
Start at the hub →Frequently Asked Questions
- What is the Section 179 deduction?
- Section 179 lets a business elect to deduct the cost of qualifying equipment in the year it is placed in service, instead of depreciating it over several years. It applies to tangible business equipment — machinery, vehicles over certain thresholds, computers, and similar property used more than 50% for business. The deduction is capped annually, phases out above a total-spending threshold, and cannot exceed your business income for the year; unused amounts carry forward.
- Why does this calculator make me enter the current-year cap?
- Because the cap and phase-out threshold adjust with inflation and legislation, and financing sites that hardcode them go stale — a stale cap produces a wrong deduction estimate that people then plan purchases around. The authoritative current-year figures are published by the IRS (see Publication 946 at irs.gov). The pre-filled values in the tool are editable examples, not asserted fact.
- Does financed or leased equipment qualify for Section 179?
- Financed equipment generally qualifies: eligibility turns on placing qualifying property in service, not on paying cash, which is why the loan column of the comparison can show a full first-year deduction alongside only a few months of payments. Leases are split: a $1-buyout (finance) lease is usually treated as a purchase and can qualify, while a true fair-market-value lease usually is not — you deduct the lease payments as rent instead. The classification depends on the lease terms; confirm with your CPA.
- What does "placed in service" mean for the deduction year?
- Installed and ready for its intended use by the end of the tax year — not merely ordered, shipped, or sitting in crates on your floor. A machine delivered in late December but not operable until January generally lands in the next tax year. If a year-end deduction is the goal, plan the installation date, not just the purchase date.
- How is this different from bonus depreciation?
- Bonus depreciation is a separate first-year write-off that applies after Section 179, has no dollar cap, and can create a loss — but its percentage has changed repeatedly as tax law changes, and many states decouple from it. This calculator deliberately models Section 179 only and flags bonus as a not-modeled caveat; the interaction between the two is exactly the kind of thing to run past your CPA. See our Section 179 vs bonus depreciation comparison for the plain-language differences.
- Is the output of this calculator tax advice?
- No. It is a planning estimate built from the numbers you enter. Real outcomes depend on the current-year caps, bonus depreciation rules, your business income limitation, state conformity, and your overall return. Use the output to frame the conversation with your CPA — not to replace it.