The short answer. For tax years beginning in 2026, a business can elect to expense up to $2,560,000 of qualifying equipment under Section 179, reduced dollar for dollar once its total qualifying purchases for the year exceed $4,090,000. Separately, 100% bonus depreciation is now permanent for qualifying property acquired after January 19, 2025. In both cases the equipment generally has to be placed in service, not just ordered, by the end of the tax year, and equipment you fund with a loan can qualify just like equipment you pay cash for.
The 2026 Section 179 numbers
The IRS publishes the inflation-adjusted figures each fall. For tax years beginning in 2026, Rev. Proc. 2025-32 sets them at:
- $2,560,000 maximum you can elect to expense.
- $4,090,000 phase-out threshold. Every dollar of qualifying purchases above this reduces the $2,560,000 limit by a dollar, so the deduction is fully phased out at $6,650,000 of purchases.
- $32,000 cap for certain heavy sport utility vehicles.
For comparison, the 2025 figures were $2,500,000 and $4,000,000, after the 2025 tax law roughly doubled the prior limits.
Bonus depreciation is back at 100%, permanently
Bonus depreciation had been stepping down each year. The 2025 tax law restored it to 100% and made it permanent for qualifying property acquired after January 19, 2025. The IRS issued guidance on the change in Notice 2026-11 on January 14, 2026.
Two details matter for planning. The property generally has to be both acquired and placed in service after that date, and equipment under a binding contract signed on or before January 19, 2025 is generally treated as acquired on the contract date. Used equipment can qualify as long as it is new to your business and bought from an unrelated party.
Section 179 and bonus depreciation are not the same
They often get mentioned together, and many businesses use both, but they work differently:
- Section 179 is an election with a dollar cap and a phase-out, and it generally cannot exceed the business's taxable income for the year. Any amount it can't use carries forward.
- Bonus depreciation has no dollar cap and is not limited by taxable income in the same way.
- State taxes may not follow the federal rules, so the state picture can look different.
Which one to use, and in what order, is a question for your tax advisor. It depends on your income, entity type and state.
"Placed in service" is the real deadline
Signing a purchase order in December is not enough. The equipment generally has to be delivered, set up and ready for use in your business by the end of your tax year. Delivery times on trucks, machinery and specialized equipment can run weeks or months, which is why year-end plans that start in December often miss.
If you want this year's deduction, the practical order is: confirm with your tax advisor, choose the equipment, confirm the delivery date, and start the funding file early so it is ready the moment the equipment is.
Where funding fits
Here is why so many operators fund year-end equipment instead of paying cash. The deduction generally depends on when the equipment is placed in service, not on how much you have paid for it. Equipment bought with a loan, or with a lease that works like a purchase (such as a $1 buyout lease), can generally qualify in the year it goes into service, even though most of the payments fall in later years. A true rental lease generally does not; you deduct the lease payments instead.
That lets a business put equipment to work this year and keep its cash, while spreading the cost over the equipment's working life. Equipment capital runs from $5,000 to $50,000,000 with terms of 24 to 84 months, and recent equipment files have funded as fast as next day.
Already bought equipment this year?
If you paid cash for equipment earlier in the year and want that cash back in the business, retroactive funding may be available for purchases made within the last 180 days, using the original invoices. It doesn't change the tax treatment of the purchase; it just turns money you've already spent back into working capital.
A year-end checklist
- Talk to your tax advisor now about how much you may be able to deduct and whether Section 179, bonus depreciation or both make sense.
- Pick the equipment and confirm delivery before December, with time to set it up.
- Start the funding file early so approval isn't the bottleneck.
- Keep the invoices and in-service records your advisor will need.
- Make sure it's in service by the end of your tax year.
Where to start
If you're planning year-end equipment purchases, we can have the capital side ready before the equipment arrives. Apply now, or start with a free Capital Assessment.
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Sources: Internal Revenue Service, Rev. Proc. 2025-32, section 4.24 (2026 Section 179 limits); IRS news release IR-2026-06 and Notice 2026-11 (permanent 100% bonus depreciation). This article is general information, not tax, legal or financial advice. Whether and how much you can deduct depends on your business, your tax situation and current law, so confirm with your tax advisor. SCS is a capital advisory and placement firm, not a lender, and does not provide tax advice.