Section 179 for Equipment and Trucks in 2026: What Qualifies, the Limits, and How Financing Fits

October 22, 2026 · 8 min read · Equipment Funding Network

For tax years beginning in 2026, Section 179 lets a business deduct up to $2,560,000 of the cost of qualifying equipment in the year it is placed in service, instead of depreciating it over several years. The limit starts to shrink, dollar for dollar, once the business places more than $4,090,000 of Section 179 property in service in the year, and equipment you finance can qualify the same as equipment you buy with cash.

The 2026 numbers, from the IRS

• Maximum Section 179 deduction: $2,560,000 for tax years beginning in 2026 (IRS Revenue Procedure 2025-32, section 4.24).
• Phase-out threshold: $4,090,000. The $2,560,000 limit is reduced by the amount the cost of Section 179 property placed in service during the year exceeds $4,090,000, so it reaches zero at $6,650,000.
• Sport utility vehicles: the cost of an SUV that can be taken into account under Section 179 is capped at $32,000 for 2026 (the same IRS section).
• For comparison, 2025 was $2,500,000 with a $4,000,000 threshold, the amounts set by the 2025 tax law for tax years beginning after 2024; the 2026 figures are those amounts adjusted for inflation.

What qualifies

Section 179 covers tangible business property such as trucks, trailers, construction and farm machines, manufacturing and medical equipment, restaurant equipment, computers and off-the-shelf software, plus certain improvements to nonresidential buildings. Land and buildings themselves do not qualify. IRS Publication 946 sets out the rules, and these are the ones that matter most for an equipment buyer:

• Bought, not inherited or gifted. The property must be acquired by purchase, and not from a related person such as a spouse, parent or child, or a business you control.
• More than 50 percent business use in the year you place it in service. With partial personal use, the deduction is limited to the business share.
• New or used. Section 179 does not require new equipment; a used truck or machine you buy can qualify.
• Placed in service in the tax year. The IRS means ready and available for a specific use in your business, not ordered, paid for or still on the seller's lot.

The limit most small businesses hit first

The dollar limit rarely binds a small business. The business income limit often does. Section 179 cannot be more than your taxable income from active trades or businesses for the year, so a business with modest income can deduct only that much this year, whatever it bought. Publication 946 says the amount you could not deduct carries forward to the next year. Ask your tax professional how your income figure is calculated, because it can include more than one business's results.

Section 179 and bonus depreciation

Bonus depreciation is a separate first-year deduction. Under the 2025 tax law, as the IRS describes it in Notice 2026-11, qualified property acquired after January 19, 2025 is eligible for a permanent 100 percent additional first-year deduction. Bonus depreciation has no dollar limit and no business income limit, and it can apply to new or certain used property. Section 179 lets you choose asset by asset how much to take. Which one, or which mix, fits your year is a question for your CPA.

How financing fits

• The deduction is based on the equipment's cost, and the cost includes the part you borrow. Financed equipment can qualify the same as equipment bought with cash.
• A loan or equipment finance agreement makes you the owner, so you can take Section 179. So does a lease with a one dollar buyout, which is generally treated as a purchase.
• A true lease, such as a fair market value lease, generally leaves ownership with the funding source. You deduct the lease payments instead of taking Section 179. Ask the funding source in writing which kind you are signing.
• The interest on a loan is generally deductible as a business expense as you pay it, separately from the depreciation.
• A deduction is not cash. It lowers taxable income, and you still make every payment.

Trucks and vehicles

The $32,000 SUV cap applies to sport utility vehicles rated more than 6,000 pounds and not more than 14,000 pounds gross vehicle weight. Trucks rated above 14,000 pounds, such as Class 8 tractors and most dump trucks, are outside that cap. Publication 946 also excludes some vehicles in the 6,000 to 14,000 pound band from the cap, including those with a cargo area of at least six feet that is not readily reachable from the passenger compartment. Passenger vehicles have their own, lower limits. Read the weight rating on the door sticker, not the brochure.

Timing at year end

For a calendar-year business, the equipment has to be in service by December 31. Financing takes time, and titled equipment such as a truck or trailer adds title and registration work, so start several weeks before year end. A deal that funds on December 30 for a truck still two states away does not help this year's return.

Selling the equipment later, or letting business use fall to 50 percent or less, can bring back part of the deduction as income. Your tax professional can show you what that means over the whole term, not only this year.

EFN matches businesses buying equipment with lenders whose own criteria fit the deal. It is not a lender and does not give tax advice. EFN's service is free to you, and the first step is a soft credit pull that does not affect your score.

Common follow-up questions

What is the Section 179 limit for 2026?
$2,560,000 for tax years beginning in 2026, reduced dollar for dollar once Section 179 property placed in service in the year exceeds $4,090,000 (IRS Revenue Procedure 2025-32). Confirm how it applies to you with your tax professional.

Can I take Section 179 on financed equipment?
Generally yes, when the financing makes you the owner, as a loan, an equipment finance agreement or a one dollar buyout lease does, and the equipment is placed in service in the year. A true lease generally does not qualify. Ask your CPA.

Does used equipment qualify for Section 179?
Yes, if you bought it, it is not from a related person, and you use it more than half for business. Your tax professional can confirm your purchase qualifies.

Is bonus depreciation still 100 percent?
The IRS describes a permanent 100 percent additional first-year deduction for qualified property acquired after January 19, 2025 (Notice 2026-11). Ask your CPA how it fits with Section 179 for your business.

When does the equipment have to be in service?
By the end of your tax year, December 31 for a calendar-year business. In service means ready and available for its use in your business, not just ordered or paid for.