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Section 179 & Bonus Depreciation: Your 2026 Equipment Tax Savings Guide
Plan your expenses and deductions strategically each year
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If you run a small business in Florida and you have been putting off that equipment upgrade — new computers, a commercial vehicle, office furniture, or specialized machinery — 2026 might be the best year in a decade to pull the trigger. Thanks to the One Big Beautiful Bill Act (OBBBA) signed into law in 2025, bonus depreciation is back to 100 percent, and the Section 179 deduction limits have been permanently expanded. Together, these two provisions let you deduct the full cost of qualifying equipment in the year you buy it, rather than spreading the write-off over five, seven, or even twenty years.
That is not a small deal. For a Florida LLC that spends $50,000 on new laptops and point-of-sale systems, it could mean an extra $12,000 to $15,000 in tax savings this year alone. Let us walk through exactly how both deductions work, how they interact, and how you can stack them for maximum savings.
What Changed Under the One Big Beautiful Bill Act
Before the OBBBA, bonus depreciation was on a phase-down schedule. It dropped from 100 percent in 2022 to 80 percent in 2023, 60 percent in 2024, and was headed to 40 percent in 2025. Many small business owners were watching their first-year deductions shrink every January. The OBBBA reversed that decline by restoring 100 percent bonus depreciation for qualified property acquired and placed in service after January 19, 2025. Equally important, the law made the enhanced Section 179 limits permanent and indexed them to inflation, so they will continue rising each year without Congress needing to act again.
For Florida businesses specifically, these federal deductions are especially powerful because Florida has no state personal income tax. That means pass-through entity owners — sole proprietors, LLC members, S-corp shareholders — keep every dollar of federal savings without a state clawback eating into the benefit.
Section 179 in 2026: The Numbers You Need
Section 179 allows you to deduct the full purchase price of qualifying equipment and software in the year it is placed in service, rather than depreciating it over time. Here are the key 2026 figures:
Maximum Deduction — $2,560,000. This is the most you can write off under Section 179 in a single tax year. For the vast majority of Florida small businesses, this ceiling will never be a constraint.
Spending Cap (Phase-Out Threshold) — $4,090,000. Once your total equipment purchases for the year exceed this amount, the Section 179 deduction begins to phase out dollar-for-dollar. If you spend $6,650,000 or more, the Section 179 deduction is fully phased out.
Business Income Limitation — Your Section 179 deduction cannot exceed your taxable business income for the year. If it does, the excess carries forward to future years. This is one key difference from bonus depreciation.
Qualifying Property — Tangible personal property used in your business: computers, printers, office furniture, manufacturing equipment, tools, certain vehicles, off-the-shelf software, and qualified improvement property for your building's interior.
Bonus Depreciation in 2026: How 100% Changes the Game
Bonus depreciation under Section 168(k) works differently from Section 179, and the differences matter when you are planning purchases.
No Dollar Cap — Unlike Section 179's $2,560,000 limit, bonus depreciation has no maximum deduction amount. Whether you buy $10,000 or $10 million in equipment, you can deduct 100 percent in year one.
No Business Income Limitation — Bonus depreciation can actually create or increase a net operating loss (NOL), which you can then carry forward to offset future income. Section 179 cannot do this.
New and Used Property Qualify — Under OBBBA, both new and used equipment qualify for 100 percent bonus depreciation, as long as the property is new to you (you have not used it before in your business).
Applied After Section 179 — The IRS requires that you take your Section 179 deduction first, then apply bonus depreciation to any remaining cost basis. This ordering rule means the two deductions complement rather than conflict with each other.
Section 179 vs. Bonus Depreciation: Side-by-Side Comparison
| Feature | Section 179 | Bonus Depreciation |
|---|---|---|
| 2026 Deduction Limit | $2,560,000 | No limit |
| Spending Cap | Phases out above $4,090,000 | None |
| Business Income Limit | Yes — cannot exceed taxable income | No — can create NOL |
| Used Equipment | Yes | Yes (new to your business) |
| Vehicles (SUVs over 6,000 lbs) | $31,300 cap (2026 est.) | Additional first-year deduction allowed |
| Carryforward if Unused | Yes (income limitation excess) | N/A — no income limitation |
| Real Property Improvements | Qualified improvement property | Qualified improvement property |
A Real-World Example: Stacking Both Deductions
Let us say you own a landscaping company in Tampa and in 2026 you purchase $175,000 in new equipment: two commercial mowers ($45,000 each), a used dump trailer ($35,000), a fleet management software license ($10,000), and various tools and safety gear ($40,000).
