How much can I deduct for equipment and a business vehicle in 2026?

Bonus depreciation, restored to 100%: bonus depreciation had been phasing down (60% in 2024, headed to zero). OBBBA brought it back to 100% permanently for property acquired and placed in service after January 19, 2025. That means a $4,000 laptop, a $9,000 office build-out, or qualifying equipment can be deducted in full the year you start using it, rather than spread over five to seven years.

Section 179, a parallel tool: Section 179 also lets you expense the full cost of qualifying property in year one, now up to $2.5 million, with the phase-out starting at $4 million of purchases. The practical difference for a small service business is that Section 179 cannot create a business loss, while bonus depreciation can. In most consultant or practice situations either tool fully expenses the purchase, and your preparer picks based on whether you want to create a loss that year.

Vehicles have their own rules: a vehicle used for business is deductible in proportion to business use. For ordinary passenger cars, annual depreciation is capped by the luxury-auto limits, so you cannot expense a $70,000 sedan in one year even with bonus depreciation. Vehicles with a gross vehicle weight rating over 6,000 pounds (many large SUVs and trucks) are exempt from the passenger-auto caps and can be expensed much more aggressively. Keep a mileage log either way, because business-use percentage drives the whole deduction.

Timing is the real lever: because these are year-one deductions, the question is usually which year to buy. Pulling a large purchase into a high-income year, or pushing it into a year you expect to earn more, can be worth more than the deduction itself. This is a planning decision that depends on your projected profit, which is why it belongs in a tax-planning conversation rather than a December scramble.