Section 179 Tax Deduction
The Section 179 deduction allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. This can result in significant tax savings.
2026 Section 179 Limits
The IRS adjusts Section 179 limits annually. Here are the current figures for the 2026 tax year.
$1,250,000
Maximum Deduction
The maximum amount you can deduct for qualifying equipment in 2026.
$3,130,000
Spending Cap
The deduction begins to phase out dollar-for-dollar after this threshold.
60%
Bonus Depreciation
First-year bonus depreciation rate for equipment placed in service in 2026.
How Section 179 Saves You Money
| Scenario | Without Section 179 | With Section 179 |
|---|---|---|
| Equipment Cost | $150,000 | $150,000 |
| First Year Deduction | $21,429 (7-yr depreciation) | $150,000 (full amount) |
| Tax Savings (35% bracket) | $7,500 | $52,500 |
| Additional First-Year Savings | — | $45,000 |
What Qualifies?
Most tangible business equipment that is purchased or financed and put into service during the tax year qualifies for the Section 179 deduction. This includes both new and used equipment.
- Commercial trucks and vehicles (over 6,000 lbs GVWR)
- Construction equipment (excavators, loaders, cranes)
- Farm equipment (tractors, combines, irrigation systems)
- Restaurant equipment (ovens, coolers, POS systems)
- Office equipment and technology
- Leased equipment (with a $1 buyout or capital lease)
Key Requirements
- Equipment must be purchased or financed and placed in service during the 2026 tax year
- Equipment must be used for business purposes more than 50% of the time
- The deduction cannot exceed your business's taxable income for the year
- Both new and used equipment qualify (a change from pre-2018 rules)
Important Disclaimer
This information is provided for educational purposes only and should not be considered tax advice. Please consult with a qualified tax professional or CPA to determine how Section 179 applies to your specific situation.
Maximize Your Tax Savings This Year
Finance your equipment before December 31st to take advantage of Section 179 deductions for the 2026 tax year.