Equipment Financing & Depreciation
True after-tax cost of
equipment financing
The sticker rate on an equipment loan is only part of the cost. Depreciation and financing structure depreciation can offset a significant portion of the purchase price in Year 1 -- lowering your effective rate well below what the lender quotes. This calculator models the full financing picture: loan vs. lease, MACRS depreciation schedule, tax benefit in dollars, and the true after-tax cost of capital.
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Loan vs. lease comparison — Model the same equipment as a loan or a capital lease. Compare monthly payment, total cost of ownership, and end-of-term equity position side by side.✓
Depreciation schedule — Enter your tax rate and the calculator applies MACRS to show the dollar tax benefit and net after-tax cost of the equipment over its recovery period.✓
Bonus depreciation — Model bonus schedules under MACRS. See how term, rate and residual interact and which combination produces the largest Year-1 deduction.✓
MACRS depreciation schedule — Select equipment category (5-year, 7-year, 10-year property) and view the full MACRS depreciation schedule alongside the loan amortization -- showing book value vs. loan balance each year.✓
Loan balance vs. asset value tracker — See whether the equipment retains value faster or slower than the loan pays down. Identifies the period when you are underwater (loan balance exceeds asset value).✓
True after-tax cost of capital — The effective cost of the loan after the tax shield from depreciation. Converts the stated interest rate into the real cost of financing net of all tax benefits.Monthly PaymentLoan vs. LeaseTotal CostAmortizationBonus DepreciationMACRS ScheduleAfter-Tax CostEquity TrackerUnderwater Period
What this calculator models
2Financing structures
MACRS+ Bonus depreciation
MACRSFull depr. schedule
TrueAfter-tax APR
Financing inputs
Equipment costPurchase price of the equipment or machinery.
Down paymentLenders typically require 10-20% down on equipment.
Rate & termInterest rate and loan term (typically 3-7 years for equipment).
Residual valueExpected value at end of term. Used for lease buyout and equity tracking.
Tax & depreciation inputs
Tax rateYour effective federal + state marginal tax rate. Used to compute dollar value of deductions.
DepreciationFirst-year expensing limit. For tax years beginning in 2026 the Section 179 limit is $2,560,000, phasing out dollar-for-dollar above $4,090,000 and eliminated at $6,650,000 (Rev. Proc. 2025-32).
Bonus %Bonus depreciation rate. The OBBBA repealed the scheduled phase-down and made 100% permanent for qualified property acquired and placed in service after 19 January 2025; lower rates remain for property under a binding contract dated before that.
Asset classMACRS class life: 5-year (autos, computers), 7-year (machinery), 10-year (manufacturing).
For informational purposes only. Not tax or financial advice. Depreciation rules change. Confirm current figures with a CPA before making any equipment financing decision.