Bonus Depreciation Calculator United States

What the bonus depreciation calculator does

The bonus depreciation calculator estimates the first-year deduction a business can take on qualifying property under Internal Revenue Code Section 168(k), and the tax that deduction saves. You enter the asset cost, the business-use percentage, your marginal tax rate and, optionally, a Section 179 deduction you are claiming first. The tool returns the bonus depreciation deduction, the depreciable basis, the total first-year deduction, the basis left to depreciate, the estimated tax savings, and the effective after-tax cost of the asset.

Depreciation normally spreads the cost of a business asset across its useful life. Bonus depreciation lets a business deduct a large percentage of the cost in the year the asset is placed in service, which can cut taxable income sharply in the purchase year.

How the calculation works

The calculator follows the order the tax code uses:

• It multiplies the asset cost by the business-use percentage to find the depreciable basis, because only the business-use portion can be depreciated.
• It subtracts any Section 179 deduction you elect to take first, leaving the basis available for bonus depreciation.
• It applies the bonus depreciation rate to that remaining basis.
• It adds the Section 179 amount and the bonus deduction to give the total first-year deduction, then applies your marginal rate to estimate the tax savings.

The bonus rate is stored as a parameter and updated when the statutory rate changes. Any basis left after the first-year deduction is depreciated in later years under the applicable recovery schedule.

Bonus depreciation and Section 179 together

Section 179 lets you elect to expense qualifying property up to an annual dollar limit, and it phases out once total purchases for the year exceed a threshold. It cannot create or increase a business loss; it is limited to your business income.

Bonus depreciation has no dollar cap and is not limited by business income, so it can produce a loss that may offset other income, subject to the loss rules for your situation. A common approach is to apply Section 179 first, up to its limits and where it helps, then take bonus depreciation on the remaining basis. Enter a Section 179 amount and the calculator removes it from the basis before applying the bonus rate.

Why business-use percentage matters

An asset used partly for personal purposes is only partly depreciable. Both Section 179 and bonus depreciation apply to the cost multiplied by the business-use share. Vehicles are the most common case: a car or truck used for business and personal driving needs its business-use percentage documented, and only that portion is eligible.

If business use falls below a required threshold in a later year, some accelerated deductions can be recaptured as income. The calculator does not model this, but it is a reason to track business use carefully.

Reading your result

The output leads with the bonus depreciation deduction. The depreciable basis is the business-use portion of the cost, and the total first-year deduction combines any Section 179 amount with the bonus deduction. The remaining basis is the cost left to depreciate in later years. The estimated tax savings and the effective after-tax cost show how much the write-off reduces the real cost of the purchase. Because the benefit falls in the first year, the year an asset is placed in service can change your tax outcome, and comparing effective cost with and without the deduction shows by how much.

What you need to enter

Enter the asset cost, the business-use percentage, your marginal tax rate and any Section 179 deduction you plan to take first. Use the cost placed in service in the tax year: bonus depreciation applies in the year the asset is ready and available for use, which may not be the year it was ordered or paid for. The statutory rate and related limits can change, and depreciation interacts with the rest of your return, so confirm the details with a tax professional before relying on a large first-year deduction.

This is general information only and not financial or tax advice.

About This Bonus Depreciation Calculator

Use this bonus depreciation calculator to get an instant, accurate estimate. The figures follow official IRS guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.