This article is general information, not tax advice. Deduction limits and rules change, so confirm your situation with a qualified tax professional.
What is Section 179?
Section 179 of the U.S. tax code lets eligible businesses deduct the cost of qualifying equipment in the year it's placed in service, up to annual limits, instead of depreciating it over several years. For contractors buying iron, it can reduce taxable income significantly in the year of purchase.
Does Section 179 apply to used equipment?
Generally, yes. Used equipment can qualify as long as it's "new to you" (you didn't previously use or own it) and it's used for business more than 50% of the time. That includes machines bought from private sellers.
Can I take Section 179 on financed equipment?
Generally, yes. Equipment bought with an Equipment Finance Agreement or a loan can qualify, often for the full purchase price, even though you're paying it off over time. That's why year-end financed purchases are popular: you may deduct the cost now while spreading payments over the term.
What about leases?
- $1 buyout (capital) leases are generally treated like purchases and may qualify for Section 179.
- FMV and true operating leases generally don't qualify for Section 179. The lease payments are usually deducted as a business expense instead.
Compare the structures in FMV vs. $1 buyout leases.
When must the equipment be placed in service?
It has to be bought and placed in service, meaning ready and available for use in your business, within the tax year. Buying a machine on December 30 that isn't delivered until January generally moves the deduction to the next year.
What about bonus depreciation?
Bonus depreciation is a separate provision that can apply alongside or instead of Section 179, and its percentage has changed over time. Your tax pro can tell you which combination gives the best result for your business.
What if I sell the equipment later?
If you sell a machine you deducted, part of the gain may be taxed as depreciation recapture. Plan for this before you sell your equipment.
What should I ask my tax professional?
- This year's Section 179 limit and phase-out threshold.
- Section 179 vs. bonus depreciation vs. regular depreciation for your income.
- How your chosen finance or lease structure will be treated.
How do I apply for equipment financing through EquipMarket?
EquipMarket works with our lending partner, Southend Capital, to finance dealer and private-party equipment. One short application gets you pre-qualified. Terms run 24 to 72 months, and you can choose an Equipment Finance Agreement (finance-to-own), a traditional lease, a 10% fair-market-value lease or a $1 buyout lease.
Apply for financing now → or compare financing options and estimate a payment. Rates and approval are set by the lender based on your credit, time in business and the machine.
Shop machines before year-end: excavators, wheel loaders, articulated trucks.
