Equipment Depreciation Calculator (2026): Section 179 vs. Bonus vs. MACRS

Section 179, bonus or regular depreciation: the short version

When you buy equipment, a vehicle or a computer for your business, you usually can't deduct the whole price as an expense. You recover it through depreciation. For 2026 there are three main ways to do that, and you can mix them asset by asset:

All three give you the same total deduction over time. The choice is about timing, and timing matters because a deduction is worth more in a year when your tax rate is higher. That is a tax question, not a spending question. Nothing here is a suggestion to make a purchase.

How the calculator works

• Recovery class. Computers, office tech, cars and light trucks are 5-year property. Office furniture and most machinery are 7-year. Land improvements and qualified improvement property are 15-year. Nonresidential buildings and their structural parts are 39-year.
• Half-year convention. Most equipment is treated as placed in service in the middle of the year, so year 1 gets half a year of depreciation (Pub 946 Table A-1). For example, 7-year property gets 14.29% in year 1 and 24.49% in year 2.
• Mid-quarter convention. If more than 40% of the equipment you placed in service during the year (by cost, not counting buildings or amounts you expense under Section 179) went into service in October, November or December, the mid-quarter tables apply to everything placed in service that year (Tables A-2 to A-5). Equipment placed in service in the 4th quarter then gets only 3.57% (7-year) or 5% (5-year) in year 1.
• Mid-month convention applies to 39-year buildings (Table A-7a).
• Business use. Only the business part of the cost is depreciated. Vehicles must be used more than 50% for business to use Section 179 or bonus depreciation.

Vehicles: the special limits for 2026

Cars, SUVs, trucks and vans rated 6,000 lb gross vehicle weight or less are "passenger automobiles" with annual caps on depreciation, including Section 179 and bonus. For vehicles placed in service in 2026 (Rev. Proc. 2026-15):

Multiply each cap by your business-use percentage. Heavier SUVs (over 6,000 lb, up to 14,000 lb) aren't subject to these caps, but Section 179 on one is limited to $32,000 for 2026. Pickups with a cargo bed of at least 6 feet, cargo vans with no seating behind the driver, and vehicles that seat more than nine behind the driver are exempt from that $32,000 cap. Keep a mileage log: you can't deduct depreciation on a vehicle unless you can prove business use. If you use the standard mileage rate instead, depreciation is already built into that rate, so you don't use this calculator for that vehicle. Our mileage deduction calculator covers that method.

Connecticut and North Carolina don't fully follow the federal rules

Connecticut (personal income tax)

• Bonus depreciation: add back 100% of the federal bonus deduction on Schedule 1 of Form CT-1040 (line 36). In each of the next 4 years, subtract 25% of that add-back (line 48a).
• Section 179: add back 80% of the federal Section 179 deduction (line 36a). In each of the next 4 years, subtract 25% of the amount you added back.
• The same add-backs apply to your share from an LLC, partnership or S corporation. Corporations follow separate business tax rules.

North Carolina (individual income tax)

• Bonus depreciation: North Carolina didn't adopt federal bonus depreciation. Add back 85% of the federal bonus deduction on Form D-400 Schedule S (line 3), then deduct 20% of that add-back in each of the next 5 years (line 23).
• Section 179: North Carolina uses its own limits of $25,000 and a $200,000 investment limit. Add back 85% of the difference between your federal Section 179 deduction and the deduction using NC limits (line 4), then deduct 20% of it in each of the next 5 years (line 24).
• These are the rules NCDOR published for tax year 2025, and North Carolina has used the same approach for years. NCDOR hadn't posted 2026 instructions when we checked, so confirm them before you file.

In both states your total depreciation over time ends up the same. The add-back moves part of the deduction into later years, so a large federal write-off can still leave state tax due in the first year.

What happens when you sell

If you sell or trade in equipment for more than its depreciated value, the gain up to the depreciation you took is generally taxed as ordinary income (Section 1245 recapture, reported on Form 4797). That includes Section 179 and bonus amounts. Expensing everything now can mean a bigger taxable gain later, so plan for it.

Records to keep

• The invoice, proof of payment and the date it was delivered and set up.
• For vehicles, a mileage log with dates, miles and business purpose, plus the GVWR sticker.
• A list of all equipment placed in service each year with dates and costs (for the mid-quarter and Section 179 limits).
• Form 4562 and your state add-back schedule each year until the asset is fully depreciated and the state add-backs are used up.

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