Buy a machine and the tax code hands you three ways to recover the cost: MACRS, the default accelerated schedule; Section 179, immediate expensing with a generous cap; and bonus depreciation, which since 2025 is permanently 100%. Most equipment ends up fully deducted in year one anyway. The interesting questions are which class the asset lands in, what the caps are this year, and when deliberately slowing the deduction down is the smarter play.
The Modified Accelerated Cost Recovery System is the default: no election needed, no income limits. Each asset gets a recovery period from the IRS class-life table, and a fixed percentage schedule does the rest. Most equipment uses 200% declining balance with the half-year convention, which front-loads the early years and tacks a stub year onto the end.
The percentage table for the common classes:
| Year | 3-year | 5-year | 7-year |
|---|---|---|---|
| 1 | 33.33% | 20.00% | 14.29% |
| 2 | 44.45% | 32.00% | 24.49% |
| 3 | 14.81% | 19.20% | 17.49% |
| 4 | 7.41% | 11.52% | 12.49% |
| 5 | — | 11.52% | 8.93% |
| 6 | — | 5.76% | 8.92% |
| 7 | — | — | 8.93% |
| 8 | — | — | 4.46% |
Classification follows use, not shape: computers and light vehicles are generally 5-year property, office furniture and most general manufacturing machinery 7-year, dedicated dies and special tooling often 3-year. The controlling source is IRS Publication 946's class-life table, originally built from Rev. Proc. 87-56.
Section 179 lets you elect to expense qualifying property immediately instead of depreciating it. For property placed in service in 2026, the limit is $2,560,000, and the benefit phases out dollar for dollar once you place more than $4,090,000 of qualifying property in service during the year. Two guard rails shape real elections: the deduction can't exceed your aggregate business taxable income (disallowed amounts carry forward), and heavy SUVs are capped at $32,000 of 179 regardless of price.
Scale example: a company placing $2.8 million of equipment in service in 2026 elects 179 on $2,560,000 and covers the remaining $240,000 with 100% bonus — the full $2.8 million deducted in year one. A company placing $4.5 million trips the phase-out: $410,000 over the threshold cuts the 179 limit to $2,150,000, with bonus still catching the rest.
The phase-down died. TCJA had stepped bonus from 100% down to 80% (2023) and 60% (2024), on a glide path to zero. The 2025 law (OBBBA) restored and made permanent 100% bonus for qualified property acquired after January 19, 2025 — new and used, as long as the used equipment is new to you and bought from an unrelated party. Practical effect: for most equipment purchases, Section 179 versus "MACRS plus bonus" produces the same year-one deduction, and the election is about income limits and state conformity rather than speed.
A 7-year asset. MACRS year one: $95,000 × 14.29% = $13,576; year two jumps to $23,266 (24.49%), then tapers through year eight. Straight line for the books, say $10,000 salvage over 10 years, deducts a flat $8,500 a year. Section 179 could take the full $95,000 in year one, worth $19,950 of tax offset at a 21% rate versus $2,851 for the MACRS year-one slice. For comparison, a 5-year-classified $140,000 asset deducts $28,000 in year one under MACRS (20%) and saves $5,880 at 21%.
None of this argues against taking the deduction; it argues for placing it in the year where a dollar of deduction is worth the most.
Enter a cost basis and class — get the MACRS schedule, straight-line comparison, 2026 Section 179 limit, and year-one tax saved.
Equipment Depreciation Calculator →MACRS is the default, 179 is the fast lane with an income cap, and 100% bonus covers the overflow permanently. Match your asset to the right class life, respect the vehicle caps, and time the deduction to where the rate is highest. For the vehicle-specific rules, see our vehicle Section 179 calculator and car depreciation guide-by-numbers; for the purchase-vs-rent economics, ROI calculator frames the other side. This guide is educational, not tax advice — a CPA who knows your state's conformity rules is worth the hour.
Usually, yes. Section 179 lets you expense up to $2,560,000 for 2026, limited by business taxable income, and permanent 100% bonus depreciation covers what 179 doesn't catch. The main carve-outs: light vehicles face IRC §280F caps, heavy SUVs are limited to $32,000 of 179, and property must be used more than 50% for business.
Tax depreciation follows MACRS or your elected method on the return; book depreciation follows the method your financial statements use, typically straight line over an estimated useful life. The two run in parallel and produce different numbers on purpose — tax rules front-load for cash-flow reasons, book rules spread cost against the revenue the asset generates. The gap between them is a deferred tax liability.
For the first year, MACRS applies a half-year convention: you get half a year's deduction whether the asset started running in January or December. But if more than 40% of the year's qualifying property is placed in service in the last quarter, the mid-quarter convention kicks in and shrinks that first-year slice — a real trap for December buying sprees.