Section 179 and Bonus Depreciation: Deducting Equipment in 2026

When you buy equipment for your business, such as a computer, tools, a work truck or machinery, you normally recover the cost over several years through depreciation. Two tax rules let many small businesses deduct the full cost right away: Section 179 and bonus depreciation. Both were strengthened by the One Big Beautiful Bill Act in 2025.

Section 179 expensing

Section 179 lets you elect to deduct the cost of qualifying property in the year it's placed in service.

• 2026 limit: about $2.56 million, phasing out once total qualifying purchases exceed about $4.09 million
• Qualifying property: equipment, machinery, computers, software, office furniture, certain vehicles and some building improvements
• New and used property both qualify
• Limited to business income: Section 179 can't create a loss; unused amounts carry forward

100% bonus depreciation

The 2025 law permanently restored 100% bonus depreciation for qualifying property acquired after January 19, 2025.

• No dollar limit
• Can create a loss, which may offset other income or carry forward
• Applies to new and used property (if used, it must be new to you)
• Applies automatically unless you elect out for a class of property

Section 179 vs. bonus depreciation

	Section 179	Bonus depreciation
Annual limit	About $2.56M (2026)	None
Can create a loss	No	Yes
Must elect	Yes	Automatic (can opt out)
Pick and choose assets	Yes	By asset class

Many businesses use Section 179 first for flexibility, then bonus depreciation for anything else.

Vehicles have special limits

• Passenger vehicles (under 6,000 lbs gross vehicle weight) have annual depreciation caps
• Heavy SUVs, pickups and vans (over 6,000 lbs) can qualify for larger first-year deductions, with a separate cap on Section 179 for certain SUVs
• Business-use percentage must be over 50% to use Section 179 or bonus depreciation, and only the business portion is deductible

Should you always take the full deduction now?

Not necessarily. Consider:

• Your income level. A deduction is worth more in a high-income year.
• Future plans. If you sell the asset or business use drops below 50%, you may have to recapture part of the deduction as income.
• Loan qualification. Large deductions reduce reported profit, which lenders look at.
• QBI deduction. Lower business income can reduce your QBI deduction.

Don't buy just for the deduction

A $10,000 purchase doesn't save you $10,000. It saves you your tax rate times $10,000. Buy equipment because the business needs it, then use these rules to maximize the benefit.

The bottom line

In 2026, most small businesses can deduct the full cost of needed equipment in the year they buy it. Keep invoices, note the date each asset was placed in service, and plan the timing with your tax professional.

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Need help getting this right? TRIG Bookkeeping & Tax Services helps new business owners in Washington with company registration, monthly and annual bookkeeping, and government compliance. Contact us to talk about your business.

This article is general information, not legal or tax advice for your situation. Tax rules and fees change, so confirm current details with the IRS, the Washington Department of Revenue, or a qualified professional.