Under Section 179, you elect to deduct the full $175,000 immediately — well under the $2,560,000 cap. Since your business earned $220,000 in taxable income this year, you are within the income limitation. Your entire purchase is written off in year one. At a combined federal tax rate of roughly 24 percent, that translates to about $42,000 in tax savings this year instead of spreading $175,000 over five to seven years of depreciation.
Now imagine you also bought a $65,000 work truck that exceeds 6,000 pounds GVWR. You take the Section 179 SUV cap (estimated at $31,300 for 2026), then apply 100 percent bonus depreciation to the remaining $33,700. The result: the entire $65,000 truck is deducted in 2026. Without both provisions working together, you would be depreciating that truck over six years.
Common Mistakes Florida Business Owners Make
Waiting until December to buy — The equipment must be placed in service (meaning actually used in your business) before December 31, 2026. Ordering in December but not receiving delivery until January means the deduction slides to 2027. Plan purchases with enough lead time for delivery and setup.
Forgetting the income limitation on Section 179 — If your business has a loss year or very thin margins, Section 179 alone will not help because it cannot exceed your business income. However, bonus depreciation can create a loss, so in lean years you may want to rely entirely on bonus depreciation and skip the Section 179 election.
Mixing personal and business use — Only the business-use percentage of an asset qualifies. If you use a laptop 70 percent for business and 30 percent for personal tasks, only 70 percent of the cost is deductible. Keep a usage log, especially for vehicles.
Overlooking qualified improvement property — Interior improvements to a nonresidential building you lease or own — new HVAC, lighting, security systems, flooring — qualify for both Section 179 and bonus depreciation. Many business owners miss this one.
Your Section 179 & Bonus Depreciation Checklist
1. Inventory your equipment needs now — Walk through your business and identify aging computers, worn-out tools, outdated software, and vehicles approaching end-of-life. Prioritize by impact on productivity and revenue.
2. Get purchase quotes before Q3 — Supply chain delays can push delivery past year-end. Getting quotes and placing orders by summer ensures you have the equipment in service well before December 31.
3. Document everything — Keep invoices, delivery receipts, and photos showing the equipment in use at your business location. The IRS wants proof the asset was placed in service in the tax year you claim the deduction.
4. Separate business and personal use — For dual-use assets like vehicles and laptops, maintain a contemporaneous log of business versus personal use. Apps like MileIQ or a simple spreadsheet work fine.
5. Run the numbers with your accountant — The interaction between Section 179, bonus depreciation, QBI deduction, and your overall tax bracket can be complex. A few hundred dollars in professional advice can save thousands in missed deductions.
6. Consider financing strategically — You do not have to pay cash. Equipment purchased through a loan or financing agreement still qualifies for both deductions. You get the full write-off in year one while spreading the actual payments over time.
7. Review your entity structure — If you operate as a sole proprietor, the Section 179 income limitation applies at the individual level. S-corp and partnership structures have different pass-through rules. Make sure your entity setup is optimized for these deductions.
The Bottom Line for Florida Small Businesses
The combination of 100 percent bonus depreciation and expanded Section 179 limits is one of the most generous equipment tax incentive packages small businesses have ever seen. Whether you are buying a $2,000 laptop or a $200,000 piece of specialized machinery, you can likely deduct the entire cost in the year of purchase. For Florida businesses already benefiting from no state income tax, these federal deductions go even further.
Do not leave money on the table. If you have been considering equipment upgrades, 2026 is the year to act. At Accounting BOSS, we help Florida small business owners maximize every deduction and build tax strategies that grow their bottom line. Reach out today for a consultation and let us put Section 179 and bonus depreciation to work for your business.
