What this calculator does
This calculator estimates the first-year depreciation deduction for a vehicle bought for business use, and the tax that deduction could save. It is for business owners, self-employed people and S corporation shareholders looking at SUVs, pickups and vans rated above 6,000 pounds gross vehicle weight (GVWR), the rule behind what is often called the "G-Wagon deduction," and for comparison, ordinary passenger cars.
You enter the price, the share of use that is for business, the vehicle category, your federal bracket and state rate, and whether bonus depreciation applies. The calculator shows the business basis, the Section 179 amount, the bonus depreciation on the rest, the combined first-year deduction, and that deduction multiplied by your combined tax rate. The presets are price and business-use examples; whether a particular model is over 6,000 pounds, and which category it falls in, depends on the GVWR on its label and its body design, so check the specific vehicle.
How the math works
The business basis is the price times the business-use percentage. For an SUV rated over 6,000 and up to 14,000 pounds, Section 179 expensing is limited to $32,000 for tax years beginning in 2026 under section 179(b)(5), as set by Revenue Procedure 2025-32 and listed in IRS Publication 946. Bonus depreciation, which Pub 946 calls the special depreciation allowance, then applies at the rate you select to the basis left over. The 2025 tax law (P.L. 119-21) reinstated a 100% allowance for qualified property acquired and placed in service after January 19, 2025, and you may elect out of it for a class of property.
Vehicles over 6,000 pounds that meet one of the exceptions to the SUV limit are treated as fully expensable under Section 179 in the calculator. Passenger vehicles at 6,000 pounds or less are capped at the first-year limit for passenger automobiles, $20,200 for vehicles placed in service in 2025 with the special allowance; the 2026 limits are published separately by the IRS and are not yet reflected here. The estimated tax reduction is the first-year deduction times your federal bracket plus your state rate, which assumes the whole deduction is taken at those marginal rates.
Worked example
These are the default inputs: a $185,000 SUV over 6,000 pounds, 85% business use, a 37% federal bracket, a 9.3% state rate and 100% bonus depreciation.
- Business basis: $185,000 × 85% = $157,250.
- Section 179: limited to the 2026 SUV amount of $32,000.
- Bonus depreciation: 100% of the remaining $125,250.
- First-year deduction: $32,000 + $125,250 = $157,250, the whole business basis.
- Estimated tax reduction: $157,250 × 46.3% = $72,807, so the vehicle's cost net of that reduction is $112,193.
The $72,807 is a first-year figure. Depreciation moves deductions earlier rather than adding to them: a vehicle expensed in full in year one has no depreciation left for later years, and the business-use and recapture rules below can reverse part of it.
When the $32,000 SUV limit matters and when it does not
With the 100% allowance, the SUV limit does not change the first-year total, because bonus depreciation covers whatever Section 179 does not. The limit matters when bonus depreciation is not taken, and the vehicle's weight class matters a great deal. Default price, use and rates:
| Scenario | Section 179 | Bonus | First-year deduction | Estimated tax reduction |
|---|---|---|---|---|
| SUV over 6,000 lbs, 100% bonus | $32,000 | $125,250 | $157,250 | $72,807 |
| SUV over 6,000 lbs, elect out of bonus | $32,000 | $0 | $32,000 | $14,816 |
| Meets an SUV-limit exception | $157,250 | $0 | $157,250 | $72,807 |
| Passenger car, 6,000 lbs or less (2025 limit) | capped at $20,200 | $20,200 | $9,353 | |
Pub 946 lists three exceptions to the SUV limit: vehicles designed to seat more than nine passengers behind the driver's seat; vehicles with an open or capped cargo area at least 6 feet long inside that is not readily accessible from the passenger compartment, such as some full-size pickups; and vehicles with an integral enclosure over the driver and load area, no seating behind the driver, and no body section more than 30 inches ahead of the windshield, such as some cargo vans. When bonus depreciation is elected out, regular depreciation on the remaining basis still applies in later years, which the calculator does not model.
Limits the headline figure leaves out
| Rule | Effect | Source |
|---|---|---|
| Business use must exceed 50% | Listed property used 50% or less for business does not qualify for Section 179 or the special allowance | Pub 946 |
| Adequate records | No depreciation or Section 179 deduction for listed property without records proving business use, kept as long as recapture can occur | Pub 946 |
| Business income limit | Section 179 cannot exceed taxable income from active trades or businesses; the excess carries forward | Pub 946 |
| Overall 2026 Section 179 limit | $2,560,000, reduced once qualifying purchases exceed $4,090,000 | Pub 946 |
| California | Section 179 limited to $25,000 with a $200,000 phaseout threshold, and federal bonus depreciation not adopted | FTB Pub 1001 |
The state rate is the biggest source of overstatement in the default example. The calculator applies your state rate to the full federal deduction, but California FTB Publication 1001 says California does not conform to federal bonus depreciation and allows Section 179 expensing of only $25,000. At the default 9.3% rate, $14,624 of the $72,807 comes from the state portion, and a California filer would get much less of it in the first year. Setting the state rate to zero shows the federal-only figure, $58,183. Other states have their own rules; check yours before relying on the state portion.
Frequently Asked Questions
No, but business use must be more than 50%. Pub 946 says listed property, which includes most vehicles, used 50% or less for qualified business use in the year it is placed in service does not qualify for Section 179. Above 50%, the deduction applies only to the business-use share of the cost.
Pub 946 requires excess depreciation to be recaptured, meaning added back to income, in the first year the vehicle is no longer used more than 50% for business. Recapture can occur in any tax year of the recovery period, which is why business-use records have to be kept for that whole time.
Often, yes. Section 179 applies to property acquired by purchase, and Pub 946 excludes property acquired from a related person. Used property can also qualify for the special allowance when it meets the acquisition conditions in Pub 946, so check those conditions for the specific purchase along with the business-use test.
Not when 100% bonus depreciation applies. The limit caps the Section 179 portion only, and bonus depreciation can cover the rest of the business basis, so the default example deducts the full $157,250. The limit does cap the first year if you elect out of bonus depreciation, where the default example falls to $32,000.
No. The calculator applies your state rate to the federal deduction. California allows Section 179 expensing of only $25,000 and does not follow federal bonus depreciation, so its first-year state deduction is much smaller. Set the state rate to zero to see the federal effect alone.
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Disclaimer: Educational and scenario-analysis only; not tax, legal, or investment advice. Consult a licensed CPA about your situation. Limits are from IRS Publication 946 and FTB Publication 1001 as of the review date.