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Section 179 Calculator
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2021 IRS Rules
Notes
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Section 179 Deduction Cap
$1,050,000
Maximum deduction that can be taken
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Section 179 Phase Out Threshold
$2,620,000
Purchases above this amount will reduce the overall deduction dollar for dollar
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Assumptions
Notes
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Total Qualifying Equipment Purchase
$1,300,000
<= Add up your total qualifying machinery purchases and enter here
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Marginal Tax Rate
35%
<= Add your marginal income tax rate (that is the rate of tax you pay on extra $1 of earnings)
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ItemAmountNotes
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A.
Total Qualifying Equipment Purchase
$1,300,000
Total amount of machinery purchased
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B.
Section 179 Qualifying Deduction
$1,050,000
Calculates the eligible amount for Section 179 Deduction
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C.
Section 179 Tax Benefit
$367,500
Tax benefit in current operating year from Section 179 Deduction
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D.
Effective Equipment Cost After Tax Benefit
$932,500
Line A minus Line C
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E.
Percent Savings
28%
The "discount" savings, which is 1 - (Line D / Line A)
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Sources:
https://www.equipmentradar.com
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https://en.wikipedia.org/wiki/Section_179_depreciation_deduction
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https://www.irs.gov/publications/p946
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Notes:
Section 179 is designed to be a small business tax benefit. As a result, the IRS phases out the benefit for businesses that purchase higher
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amounts of equipment each year. Businesses who purchase less than $3.67m ($2.62m threshold above + $1.050 deduction cap) of equipment
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each year are eligible for a Section 179 tax deduction. The benefit is reduced by $1 for every $1 above $2.62m, until it is $0 at $3.67m
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Deduction Phase Out Chart
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Equipment
Maximum
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Purchase
Deduction
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$0$0$500,000
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$250,000$250,000
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$500,000$500,000
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$750,000$750,000
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$1,000,000$1,000,000
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$1,250,000$1,050,000
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$1,500,000$1,050,000
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$1,750,000$1,050,000
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$2,000,000$1,050,000
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$2,250,000$1,050,000
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$2,500,000$1,050,000
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$2,750,000$920,000
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$3,000,000$670,000
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$3,250,000$420,000
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$3,500,000$170,000
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$3,750,000$0
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