Bonus Depreciation 2026 & Section 179: What Your Books Need

Can equipment you buy in December still count for bonus depreciation 2026? Yes, as long as it's in service by December 31 and your books can prove it.

Section 179 alone goes up to $2,560,000 in 2026. But a lot of whether your CPA can use it comes down to boring stuff, like dates and paperwork.

December is when dealers roll out "buy it before the 31st and write it off." Good sales line. The dealer won't be sorting out the paperwork in March, though. Your CPA will, using whatever your books show.

Bonus depreciation 2026 at a glance

The One Big Beautiful Bill Act, signed July 4, 2025, made 100% bonus depreciation permanent. If an article shows 20% as the 2026 rate for everything, it's using the old phase-down schedule. Here are the 2026 federal numbers:

Federal figures for 2026, calendar-year businesses. Sources: IRS Notice 2026-11, Rev. Proc. 2025-32 and Rev. Proc. 2026-15.

Section 179 deduction 2026 vs. bonus depreciation

Section 179 is an election your CPA makes asset by asset, on Form 4562. The cap shrinks dollar for dollar once you place more than $4,090,000 of Section 179 property in service. It also can't be more than your taxable income from businesses you actively run (W-2 wages count too), and anything over that carries forward.

Bonus depreciation is automatic unless your CPA elects out for a whole class of property (say, all your 5-year equipment). There's no income limit, so it can create a loss for the year (your CPA checks how much of it you can use). And there's no overall dollar cap except on cars and light trucks (more below).

Section 179 needs more than 50% business use in the first year. Bonus has the same test for vehicles and other "listed property," the IRS's term for vehicles and a few other things, like entertainment equipment.

Which one to use, and how much, is your CPA's call, based on this year's income, next year's and your state return. Our job is making sure your monthly bookkeeping gives them clean numbers to decide with.

Acquired vs. placed in service: the two dates your books need

The acquired date sets the bonus rate. The placed-in-service date sets the tax year. Your records need both.

Contracts signed before January 20, 2025

The 100% rate is for property acquired after January 19, 2025. If you signed a written binding contract for it before January 20, 2025, it's generally treated as acquired when you signed. Most property like that gets 20% bonus if it goes into service in 2026.

Keep the signed purchase agreement or order with the invoice, especially for anything ordered before January 20, 2025 that's only arriving now.

Delivered isn't the same as in service

Equipment counts in the year it's placed in service, which the IRS defines as ready and available for its specific use. Ordering or paying for it doesn't count. In the IRS's own example in Publication 946, a machine delivered one year but not installed and running until the next counts in the next year.

Say you order a $90,000 machine on December 10. It's delivered December 29, but the installer can't get it running until January 6. That machine most likely counts for 2027.

Keep proof of the day each purchase was ready to use: the delivery receipt, the install sign-off, or a vehicle's registration date.

Financed equipment: the deduction isn't the cash

Do you have to pay cash to get the deduction? Nope. Your cost includes what you financed, plus sales tax, freight and installation.

That's also where owners get burned. Say you finance a $60,000 work truck with $6,000 down. It's a pickup rated over 6,000 pounds, used only for work, and your CPA takes 100% bonus on it.

It's a deduction, not a credit. If that whole $60,000 comes off income taxed at 24%, it's worth roughly $14,400 in federal income tax. The QBI deduction and self-employment tax move the real number, so ask your CPA. Either way, you still owe the lender $54,000.

So you spent $60,000 to save roughly $14,400. And since the whole cost is used up in 2026, there's no depreciation left to take on that truck on your federal return in 2027 or later.

How it should look in QuickBooks

In QuickBooks Online, a journal entry usually handles a financed purchase in one step. Here's what it should show:

1. The full cost goes to a fixed asset account, like Vehicles or Machinery and Equipment. It doesn't belong in Repairs or Truck Expense.
2. The amount financed goes to a loan account under liabilities. The down payment comes out of the bank account, so match it to this entry in the bank feed instead of adding it twice.
3. Each monthly payment gets split. Principal reduces the loan and interest goes to interest expense. The lender's amortization schedule shows the split for every payment.
4. Depreciation waits for your CPA, and their entry gets recorded once the return is done so the books match.

Book the whole payment as an expense and profit looks too low while the loan sits at its original balance. If the loan accounts haven't been reconciled all year, catch-up bookkeeping can fix it before your CPA sees it. Our free year-end bookkeeping checklist walks through matching each loan to the lender's statement.

Keep a fixed asset list

A fixed asset list shows the details your CPA needs, and a plain spreadsheet works just fine. One row per asset:

• What it is, the vendor, and the serial number or VIN
• The contract or order date, and the date it was ready to use
• Total cost, and how it was paid (cash, loan, lease or trade-in)
• The date it was sold or traded, and what you got for it

Vehicles, trade-ins and small purchases

Vehicles go by weight

A car, or a truck or van rated 6,000 pounds gross vehicle weight or less, is capped at $20,300 of first-year depreciation for 2026, even with bonus. A heavy SUV has a $32,000 Section 179 cap, but bonus can generally cover the rest.

The weight rating is on the label on the driver's door edge or door frame, so photograph it for your file. A mileage log proves the business use.

Trade-ins are sales now

Since 2018, like-kind exchanges are generally limited to real estate. Trading in your old truck gets treated like selling it. Your CPA needs the trade-in allowance and the old truck's details. If it was already fully written off, that trade-in value can show up as taxable income.

Small purchases need a policy by January 1

The IRS de minimis safe harbor lets you expense items up to $2,500 per invoice or item, if your CPA makes the election on the return. The catch: your books have to expense those items too, under a policy in place at the start of the year. So set your 2027 policy in December.

Pennsylvania doesn't follow bonus depreciation

If you pay Pennsylvania personal income tax on your business profit (sole proprietors and S corporation owners do, for example), bonus depreciation isn't allowed. Section 179 is, and for tax years starting in 2023 or later, Pennsylvania follows the federal limits.

C corporations add federal bonus depreciation back on the Pennsylvania corporate net income tax return and take regular depreciation instead. Either way, a truck written off with bonus on your federal return can keep depreciating on your Pennsylvania return for years, unless your CPA can use Section 179 for it in Pennsylvania. Your asset list has to track both.

In another state? Ask your CPA how that state treats bonus.

What your CPA needs in January

We don't file income tax returns. Your CPA does. Whoever keeps your books should hand your CPA a year-end package so nobody's chasing paperwork in February. For equipment, it should include:

• The fixed asset list, with both dates for every 2026 purchase
• Invoices, bills of sale and signed purchase agreements
• Loan and lease documents, the amortization schedule and a December 31 loan statement
• Titles, the weight-label photo and the mileage log for each vehicle
• Your under-$2,500 expensing policy

How we help

We keep the books, reconcile the loan accounts every month and keep your fixed asset list current, so the January package (part of our tax-ready bookkeeping) is ready before your CPA asks. Jordan is a Certified QuickBooks ProAdvisor. We're based in Cranberry Township, PA, north of Pittsburgh, and work with business owners across the US, all online.

Monthly plans start at $399 a month. Catch-up work is a flat fee from $399, quoted after a free look at your books.