Bonus Depreciation Calculator

Buy a piece of qualifying business equipment, and instead of writing off a fraction of its cost every year for the next 5 or 7 years, you can generally deduct the entire cost immediately, in the year you put it into service. This is bonus depreciation — and as of the One Big Beautiful Bill Act, it’s back to a full, permanent 100%, after years of a scheduled phase-down that had it dropping toward zero. This calculator shows exactly what that deduction is worth to your business in actual tax savings, not just the deduction amount itself.

100% Is Back, and It’s Not Temporary Anymore

The original 2017 tax law set 100% bonus depreciation to phase down: 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and gone entirely by 2027. The One Big Beautiful Bill Act, signed July 2025, threw that schedule out — for property acquired and placed in service after January 19, 2025, the rate is permanently 100%, with no expiration date and no further scheduled reduction. Property acquired before that date still falls under the old 40% rate for 2025. If you’ve been planning around the old phase-down numbers, this changes the math significantly in your favor.

What the Deduction Is Actually Worth

A $100,000 deduction isn’t a $100,000 tax savings — it’s worth whatever your marginal tax rate is on that amount. A C corporation gets a flat 21% benefit, full stop. A pass-through business (sole proprietorship, partnership, S corporation) has the deduction reduce the owner’s personal taxable income, where it’s worth the owner’s actual marginal rate — which “stacks” against the top of their income, the same way any other deduction does, and can be meaningfully higher or lower than 21% depending on the owner’s total income.

Bonus Depreciation vs. Section 179

These two often get bundled together, but they’re different tools. Section 179 lets you immediately expense up to $2,560,000 of qualifying purchases for 2026, phasing out dollar-for-dollar once total purchases exceed $4,090,000 — and it’s capped at your business’s taxable income (it can’t create a loss). Bonus depreciation has no dollar cap and no income limitation — it can create a net operating loss you carry forward. Many businesses apply Section 179 first, then bonus depreciation on whatever’s left, though this calculator focuses on bonus depreciation specifically.

Example: $100,000 Equipment, Pass-Through, $150,000 Business Income, Single

Full bonus depreciation deduction: $100,000. Without it, taxable income (after the 2026 standard deduction) would be $133,900; with the deduction, it drops to $33,900. The tax saved by that $100,000 deduction — the difference between tax on $133,900 and tax on $33,900 — comes out to $20,914, an effective rate of 20.9% on the deduction itself, since the top slice of it stacks in the 24% bracket while most falls in the 22% and 12% brackets on the way down. Spread over 5 years straight-line instead, only $20,000 of deduction would apply this year, saving $4,800 in year one — more than $16,000 less cash-flow benefit in year one alone, not just a paperwork timing difference.

Frequently Asked Questions

This calculator provides a simplified federal-only estimate. It does not model Section 179, state tax conformity, the Qualified Business Income deduction, self-employment tax, or property that doesn’t qualify for bonus depreciation. Check a qualified tax professional for your specific situation.