Bonus Depreciation (2026)

Bonus depreciation moves deductions forward—you supply the rate

Bonus depreciation allows an additional first-year write-off of a percentage of eligible asset basis, with remainder depreciated under MACRS. Congress has adjusted bonus rates repeatedly; some years allowed 100%, others phased down. This tool never assumes a 2026 statutory percentage—you enter the rate that applies to your placed-in-service year and asset class.

Enter asset basis after any Section 179 expense, bonus percentage, marginal tax rate, and optional state conformity flag you interpret. See first-year deduction and NPV-style timing benefit vs straight MACRS for educational comparison.

Why rates are user-entered

Tax extender packages and phase-down schedules make a hard-coded “2026 bonus rate” misleading. Enter the percentage from IRS guidance for your acquisition date—100%, 80%, 60%, or other as law provides when assets are placed in service.

How to use the calculator

Step 1 — Enter eligible basis

Purchase price minus Section 179 taken—Section 179 calculator for 179 first.

Step 2 — Enter bonus percentage

Your statutory or elective bonus rate for the tax year.

Step 3 — Read first-year tax savings

Apply marginal federal rate; consider state add-back separately.

Worked example

$200,000 equipment, $0 Section 179, you enter 40% bonus → $80,000 first-year bonus plus MACRS on $120,000 remainder. At 32% marginal federal, first-year federal savings ~$25,600 on bonus portion alone vs slower MACRS without bonus—timing benefit larger when discounting future deductions.

Interaction with QBI and SE tax

Lower net income from bonus reduces SE tax on Schedule C and affects QBI—Section 199A QBI calculator.

Common mistakes

• Using outdated bonus percentage from prior tax year
• Assuming states automatically conform
• Applying bonus to ineligible property
• Forgetting recapture rules on early disposition

Related tools

Section 179 limits user-entered: Section 179 calculator. Business net: 1099 tax calculator. State: state tax comparison.

Placed-in-service date control

Asset must be placed in service before year-end—not merely ordered or delivered without operational use. Mid-December installation of equipment may qualify; January delivery does not for prior tax year bonus election you enter percentage for.

Mid-quarter and luxury auto conventions

MACRS mid-quarter convention may apply when >40% of assets placed in service in Q4—bonus percentage applies to reduced first-year base after convention.

State add-back and subtraction schedules on corporate/partnership returns decouple bonus for state taxable income—federal savings here overstated for state if not modeled separately.

Used property bonus eligibility depends on tax year law when acquired—enter eligibility assumption consistent with percentage you supply.

Reading your results for bonus depreciation

The interactive panel above shows a transparent calculation trace in cents—use it to sanity-check inputs before you rely on any number for decisions. Tax software at filing time may differ when every credit, limitation, and state conformity rule is applied in full. Treat output here as structured planning math aligned to 2026 federal reference data where noted, not as e-file output or professional advice.

When your situation includes items this specialized tool simplifies—multiple entities, prior-year carryforwards, treaty elections, or state nonconformity—layer those facts manually or with a preparer. The goal is to narrow uncertainty enough to ask better questions, not to eliminate the need for review when dollars are material.

Recordkeeping that survives scrutiny

Keep source documents (forms, statements, logs, confirmations) that support every input you typed. IRS and state audits often start from third-party reporting; your job is to reconcile 1099s, K-1s, and broker exports to the story you file. Digital backups with dates beat reconstructed spreadsheets created after an notice arrives.

For bonus depreciation, retain worksheets year to year when carryforwards exist—loss carryovers, credit carryforwards, passive loss suspensions, and basis schedules die silently if you change preparers and lose history.

Related tools on this site

Section 179: Section 179 calculator. State: state tax comparison.

2026 federal brackets and payroll context

Ordinary income tax brackets and standard deductions for 2026 follow IRS Rev. Proc. 2025-32 ($16,100 single / $32,200 joint standard deduction; seven marginal rates from 10% to 37%). Social Security tax applies at 6.2% on wages up to the $184,500 wage base; Medicare continues at 1.45% with Additional Medicare Tax above threshold wages. These layers stack independently from specialized rules modeled in this bonus depreciation tool—run the federal income tax calculator when you need the full return picture.

Quarterly estimated tax may be required when withholding does not cover liability—see the quarterly estimated tax calculator. Year-end refund or balance due comparisons belong in the tax refund estimator once withholding and payments are known.

Before filing season

Reconcile this bonus depreciation calculator estimate against draft Form 1040 lines and attached schedules your software produces. Look for mismatches in basis, carryforwards, and state add-backs—the first pass with a specialized calculator often misses secondary limits that full return software catches. Update inputs when you receive final 1099s, K-1s, and corrected broker statements; January revisions are normal.

If results imply large balance due, adjust withholding or estimated payments before December 31 when possible—penalties accrue on underpayment even when you file timely in April. If results imply large refund, you may be over-withholding or overpaying estimates; tune W-4 or voucher amounts for better cash flow without chasing refunds as a savings strategy.

State returns often piggyback federal logic but diverge on conformity items. Re-run state tools when federal inputs change materially so you do not pay state estimates based on federal-only planning from this bonus depreciation calculator page.

Sources and methodology

IRC Section 168(k); bonus rate user-supplied. Brackets Rev. Proc. 2025-32. Educational—not fixed asset system.