MACRS schedule, straight line, and Section 179 compared for one purchase
| Year | MACRS % | Deduction | Cumulative | Remaining basis |
|---|
GDS 200% declining balance, half-year convention (IRS Publication 946, Table A-1).
| Year | 3-year | 5-year | 7-year | 10-year |
|---|---|---|---|---|
| 1 | 33.33% | 20.00% | 14.29% | 10.00% |
| 2 | 44.45% | 32.00% | 24.49% | 18.00% |
| 3 | 14.81% | 19.20% | 17.49% | 14.40% |
| 4 | 7.41% | 11.52% | 12.49% | 11.52% |
| 5 | — | 11.52% | 8.93% | 9.22% |
| 6 | — | 5.76% | 8.92% | 7.37% |
| 7 | — | — | 8.93% | 6.55% |
| 8 | — | — | 4.46% | 6.55% |
| 9 | — | — | — | 6.56% |
| 10 | — | — | — | 6.55% |
| 11 | — | — | — | 3.28% |
Each column sums to 100%. The half-year convention assumes the asset enters service at mid-year, which is why every class recovers in year one at half its declining-balance rate and tacks a stub year onto the end.
| Tax year | Deduction limit | Phase-out begins | Heavy SUV cap |
|---|---|---|---|
| 2026 | $2,560,000 | $4,090,000 | $32,000 |
| 2025 | $2,500,000 | $4,000,000 | $31,300 |
| 2024 | $1,220,000 | $3,050,000 | $30,500 |
| 2023 | $1,160,000 | $2,890,000 | $28,900 |
Every dollar of qualifying property placed in service above the phase-out threshold cuts the limit dollar for dollar: at $4.5 million placed in service in 2026, the limit falls to $2,150,000. Bonus depreciation (IRC §168(k)) is now permanently 100% for qualified property acquired after January 19, 2025, so amounts beyond your 179 election are typically fully deductible in year one anyway.
Three deductions compete for the same purchase. MACRS is the default: a fixed percentage schedule with no elections and no income limits. Section 179 lets you expense the cost immediately, up to an annual limit that shrinks if you buy a lot. Bonus depreciation now covers 100% of what's left. Straight line is the bookkeeping view most useful for internal reporting.
MACRS deduction each year = cost basis × the table percentage for your class. Straight line = (cost − salvage) ÷ useful life. The 2026 Section 179 limit = $2,560,000 minus $1 for every dollar of qualifying property over $4,090,000, and the election itself can't exceed business taxable income. The tax-saved tiles multiply the year-one deduction by your rate (21% is the federal corporate rate; pass-throughs should use their combined marginal rate).
Enter the cost basis you actually place in service: purchase price plus sales tax, delivery, and installation. Pick the MACRS class from IRS Publication 946's class-life table, driven by how the asset is used. The schedule table updates live; the 179 tile shows the maximum first-year expensing your total spend supports, and flags the phase-out when you cross it.
A shop buys a $95,000 CNC machining center, classified as 7-year property. MACRS year one: $95,000 × 14.29% = $13,576, worth about $2,851 of tax deferral at a 21% rate. Year two jumps to 24.49% ($23,266), then the schedule tapers through year eight. Straight line with a $10,000 salvage over 10 years would deduct a flat $8,500 a year, which is calmer on the books but slower against taxes.
Now the election math. The same machine fully qualifies for Section 179, so year one could be the entire $95,000. Scale it up: a company placing $2.8 million of equipment in service during 2026 elects 179 on $2,560,000 and covers the remaining $240,000 with 100% bonus, deducting the full $2.8 million immediately. But a company placing $4.5 million in service trips the phase-out: $410,000 over the threshold reduces the 179 limit to $2,150,000, with bonus still catching the rest. A 5-year comparison: a $140,000 asset placed in the 5-year class deducts $28,000 (20%) in year one under MACRS, saving $5,880 at 21%.
Section 179 front-loads the entire deduction into year one, up to the annual limit, but it's capped by your business's aggregate taxable income that year. MACRS spreads the deduction on a fixed schedule and doesn't care about current-year income. Since bonus depreciation became permanently 100%, the practical gap has narrowed for most equipment: even without 179, a purchase is typically fully deductible in year one anyway. The real planning question is timing, not method, if you expect a loss year or a higher-rate year ahead.
For tax years beginning in 2026, the Section 179 deduction limit is $2,560,000, and the phase-out begins at $4,090,000 of qualifying property placed in service; every dollar over the threshold reduces the limit dollar for dollar. Heavy SUVs (GVW 14,000 lbs or less) are capped at $32,000 of 179 regardless. For comparison, 2025 was $2,500,000 with a $4,000,000 phase-out.
Yes. The 2025 tax law (OBBBA) made 100% bonus depreciation permanent for qualified property acquired after January 19, 2025, ending the 2023-2024 phase-down that had dropped it to 80% and 60%. Applied after any Section 179 election, bonus lets most new and used equipment be fully written off in year one.
Common placements: computers, peripherals, and light vehicles are 5-year property; office furniture and most general manufacturing machinery are 7-year; dedicated dies, jigs, and special tooling are often 3-year; certain utility and single-purpose agricultural structures run 10 years or longer. The authoritative source is IRS Publication 946's Table of Class Lives (Rev. Proc. 87-56), and the classification follows the asset's use, not its shape.
Yes, since 2018. Used equipment qualifies as long as it is new to you, was not purchased from a related party, and is used more than 50% for business. The same 179 limit and bonus rules apply as for new purchases.
The deduction is limited to your aggregate net business taxable income, counting active trade or business income but not investment income. Any amount disallowed carries forward to next year and keeps its 179 character. If you're already near a loss, MACRS with a 179 carryover is usually the cleaner outcome than forcing the election.
This calculator is an educational tool, not tax advice. MACRS conventions (half-year vs. mid-quarter), listed property rules, vehicle caps under IRC §280F, and state conformity all change the answer; confirm the treatment for your situation with a CPA or tax preparer before filing.