Section 179 is a provision of the U.S. tax code that allows eligible businesses to deduct the cost of certain qualifying equipment and property in the year the equipment is placed into service, rather than recovering the cost over a longer depreciation period.
Put simply, Section 179 lets businesses immediately deduct the purchase price of qualifying equipment, vehicles, and software in the year they’re placed in service.
For tax year 2026, eligible businesses may be able to expense up to $2.5 million in qualifying equipment purchases, subject to applicable IRS rules, limitations, and eligibility requirements.
For a contractor already planning to invest in equipment, understanding Section 179 can be an important part of determining when and how to make that investment.
Keep in mind: Section 179 eligibility and deduction limits depend on individual circumstances. Always consult your tax advisor regarding your specific situation.
CONTINUED 2026 BENEFITS
ONE: 100% BONUS DEPRECIATION
No more phase-out. Any qualifying equipment placed in service after January 19, 2026, qualifies for full first-year expensing.
TWO: SECTION 179 DEDUCTION DOUBLED
The cap is now $2.5M, with the phase-out beginning at $4M. These limits are permanent and indexed for inflation.
HOW THEY WORK TOGETHER
Apply Section 179 first (up to $2.5M).
Then use 100% bonus depreciation for any remaining amount.
Example: Buy $3M in qualifying equipment → Deduct $2.5M with Section 179 + $500K bonus = full $3M write-off in year one.
View 3-Minute Video
Peter Pantelis breaks down the 2027 construction outlook, explains Section 179 in straightforward terms, and shares considerations contractors should keep in mind as they plan equipment purchases.
WHAT THIS MEANS FOR YOU?
With Section 179 limits doubled and 100% bonus depreciation permanent, 2026 is the most tax-efficient year yet to finance or lease new heavy equipment. That means stronger cash flow, lower effective costs, and more flexibility for your construction business.
Planning Your Next Equipment Purchase?
Tax strategy is only one part of the equation. The right financing structure can also help you acquire the equipment you need while managing cash flow and preserving working capital.
When you're ready to explore your options, our team of experts can help you find a financing solution tailored to your equipment needs and designed to support your business growth.
