Tax Code
IRS Section 179
Section 179 is an IRS tax deduction that allows businesses to write off the full purchase price of qualifying equipment or software in the year it is acquired, even if the equipment is financed or leased. This immediate write-off is an alternative to traditional depreciation, where the cost is deducted over several years.
How It Works For Financing
- Immediate tax savings, spread-out payments: Section 179 allows you to deduct the entire cost of the equipment in the year you put it into service, regardless of whether you've paid off the financing.
- Boosts cash flow: By financing the purchase, you avoid a large upfront expense while still getting the full tax savings immediately. The tax reduction can then help offset your monthly loan payments.
- Applies to capital leases: This deduction is available for financed purchases and capital leases (rent-to-own agreements), but generally not for operating leases (rentals).
Key Limits For 2026
- Maximum Section 179 deduction: $2,560,000
- Phase-out begins when qualifying equipment purchases exceed $4,090,000
- Fully phased out at $6,650,000
- Equipment generally must be purchased and placed in service during the tax year to qualify
Disclaimer
This information is for general informational purposes only and is not tax or financial advice. Tax laws and individual circumstances vary. You should consult with a qualified tax professional to understand how Section 179 applies to your specific business situation.