How we calculate Section 179 + bonus depreciation

Section 179 of the Internal Revenue Code lets a business elect to expense (deduct in Year 1) the cost of qualifying property up to a statutory dollar cap, instead of depreciating it over the asset's recovery period. For tax year 2025 the maximum §179 deduction is $2,500,000, with the deduction phasing out dollar-for-dollar above $4,000,000 of §179 property placed in service.

For 2026, those figures are indexed to $2,560,000 and $4,090,000 respectively.

IRC §179(b)(5)(B)(i) defines an SUV for §179 purposes as "any 4-wheeled vehicle" designed to carry passengers, not subject to §280F, rated at not more than 14,000 pounds gross vehicle weight. Vehicles with GVWR above 6,000 lb fall outside the §280F luxury-auto caps that otherwise limit Year-1 depreciation to about $20,400 (for 2025).

But for §179 specifically, an SUV between 6,000 and 14,000 lb GVWR is subject to a separate cap under §179(b)(5)(A): the SUV §179 deduction is limited to a base $25,000, indexed for inflation. For 2025 that's $31,300; for 2026, $32,000.

Bonus depreciation under §168(k) lets you deduct an additional percentage of the cost of qualifying property in Year 1, on top of (and after) §179. Under the original TCJA schedule the bonus percentage stepped down — 100% (2017-2022), 80% (2023), 60% (2024), 40% (2025), 20% (2026), 0% (2027).

The One Big Beautiful Bill Act (P.L. 119-21) reversed the step-down for property acquired and placed in service after 2025-01-19, restoring 100% bonus depreciation (per IRS Pub 946). This applies to qualified property — most business-use vehicles with a recovery period of 20 years or less, which covers essentially all on-road vehicles.

§179 stacks on top of bonus depreciation: §179 applies first up to its cap, then 100% bonus depreciation applies to the remainder of the qualifying basis. For a heavy-pickup with GVWR ≥ 10,000 lb and $80,000 purchase price, §179 typically absorbs the entire cost in Year 1, leaving $0 for bonus. For an SUV with $80,000 purchase price and the 2025 SUV cap of $31,300, §179 takes $31,300 and 100% bonus takes the remaining $48,700.

Roughly 20 US states decouple from federal §168(k) bonus depreciation — Arizona, California, Florida (corporate only), Georgia, Hawaii, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, Wisconsin, and the District of Columbia.

For these states, you must add back the federal bonus depreciation on your state return. Some states (CA, MN, NC, OH) allow recovery via a state-defined straight-line schedule over 5–6 subsequent years; others (NJ, IL, MA) simply disallow it entirely.

A subset of states also impose a state-specific §179 cap that's lower than the federal max. California caps §179 at $25,000; Indiana, Maryland, New Jersey, and Pennsylvania match. Hawaii and DC cap at $25,000. Kentucky caps at $100,000.

States with no individual income tax (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming) effectively apply 100% conformity for pass-through individual owners — there's no state tax to decouple against. Corporate (C-corp) filers in some of these states still face decoupling at the entity level.

Every fixture below was hand-traced from the formulas above before the decoder engine was written. The interactive calculator reproduces these outputs deterministically; the test suite gates the build on exact-cent reproduction.

[PLACEHOLDER: Reviewer Name — recruitment pending] — CPA or EA. Reviewer recruitment is pending; a credentialed CPA or EA with §179 + bonus depreciation experience will sign off before AdSense application (target 2026-11-12). All figures and statutory interpretations on this site are subject to that sign-off.

• Listed-property rules (§280F(d)) — for vehicles used <50% for business, MACRS straight-line is required; §179 + bonus dep are disallowed and recapture rules apply if business-use drops mid-life. The calculator returns $0 for §179 + bonus when business-use% < 50.
• Pickup bed-length nuance — §179(b)(5)(B)(ii) exempts pickups from the SUV cap when cargo bed is ≥ 6 ft AND not readily accessible from the passenger compartment. The decoder approximates this by exempting only pickups with GVWR ≥ 10,000 lb. Half-ton pickups with regular cab + long bed may also qualify for full §179 expensing, but are treated conservatively here. Confirm bed length with your CPA before claiming full §179 on a half-ton.
• Prior-year carryforwards (§179(b)(3) taxable-income limitation) — §179 deduction in any year cannot exceed business taxable income; excess carries forward. The calculator does not model your specific taxable income.
• Recapture (§1245) — selling or converting the vehicle to non-business use within the recovery period triggers ordinary-income recapture of the §179 + bonus dep deducted.
• Trade-in basis — §1031 like-kind exchange is no longer available for personal property post-TCJA. Trade-ins recognize gain/loss immediately.
• Lease-vs-buy — §179 + bonus dep apply only to purchased vehicles. Leased vehicles use different rules (§280F lease inclusion).
• State-level recovery schedule — for states with `decouple_partial` conformity, the multi-year recovery schedule (e.g. MN 80% add-back recovered over 5 years; NC 85% over 5; OH 5/6 over 6) is not modeled. The calculator shows the Year-1 state effect only.