Updated for 2026
Investing in new equipment is a big decision. Whether you’re expanding your fleet, replacing aging equipment, or preparing for a busy year ahead, current tax incentives may help reduce the cost of that investment.
For 2026, Section 179 and bonus depreciation may allow businesses to deduct all or a substantial portion of qualifying equipment costs in the year the equipment is placed in service. For many companies, that can mean improved cash flow while putting the equipment they need to work right away.
Here’s what business owners should know.
What is Section 179?
Section 179 allows businesses to deduct the cost of qualifying equipment and certain business property in the year it is placed in service rather than depreciating it over multiple years.
For 2026:
- The maximum Section 179 deduction is $2,560,000.
- The deduction begins to phase out when total qualifying equipment purchases exceed $4,090,000.
- Equipment must be used more than 50% for business purposes to qualify.
Section 179 can apply to both new and used equipment, making it a valuable tool for businesses investing in trucks, trailers, and other heavy equipment.
What is Bonus Depreciation?
Bonus depreciation offers another opportunity to accelerate equipment deductions.
For eligible property placed in service during 2026, businesses may be able to deduct 100% of qualifying equipment costs through bonus depreciation.
Unlike Section 179:
- There is no overall spending cap.
- There is no annual deduction limit.
- Bonus depreciation can create or increase a net operating loss in certain situations.
- It generally applies to an entire class of qualifying property rather than specific assets selected by the taxpayer.
Many businesses use bonus depreciation alongside Section 179 to maximize first-year deductions.
How Section 179 and Bonus Depreciation Work Together
These tax incentives are often used together.
In general, businesses apply Section 179 deductions first and then apply bonus depreciation to any remaining eligible equipment costs.
This approach can help maximize first-year deductions while giving businesses flexibility in managing taxable income.
Example:
Let’s say a customer buys $2.7 million worth of Ledwell equipment.
The first $2.5 million is deducted under Section 179.
The remaining $200,000 is eligible for 100 percent bonus depreciation.
The result equals $2.7 million entirely written off in the first year.
This is real money saved, and a real reason to act before the end of the year.
Used Equipment Rules
Good news for customers considering pre-owned equipment: both Section 179 and bonus depreciation may apply to qualifying used equipment purchases.
To qualify, equipment generally must:
- Be purchased rather than gifted or inherited.
- Be new to the buyer, even if previously owned by someone else.
- Be used primarily for business purposes.
- Be placed into service during the tax year.
- Be acquired in an eligible transaction and not purchased from a related party when bonus depreciation rules prohibit it.
Because individual circumstances vary, customers should consult their tax advisor to determine eligibility.
Why Many Businesses Act Before Year End
To receive potential tax benefits, qualifying equipment generally must be purchased and placed in service during the applicable tax year.
For businesses planning fleet upgrades, equipment expansion, or replacement purchases, waiting until the last minute can create delivery and scheduling challenges.
Planning ahead can help ensure equipment is ready to work when you need it and positioned to qualify for available tax incentives. Whether it’s Crash Trucks, Dump Trucks, or HydraTail Trailers, Ledwell is here to help you make the most of your purchase.
This article is provided for informational purposes only and should not be considered tax, legal, accounting, or financial advice. Tax laws, depreciation rules, deduction limits, and eligibility requirements may change and can vary based on individual circumstances. Customers should consult their CPA, tax advisor, or attorney regarding their specific situation before making purchasing or tax decisions. Eligibility for Section 179 deductions, bonus depreciation, and other tax incentives is determined by applicable law and individual taxpayer circumstances.
