See how much the Section 179 deduction and bonus depreciation could save on equipment you put in service this year, and what that means for your cash flow if you finance it.
Estimated 2026 tax savings
$62,500
| Equipment cost | $250,000 |
|---|---|
| Section 179 deduction | $250,000 |
| Bonus depreciation | $0 |
| First-year deduction | $250,000 |
| Estimated tax savings | $62,500 |
| Cost after tax savings | $187,500 |
Estimate only, not tax advice. Uses the 2026 Section 179 limit of $2,560,000 and phase-out threshold of $4,090,000 (IRS Rev. Proc. 2025-32). The Section 179 deduction can’t exceed your business taxable income (the excess carries forward), and state rules vary. Talk to your tax advisor.
Normally a business writes off equipment over several years through depreciation. Section 179 of the tax code lets you deduct the full cost of qualifying equipment in the year you put it in service, up to an annual limit. For 2026 that limit is $2,560,000. Once your total Section 179 purchases for the year pass $4,090,000, the limit falls by a dollar for every dollar over.
Two rules trip people up. First, the deduction can’t be more than your business’s taxable income for the year; the unused part carries forward. Second, the equipment must be used more than half the time for business, and it has to be in service by December 31, not just ordered.
Bonus depreciation picks up where Section 179 stops. For qualified property acquired after January 19, 2025 it is 100%, with no dollar cap. That matters for larger purchases and for businesses whose income is below the cost of the equipment.
Financing changes the cash-flow picture. If you finance with an equipment finance agreement or a $1-buyout lease, you can usually take the full deduction in year one while paying for the equipment over 12 to 84 months. The calculator’s financing section shows your tax savings next to what you would actually pay this year, using an APR and term you enter.
| Structure | Who owns it | Section 179? |
|---|---|---|
| Equipment finance agreement (EFA) or loan | You | Usually yes |
| $1-buyout lease | You, for tax purposes | Usually yes |
| Fair-market-value (FMV) lease | The lessor | No; lease payments are deducted instead |
General information, not tax advice. Your tax advisor decides how a specific purchase is treated.
Read more in Section 179 explained and year-end equipment purchase strategy, or see how working capital can sit alongside your equipment financing.
For tax years beginning in 2026, businesses can expense up to $2,560,000 of qualifying property. The limit starts to shrink, dollar for dollar, once total Section 179 purchases pass $4,090,000. These amounts come from IRS Rev. Proc. 2025-32, which indexes the limits set by the One Big Beautiful Bill Act.
Yes. Equipment bought with an equipment finance agreement (EFA), a loan or a $1-buyout lease generally qualifies the same as equipment bought with cash, as long as it is placed in service during the tax year. A true fair-market-value (FMV) lease usually does not, because the lessor owns the equipment; you deduct the lease payments instead.
Most tangible business property qualifies: machinery, construction and farm equipment, trucks and trailers, computers, off-the-shelf software, office furniture, and certain building improvements. It can be new or used, but it must be used more than 50% for business and placed in service by December 31.
Bonus depreciation lets you deduct a percentage of qualifying property’s cost in the first year with no dollar cap and no business-income limit. Under the One Big Beautiful Bill Act it is 100% for qualified property acquired after January 19, 2025. Section 179 has a dollar limit and can’t create a loss, but you choose asset by asset. Many businesses use Section 179 first and bonus depreciation for the rest.
Yes. SUVs with a gross vehicle weight rating between 6,001 and 14,000 pounds are limited to $32,000 of Section 179 expensing in 2026. Bonus depreciation may cover more of the cost. Lighter passenger vehicles have separate, lower depreciation caps.
The equipment has to be placed in service, meaning set up and ready for use in your business, by December 31, 2026 to count for the 2026 tax year. Ordering it or paying a deposit is not enough.
Apply online in about 5 minutes. We fund the equipment vendor directly so you can put it in service this year.
Subject to credit approval and documentation. Tax figures from IRS Rev. Proc. 2025-32; last checked November 12, 2026.