The 2026 Section 179 limits, from the IRS
Section 179 lets a business elect to deduct the cost of qualifying property in the year it is placed in service, instead of depreciating it over several years. For tax years beginning in 2026, the IRS sets the maximum at $2,560,000, reduced dollar for dollar once the cost of Section 179 property placed in service during the year passes $4,090,000 [1][2].
| Item | 2026 figure |
|---|---|
| Maximum deduction | $2,560,000 |
| Phase-out starts when Section 179 purchases exceed | $4,090,000 |
| Cap on the cost of a sport utility vehicle | $32,000 |
Two limits catch small businesses more often than the dollar cap. The deduction after the dollar limit cannot exceed your taxable income from the active conduct of a trade or business [1]. And if you use the property for both business and personal purposes, you can elect Section 179 only if business use is more than 50% in the year you place it in service [1].
"Placed in service" is the deadline that counts
The date that matters is not when you order or pay. The IRS says you place property in service when it is ready and available for a specific use [1]. A truck sitting at the dealer, an oven waiting for a gas hookup or software not yet installed is not in service. If delivery or setup could slip past December 31, the deduction may slip into 2027.
- Ask the seller for a written delivery date before you sign.
- Schedule installation, inspection or upfitting before the holidays.
- Keep the delivery receipt and a dated photo of the equipment in use.
Financing does not shrink the deduction
You do not need to pay cash to claim the deduction. NerdWallet notes that if you finance an equipment purchase and put it into service during the tax year, you can generally claim the Section 179 deduction on the full purchase price [4]. In the example above, an $80,000 machine financed in December can produce up to an $80,000 federal deduction in 2026 while only one $1,699.76 payment leaves your account this year.
That gap between the deduction and the cash spent is why December equipment financing is popular. It is also why it can be oversold. You still owe every payment over the next five years, plus interest. Compare the total cost of the financing against what the deduction is worth to you at your actual tax rate.
Bonus depreciation is back at 100% for many assets
Section 179 is not the only way to write off equipment in the first year. Publication 946 says the law known as the One Big Beautiful Bill Act reinstated the 100% special depreciation allowance for certain qualified property acquired and placed in service after January 19, 2025 [1]. Your tax preparer will decide which election, or which mix, fits your return best.
New Jersey's own cap: $25,000
New Jersey does not follow the federal numbers for its Gross Income Tax, which is the tax sole owners and partners pay on their share of business income. The Division of Taxation's depreciation worksheet says the maximum Section 179 deduction is $25,000, with no carryforward of unused amounts [3]. It also says the federal 50% special depreciation allowance is not allowed for New Jersey purposes [3].
So the same December purchase can produce a large federal deduction and a much smaller New Jersey one, with the rest recovered through depreciation over later years. Ask your preparer to show you both numbers before you decide how much to buy.
General information, not tax advice
Tax rules depend on your entity type, income and other purchases. Figures here are from IRS and New Jersey publications we read on October 21, 2026. Confirm your own situation with a tax professional.
If you are buying anyway, line up the financing now
Getting approved in October or November leaves time for delivery, setup and paperwork before year end. Batch Capital can match your quote to equipment lenders, and our New Jersey equipment financing page covers state and SBA options with longer terms.