Section 179 & Bonus Depreciation 2026: Write Off 100% of Equipment

If your small business purchased new equipment, vehicles, computers, or machinery in 2025 or 2026 — congratulations. Thanks to two of the most powerful provisions in the federal tax code, you may be able to deduct 100% of the purchase price in the very first year, rather than spreading deductions over five, seven, or more years. This is not a loophole. It is the law, and it just got significantly better.

The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, permanently restored 100% bonus depreciation and expanded Section 179 limits to record levels. For Florida small business owners, this is one of the most actionable tax opportunities available right now. Here is what you need to know.

What Is Section 179?

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year, rather than depreciating the cost over the asset’s useful life. It was designed specifically to give small and mid-size businesses a strong incentive to invest in their operations.

For 2026, the IRS has set the Section 179 deduction limit at $2,560,000. The phase-out threshold — the point at which the deduction begins to reduce dollar-for-dollar — starts at $4,090,000 in total equipment spending. Businesses that spend more than $6,650,000 on qualifying equipment phase out of Section 179 entirely, though bonus depreciation still applies.

These limits are now permanently indexed to inflation and will adjust each year, giving business owners long-term planning certainty for the first time in years.

What Qualifies for Section 179?

The list of qualifying property under Section 179 is broad and covers most tangible business assets:

Machinery and equipment — Any equipment used for business purposes, from industrial machines to restaurant kitchen equipment to construction tools.

Business vehicles (over 6,000 lbs. GVWR) — Heavy SUVs, work vans, pickup trucks, and similar vehicles used for business. Passenger vehicles have a separate, lower cap.

Computers and technology — Laptops, servers, point-of-sale systems, and other technology infrastructure used in your business.

Office furniture and fixtures — Desks, shelving, reception furniture, and similar items placed in service during the tax year.

Off-the-shelf software — Business software licenses and subscriptions that meet IRS criteria.

Qualified improvement property — Certain interior improvements to nonresidential buildings, such as HVAC systems, roofing, and fire protection.

The key rule: the asset must be used more than 50% of the time for business purposes to qualify.

Bonus Depreciation — Restored to 100%

Here is where the news gets even better. Bonus depreciation — also called “additional first-year depreciation” — was phased down from 100% after 2022, dropping to 80% in 2023 and 60% in 2024. For most of 2025, businesses were only able to claim 40% bonus depreciation.

The OBBBA changed that permanently. For qualifying property placed in service after January 19, 2025, bonus depreciation is restored to 100%. The IRS formalized this with Notice 2026-11, providing interim guidance on how to apply the new rules. This is now a permanent part of the tax code.

Section 179 vs. Bonus Depreciation: Key Differences

Both provisions let you write off equipment faster — but they work differently and have important strategic distinctions every business owner should understand.

How They Work Together

The IRS requires that Section 179 be applied first, followed by bonus depreciation on any remaining cost basis. Used together, they can allow a business to deduct up to 100% of eligible capital purchases in year one.

Here is a practical example: suppose your Florida HVAC business purchases $180,000 worth of new service vans, diagnostic equipment, and office computers in 2026. Under Section 179, you immediately deduct the full $180,000 — bringing your taxable income down dollar-for-dollar. If your taxable income was $200,000 before the deduction, you now owe taxes on just $20,000. If your purchases exceeded your taxable income, bonus depreciation covers the excess and can even generate a net operating loss that carries forward into future tax years.

Florida-Specific Considerations

Florida small business owners have an extra advantage here: Florida does not impose a state income tax on individuals, which means sole proprietors, single-member LLCs, and S-corp shareholders keep more of the savings compared to business owners in high-tax states. Florida does impose a corporate income tax of 5.5% on C-corporations, but the state generally conforms to federal depreciation rules, meaning the federal deductions you claim often flow through to reduce Florida corporate income as well.

If your business had a strong revenue year in 2026, buying equipment before December 31 could dramatically reduce both your federal and state tax burden. The key is acting before year-end and planning proactively with your accountant.

Your Section 179 & Bonus Depreciation Checklist

1. Identify every qualifying purchase made in 2025 or 2026 — Review all equipment, vehicle, technology, and furniture purchases during the tax year. If an item was placed in service and used more than 50% for business, it very likely qualifies.

2. Confirm the asset was placed in service this year — Ordering or paying for equipment is not enough. The asset must be physically delivered and ready to use within the tax year you want to claim the deduction.

3. Calculate your net business taxable income before deductions — Section 179 is capped at your business’s net taxable income. Know this number before deciding how much to claim under 179 versus bonus depreciation.

4. Choose which assets to apply Section 179 to — Unlike bonus depreciation, Section 179 gives you the flexibility to designate specific assets. This is useful when you want maximum deductions on particular high-value items while treating others normally.

5. Apply bonus depreciation to any remaining cost basis — After Section 179 is applied, the remaining cost basis on qualifying property is covered by 100% bonus depreciation. If this creates a net operating loss, document it carefully for carryforward use in future years.

6. Maintain detailed purchase records and usage logs — The IRS requires documentation supporting all depreciation claims. Keep invoices, dated receipts, and mileage or usage logs for any assets with mixed business and personal use.

7. Plan any remaining equipment purchases before December 31 — If you’ve been considering a major purchase, talk to your accountant now, not in April. Model the tax impact before you buy so you can make a fully informed decision and capture the full-year deduction.

Don’t Leave Money on the Table

The combination of restored 100% bonus depreciation and an expanded Section 179 limit makes 2026 one of the best years in recent memory for small business capital investment. Whether you’re a contractor in Tampa buying a new work truck, a dentist in Orlando upgrading equipment, or a retail owner in Miami investing in a new POS system — the tax code is on your side.

At Accounting BOSS, we help Florida small business owners cut through complexity and maximize every legal deduction available to them. If you made equipment purchases in 2025 or 2026 — or you’re planning to — reach out today. We’ll help you structure your deductions correctly, stay compliant, and keep more of what you earn.