How to Write Off 100% of Equipment Purchases This Year

If you’ve been holding off on a big equipment purchase, waiting for the tax math to make sense, here’s your green light. One of the most valuable write-offs for growing businesses is back, and it’s now permanent. Bonus Expensing, also called Bonus Depreciation, is a tax incentive that allows businesses to immediately deduct the full cost of qualifying equipment purchases in the year they are placed in service, rather than depreciating the cost over several years.

For founder-led business, bonus expensing can turn a planned purchase into a serious tax-saving move, but only if you act before year-end.

Let’s break down what’s changed, what qualifies, and why the calendar matters more than you might think.

What Just Changed with Bonus Expensing?

The One Big Beautiful Bill Act (OBBBA) permanently reinstated 100% first-year bonus depreciation. It’s officially called the additional first-year depreciation deduction. It applies to qualified property acquired and placed in service after January 19, 2025.

This means, instead of writing off the cost of a major purchase slowly over five, seven, or more years, you can deduct the full cost in the year you put it to use. A $200,000 piece of equipment doesn’t trickle onto your tax return over a decade. It hits all at once, lowering your taxable income right now.

For years, this deduction was phasing out. It dropped to 40% in early 2025 and was on track to disappear entirely. The OBBBA reversed that. The 100% deduction is no longer temporary. Now that it’s a permanent part of the tax code, you can have confidence to plan capital purchases without racing an expiring benefit.

What Can Bonus Expensing Write Off Right Now?

The list of qualifying purchases is broad, which is good news for founders investing in growth. To qualify, property generally needs a recovery period of 20 years or less and must be placed in service (not just purchased) during the tax year.

Common qualifying purchases include:

• Equipment and machinery: the core assets that keep your operation running and growing
• Modified Accelerated Cost Recovery System (MACRS) property with a recovery period of 20 years or less: including computer equipment and office furniture
• Computer software that’s depreciable
• Qualified improvement property: improvements to the interior of a nonresidential building, such as your office or facility
• Factory and facility upgrades that meet the qualified improvement standard
• Used equipment: as long as it wasn’t previously used by you before you acquired it
• R&D-related investments in qualifying depreciable assets

One detail trips up a lot of business owners: it’s the “placed in service” date that counts, not the purchase date. If you buy equipment in December but don’t put it to work until January, you’ll have to wait a full year to claim the deduction. Timing is everything when unlocking tax credits and deductions under the Big Beautiful Tax Bill.

Why Is Bonus Expensing a Mid-Year Opportunity, Not a January Problem?

Too many founders wait until tax season to think about deductions. By then, it’s often too late to do anything meaningful. This is a decision you make now while you still have months to buy, install, and start using the assets.

Any qualifying purchase you place in service before December 31 can reduce your 2026 taxable income. That’s real money staying in your business instead of going to the IRS. If you were already planning to upgrade machinery, expand your facility, or invest in new systems next year, pulling that decision forward could pay off significantly.

The smart move is to look at your capital plans now. Map out what you intend to buy, confirm it qualifies, and make sure you can realistically get it into service before the year closes. A few weeks of planning can be the difference between a full deduction and a missed one.

Bonus Expensing vs. Section 179: What’s the Difference?

Both bonus depreciation and Section 179 let you deduct the cost of qualifying assets upfront. But they work differently, and the distinctions matter when you’re making large purchases.

• Dollar limits. Section 179 caps your annual deduction. For 2025, the maximum is $2,500,000, and it starts phasing out once purchases exceed $4,000,000. Bonus depreciation has no annual dollar limit.
• Income limits. Section 179 can’t deduct more than your taxable business income for the year. Bonus depreciation has no such cap.
• Creating a loss. Because it isn’t tied to income, bonus depreciation can create a net operating loss you can carry forward to offset future income. Section 179 can’t do that.

Here’s the practical takeaway: for many founders making substantial capital investments, bonus depreciation offers more flexibility. That said, the two aren’t either-or. In many cases, you can combine Section 179 and bonus depreciation in the same tax year to maximize your write-off. The right mix depends on your numbers, and that’s why we’re here to help you review and make the right decision.

Frequently Asked Questions

Does bonus depreciation apply to vehicles used for business purposes?

Yes, bonus depreciation applies to vehicles used for business purposes, but with important limits. While passenger vehicles are subject to strict IRS limits, heavier vehicles over 6,000 pounds can qualify for a much larger first-year write-off. Because vehicle weight and usage percentages greatly affect your savings, we recommend reviewing the numbers with us before buying.

Can bonus depreciation be recaptured if I sell the asset later?

Yes, bonus depreciation is subject to depreciation recapture. When you sell an asset that used bonus depreciation, the IRS taxes the recovered deduction amount as ordinary income rather than capital gains. While the upfront tax savings usually still make claiming the deduction worthwhile, it is vital to factor these potential future sales into your broader business tax strategy.

Can I claim bonus depreciation on assets purchased through financing or a loan?

Yes, you can claim bonus depreciation on financed or loan-purchased assets. You don’t need to pay cash upfront to qualify. The IRS cares about ownership and when the asset is placed in service, not how you paid for it. This means you can preserve your cash flow through financing while still capturing the full first-year deduction.

Don’t Wait Until Year-End Planning Season

The founders who benefit most from this deduction are the ones who plan early, not the ones scrambling in December. Building smart tax strategies to fuel business growth starts with a short conversation, one that can help you time purchases, choose between Section 179 and bonus depreciation, and keep more of your hard-earned profit working for you.

A free Time-Drain Audit helps you uncover where your valuable hours are being wasted, giving you the time and clarity needed to build a smart year-end capital strategy and turn your next investment into a major tax win.