Calculate depreciation using straight-line, MACRS and Section 179. Updated 2026 limits — Section 179 $2.56M, bonus depreciation 100%. Free Calculator4U.
Calculate asset depreciation using SL, DDB, SYD, MACRS, and 2026 Tax Provisions (Section 179 & Bonus).
A depreciation calculator determines how much of a business asset's value can be deducted each year for tax and accounting purposes — using straight-line, double declining balance, MACRS, or the powerful 2026 Section 179 and bonus depreciation provisions. For 2026, the Section 179 deduction limit jumped to $2,560,000 — more than double the 2024 limit of $1,160,000 — after the One Big Beautiful Bill Act. Bonus depreciation was restored to 100% for qualifying property acquired after January 19, 2025. A business purchasing $100,000 of equipment in 2026 can now deduct the entire amount in year one. Use Calculator4U to calculate your annual depreciation schedule and identify the optimal tax strategy.
The IRS requires applying deductions in a specific order: Section 179 first, bonus depreciation second, MACRS last. Section 179 is limited to your taxable business income and cannot create a net operating loss — it is best for profitable businesses. Bonus depreciation has no dollar limit and can create or increase a net operating loss — valuable for businesses in a loss year or making very large equipment investments. A $3,500,000 equipment investment in 2026 could be fully expensed between Section 179 at $2,560,000 and 100% bonus depreciation on the remaining $940,000 — eliminating all depreciation for multiple future years at the cost of deductions today.
Depreciation is the systematic reduction in a tangible asset's recorded value over its useful life, representing wear, tear, and obsolescence. Straight-line formula: Annual Depreciation equals (Asset Cost minus Salvage Value) divided by Useful Life. For a $60,000 truck with $8,000 salvage value over 8 years: $6,500 per year. For tax purposes, most US businesses use MACRS — the IRS-required method assigning specific recovery periods from 3 to 39 years by asset type, using accelerated rates in early years.
Four main methods: Straight-Line spreads cost evenly. Double Declining Balance front-loads depreciation at 2x the straight-line rate applied to declining book value. Sum-of-Years' Digits provides moderate front-loading. MACRS is IRS-required for tax returns using specific recovery periods of 3, 5, 7, 15, 27.5, or 39 years by asset type. For 2026, Section 179 allows immediate expensing of up to $2,560,000 of qualifying assets, and 100% bonus depreciation eliminates remaining basis in year one for qualifying property acquired after January 19, 2025.
Depreciation reduces taxable income dollar for dollar. For a 21% corporate bracket, $100,000 of depreciation saves $21,000 in federal taxes. For a 32% pass-through bracket it saves $32,000. Section 179 in 2026 allows immediate expensing up to $2,560,000 — a business buying $500,000 of equipment can deduct it all in year one rather than over 5 to 7 years. Bonus depreciation at 100% applies to remaining eligible basis. Warning: depreciation recapture under IRC Sections 1245 and 1250 taxes a portion of the gain as ordinary income when you later sell the depreciated asset.
The Section 179 limit for 2026 is $2,560,000 per IRS Publication 946 — up from $1,160,000 in 2024 due to the One Big Beautiful Bill Act. Phase-out begins at $4,090,000 of qualifying property placed in service, with full phase-out at $6,650,000. The SUV Section 179 cap is $32,000 in 2026. Section 179 must be applied before bonus depreciation and cannot exceed your taxable business income — it cannot create a net operating loss.
Bonus depreciation in 2026 is 100% for qualifying property acquired and placed in service after January 19, 2025, reinstated by the One Big Beautiful Bill Act. This allows full first-year deduction of any amount of qualifying equipment with no dollar cap. Unlike Section 179, bonus depreciation can create a net operating loss. IRS requires applying Section 179 first, then bonus depreciation on remaining eligible basis, then MACRS on any remaining balance.
IRS requires this specific order: Step 1 is Section 179 up to $2,560,000 limited by business taxable income. Step 2 is 100% bonus depreciation on remaining eligible basis for qualifying property. Step 3 is regular MACRS on any remaining basis over the recovery period. This order matters — businesses with low taxable income may skip Section 179 and use bonus depreciation instead since bonus depreciation can create or increase a net operating loss while Section 179 cannot.
No — many states decouple from federal bonus depreciation and some limit Section 179 deductions below the federal threshold. California, for example, does not conform to federal bonus depreciation and has its own lower Section 179 limits. This means a business taking a 100% bonus depreciation deduction federally may still owe state income tax on the same income. Always check your specific state's conformity to federal depreciation rules before finalizing your strategy — state deductions can differ significantly from federal treatment.