The arithmetic looks simple — a cost times a percentage. The part that goes wrong by hand is the rules layered on top: the phase-out counts purchases the calculator in front of you doesn't show, and the two elections fail differently when a deduction is bigger than your income.
| Step | Common mistake by hand | What this calculator does |
|---|---|---|
| Section 179 phase-out | Checks only the one asset against the dollar limit, missing that ALL qualifying purchases this year count toward the phase-out threshold. | Takes your other qualifying purchases as a separate input and applies the dollar-for-dollar phase-out to the combined total. |
| Over-large deduction | Treats a deduction that exceeds income the same way for both elections. | Flags bonus/MACRS excess as a net operating loss (NOL, up to 80% future use) and Section 179 excess as a SECTION 179 CARRYFORWARD (still income-limited every future year) — two different mechanisms. |
| Business-use cutoff | Applies bonus depreciation or Section 179 to an asset at or below 50% business use. | Flags the 50%-or-less case explicitly — that property needs the straight-line Alternative Depreciation System instead, which is out of scope here. |
| "Bigger is always better" | Assumes maxing out bonus depreciation is always right, even in an expected loss year. | Shows the Section 179 and plain-MACRS alternatives side by side, so a smaller, income-capped election is visible as an option, not just the biggest number. |
| Is anything I enter uploaded anywhere? | N/A | No. The calculator runs entirely in your browser; nothing is sent to a server. |
Forgetting that the Section 179 phase-out is based on ALL qualifying purchases for the year, not just the one asset being considered. A hand estimate often checks a single purchase against the $2,500,000 (2025) limit and stops there, missing that other equipment bought the same year counts toward the $4,000,000 phase-out threshold too.
Treating an over-large deduction the same way under both elections. A bonus-depreciation deduction that exceeds taxable income creates or increases a net operating loss (NOL), which can offset up to 80% of a future year's income. A Section 179 election that exceeds income instead produces a SECTION 179 CARRYFORWARD -- a different mechanism, still capped by income every future year it's used, with no 80% ceiling but no better guarantee of use. Confusing the two overstates how much benefit either path locks in immediately.
Applying bonus depreciation or Section 179 to an asset used 50% or less for business. Both elections require MORE than 50% business use; at or below that line, the property must use the slower, straight-line Alternative Depreciation System instead -- a rule easy to skip when the arithmetic focuses on the dollar amount rather than the use percentage.
Assuming bonus depreciation is always the better choice because it is bigger. Section 179 is elected asset-by-asset up to the annual limit, while bonus depreciation is all-or-nothing for an entire property class. A business expecting a loss year sometimes prefers a smaller, income-capped Section 179 election -- or electing out of bonus depreciation entirely -- to avoid creating a large NOL and instead preserve depreciation for a future, higher-income year.
No. Neither this calculator nor a by-hand worksheet built from this page knows your full return -- other deductions, credits, AMT, self-employment tax, luxury-auto depreciation caps, or state conformity to bonus depreciation, which varies widely by state. Both apply the same published federal rules to the numbers you enter; verify against IRS guidance or a qualified tax professional before relying on either.