Section 179 Deduction Savings Calculator

Enter your Section 179 deduction amount and tax rates to calculate your federal savings, state savings, net equipment cost, and total tax benefit.

Created by Luis GonzalezLast updated: June 16, 2026

How to Use This Calculator

1
Enter Deduction & Tax Rates
Input your Section 179 deduction amount and your marginal federal tax rate, state tax rate, and any additional tax rate (local or self-employment).
2
Review Results
See Total Tax Savings, Net Equipment Cost, and Combined Tax Rate cards. The Insights panel shows federal/state/additional savings breakdown, savings per dollar, effective discount percentage, and 2026 deduction limits.

Example Calculation

A small business owner deducts $50,000 for new equipment under Section 179, with a 24% federal rate and 5% state rate.

Section 179 Deduction ($)

50,000

Federal Tax Rate (%)

State Tax Rate (%)

Additional Tax Rate (%)

Results

Total Tax Savings

$14,500.00

Net Equipment Cost

$35,500.00

Combined Tax Rate

29.0%

Insights card shows $12,000.

Tips

$14,500 Saved Means the Equipment Effectively Costs $35,500

At a 29% combined rate (24% federal + 5% state), every $1 deducted saves $0.29 in taxes. Your $50,000 CNC machine effectively costs $35,500 after the tax benefit. Jumping to the 32% federal bracket would save $18,500 instead — reducing net cost to $31,500.

Moving to the 32% Bracket Adds $4,000 in Savings

At 32% federal + 5% state = 37% combined, the same $50,000 deduction saves $18,500 vs $14,500 at 24%. If you can time equipment purchases for a higher-income year, the tax benefit increases by $4,000. At the 37% bracket, savings reach $21,000.

No-Tax States Save You the State Rate Entry — Not the Federal Benefit

In Texas or Florida (0% state tax), the $50,000 deduction still saves $12,000 federally at 24%. You lose the $2,500 state savings. High-tax states like California (13.3%) or New York (10.9%) can push your combined rate above 35%, making Section 179 even more valuable.

The 2026 Limit Is $1,220,000 — Phase-Out Starts at $3,050,000

You can deduct up to $1,220,000 under Section 179. At 29% combined rate, the maximum deduction saves $353,800. The deduction phases out dollar-for-dollar once total equipment purchases exceed $3,050,000, so a business buying $3,100,000 of equipment can only deduct $1,170,000.

How Much Does Section 179 Actually Save You?

The Section 179 Deduction Savings Calculator shows the real dollar impact of expensing equipment purchases.

A $50,000 deduction at a 24% federal rate and 5% state rate produces $14,500 in total tax savings — making the equipment effectively cost $35,500.

At a 29% combined rate, every dollar deducted saves $0.29 in taxes.

The Tax Savings Formula

Section 179 savings are calculated by applying each tax rate to the deduction:

Federal Savings = Deduction × Federal Tax Rate
State Savings = Deduction × State Tax Rate
Additional Savings = Deduction × Additional Tax Rate
Total Tax Savings = Federal + State + Additional Savings
Net Equipment Cost = Deduction Amount - Total Tax Savings
Combined Rate = Federal Rate + State Rate + Additional Rate

💡 To see how depreciation spreads over multiple years when Section 179 doesn't cover the full cost, try our Asset Depreciation Calculator for straight-line, declining balance, and sum-of-years methods.

Example: $50,000 Equipment Purchase at 24% Federal + 5% State

$50,000 Section 179 deduction, 24% federal rate, 5% state rate, 0% additional:

Metric	Value	Context
Total Tax Savings	$14,500	Strong — above 25% savings threshold
Net Equipment Cost	$35,500	29% offset by tax savings
Combined Tax Rate	29.0%	Federal 24% + State 5%
Federal Savings	$12,000	82.8% of total savings
State Savings	$2,500	17.2% of total savings
Savings Per Dollar	$0.29	Per $1.00 deducted
Effective Discount	29.0%	Off equipment cost
2026 Deduction Limit	$1,220,000	Phase-out at $3,050,000

The 24% federal bracket provides $12,000 (82.8% of savings), while the 5% state rate adds $2,500.

Moving to the 32% federal bracket would increase total savings to $18,500 — an additional $4,000 for the same purchase.

💡 To estimate your overall tax liability including Section 179 deductions, try our Self-Employment Tax Calculator for a complete picture of business taxes.

When Section 179 Delivers the Most Value

The deduction's value scales directly with your combined tax rate.

At 29% (24% federal + 5% state), you save $14,500 on $50,000.

At 42% (37% federal + 5% state), the same deduction saves $21,000 — effectively a 42% discount on equipment.

Time major purchases for your highest-income year to maximize the benefit, and remember the deduction cannot exceed your taxable business income for the year.

Frequently Asked Questions

How is the total tax savings calculated?

Total Savings = Deduction × (Federal Rate + State Rate + Additional Rate). For $50,000 at 24% + 5% + 0%: $50,000 × 0.29 = $14,500. Federal contributes $12,000 (24%), state adds $2,500 (5%). The deduction reduces taxable income, and savings equal the tax you would have paid on that income.

What is the net equipment cost?

The actual out-of-pocket cost after the tax benefit: Equipment Price - Total Tax Savings. For a $50,000 purchase with $14,500 in savings: $50,000 - $14,500 = $35,500. This is the true economic cost of the equipment because you recover $14,500 through lower tax payments.

What qualifies for Section 179?

Tangible personal property used for business: machinery, equipment, vehicles (with weight limits), office furniture, computers, and off-the-shelf software. The asset must be purchased and placed in service during the tax year. Used equipment qualifies too — it doesn't need to be new. Real property improvements (HVAC, roofing, fire suppression) also qualify.

What's the difference between Section 179 and bonus depreciation?

Section 179 has a $1,220,000 cap but lets you choose which assets to expense. Bonus depreciation (60% for 2026) has no dollar limit but applies automatically to all qualifying assets. Section 179 is limited to taxable income; bonus depreciation can create a net operating loss. Most businesses use both strategically.

Does my state allow Section 179?

Most states conform to federal Section 179 rules, but several have different limits. California caps Section 179 at $25,000 (with a $200,000 phase-out). Pennsylvania limits it to $25,000. New York conforms to federal limits. Always check your state's specific rules — the state savings shown assumes full conformity.

Can I use Section 179 if I have no taxable income?

Section 179 is limited to your taxable business income — you cannot use it to create a net operating loss. If your business income is $30,000 and you claim $50,000, only $30,000 is deductible this year. The remaining $20,000 carries forward to future years. Bonus depreciation has no such limitation.