Year-End Equipment Purchases: 2026 Section 179 and Bonus Depreciation

Tom Giunta, Jr

November 10, 2026

Quick answer: If your business needs equipment, buying it and placing it in service by December 31, 2026 may let you deduct the full cost on your 2026 return. 100% bonus depreciation is back for property acquired after January 19, 2025, and the Section 179 limit for 2026 is $2,560,000, according to the IRS. A deduction lowers your tax on the cost; it does not make the equipment free, so buy only what the business needs.

Every fall, business owners ask us the same question: "Should I buy that truck, computer, or machine before the year ends?" Sometimes the answer is yes. Other times, rushing a purchase costs more than it saves. This guide explains how equipment write-offs work, what changed for 2026, and how to decide whether a year-end purchase makes sense.

How equipment write-offs work

What is depreciation?

When you buy something your business will use for years, like a truck, a machine, or computers, the tax rules normally spread the deduction over several years. That spreading-out is called depreciation. A machine classed as 7-year property, for example, is normally deducted a piece at a time over eight tax years.

Two rules let you deduct much or all of the cost in the first year instead:

Section 179: You choose to deduct the cost of qualifying property right away, up to a yearly dollar limit.
Bonus depreciation: A first-year deduction for a percentage of the cost. For qualifying property acquired after January 19, 2025, that percentage is 100%.

How do Section 179 and bonus depreciation compare?

Both can write off equipment in the first year, but they have different limits.

	Section 179	Bonus depreciation
2026 dollar limit	$2,560,000	No dollar limit
Phase-out	Reduced dollar for dollar once 2026 purchases pass $4,090,000	None
Income limit	Can't exceed your taxable business income	Not subject to the Section 179 income limit
Business use	More than 50% business use required	Business-use portion only
Heavy SUVs	Capped at $32,000 for 2026	Can apply to the remaining business cost

In practice: many businesses use both. We can help you combine them so the deduction lands in the year it does the most good.

Does buying it by December 31 count?

What does "placed in service" mean?

Buying is not enough on its own. To deduct equipment on your 2026 return, it must be placed in service by December 31, 2026, meaning delivered, set up, and ready to use in your business. Ordering it, or even paying for it, does not count.

Counts for 2026: A truck delivered December 20 and used on a job December 22.
Counts for 2027: A machine ordered and paid for in December but delivered January 5.
Doesn't count yet: Computers still in their boxes on December 31.

Tip: Dealers and shipping get busy at year-end. If you're planning a purchase, order it in November so it arrives and gets set up in time.

Examples of whether equipment counts for 2026: delivered and in use by December 31 counts, paid for but delivered in January does not

What kinds of purchases qualify?

Which business purchases can I write off?

Most tangible property a business buys to use for more than a year can qualify.

Machinery and tools: Manufacturing, construction, medical, and dental equipment.
Technology: Computers, servers, phones, printers, and off-the-shelf software.
Furniture and fixtures: Desks, chairs, shelving, and display cases.
Building improvements: Certain improvements to nonresidential buildings, including roofs, heating and air conditioning, fire protection and alarm systems, and security systems, according to the IRS.
Vehicles: The rules depend on weight. For 2026, Section 179 on SUVs is capped at $32,000. Passenger cars placed in service in 2026 have a first-year depreciation cap of $20,300 with bonus depreciation, or $12,300 without it, according to the IRS.

Small purchases: Businesses without audited financial statements can generally elect the de minimis safe harbor and expense items costing $2,500 or less per invoice or item, with no depreciation tracking.

An example with a $60,000 machine

How much could a full write-off change this year's tax?

Say a business owner in the 24% federal tax bracket buys a $60,000 machine (7-year property) and has it running by December 15, 2026.

Regular depreciation: The 2026 deduction is about $8,574 (14.29% of the cost in year one), which lowers 2026 federal income tax by about $2,058.
Full first-year write-off: The 2026 deduction is $60,000, which lowers 2026 federal income tax by $14,400.

That is about $12,300 more tax benefit in 2026, kept in the business now instead of spread over the coming years. But you still spent $60,000. After the 2026 tax effect, the machine costs about $45,600, not zero. This example is simplified and counts federal income tax only; state tax and your actual bracket change the numbers.

Bar chart: on a $60,000 machine in 2026, regular depreciation lowers federal tax by about $2,058 and a full first-year write-off lowers it by $14,400

When to think twice

When is a year-end equipment purchase not a good idea?

A big write-off isn't always the best move. Slow down if any of these apply:

You don't really need it. Spending a dollar to cut your tax by 24 cents still costs 76 cents.
It strains cash flow. Draining reserves in December can leave you short in a slow January. Equipment bought with a loan can generally still be deducted in the year it's placed in service.
Your income is unusually low this year. If you expect a higher bracket later, spreading the deduction may be worth more over time.
Your state doesn't follow the federal rules. Some states limit bonus depreciation or use lower Section 179 limits.
You might sell it soon. When you sell equipment you wrote off, part or all of the gain can be taxed as ordinary income (depreciation recapture).
Business use might drop. If business use of Section 179 property falls to 50% or less, part of the deduction may have to be added back to income.

Your before-December checklist

What should I do before buying equipment this year?

List what the business needs in the next 6 to 12 months.
Estimate this year's profit so you know how much deduction you can use.
Talk with us about Section 179, bonus depreciation, and your state's rules.
Compare cash and financing.
Order early so the equipment arrives in time.
Have it delivered, set up, and in use by December 31.
Keep records: the invoice, delivery receipt, and the date it was first used. For vehicles, note the weight and keep a mileage log.

Frequently asked questions

What is the Section 179 limit for 2026?+

The Section 179 limit for 2026 is $2,560,000. It is reduced dollar for dollar once a business places more than $4,090,000 of qualifying property in service during the year.

Is bonus depreciation 100% in 2026?+

Yes, for qualifying property acquired after January 19, 2025 and placed in service in 2026, according to the IRS.

Do I have to pay for equipment by December 31 to deduct it?+

The key test is whether it is placed in service, meaning delivered, set up, and ready to use, by December 31. Equipment that is paid for but not yet in use counts in the year it is put to work.

Can I deduct equipment I bought with a loan?+

Generally, yes. Financed equipment can usually be deducted in the year it is placed in service, even while you are still making payments.

Can I write off a vehicle?+

Often, yes, for the business-use portion. For 2026, Section 179 on SUVs is capped at $32,000, and passenger cars have a first-year depreciation cap of $20,300 with bonus depreciation.

Can I deduct used equipment?+

Often, yes. Used property can qualify for bonus depreciation if your business never used it before and did not buy it from a related party.

Plan the purchase before you make it

A short conversation before you buy can show how much a write-off is worth this year and whether this year or next is the better time. Cove Accounting helps business owners plan major purchases and year-end tax moves.