100% Bonus Depreciation Is Now Permanent Law
Congress has made 100% bonus depreciation permanent. Businesses that buy or finance equipment can deduct the full cost in year one — and the window never closes.
For years, bonus depreciation was a temporary provision that Congress kept extending — and kept letting phase down. Businesses never knew whether to count on it. That uncertainty is over.
With 100% bonus depreciation now signed into permanent law, the rules are simple: buy or finance qualifying equipment, place it in service before December 31, and deduct the full purchase price on this year's tax return. No phase-down schedule. No sunset date. No guessing whether Congress will act in time.
The most powerful part? You do not have to pay cash to claim the deduction. Finance \$500,000 of equipment, make your first monthly payment, and you can still deduct the full \$500,000 this year. Your tax savings arrive immediately — often before you have made a fraction of the payments.
"Finance \$500,000 of equipment. Deduct \$500,000 this year. Your tax savings can exceed your entire first year of payments."
— The core advantage of bonus depreciation + equipment financing
Six Reasons to Act Now
Permanent law removes the urgency of year-end deadlines — but the benefits of acting sooner are still real.
Deduct 100% in Year One
Write off the full cost of qualifying equipment the same year you place it in service — no more spreading deductions over 5, 7, or 15 years.
Finance It, Still Deduct It
You don't have to pay cash to claim the deduction. Finance $500,000 of equipment, make your first monthly payment, and still deduct the full $500,000 this year.
No Dollar Cap
Unlike Section 179 (capped at $2.56M for 2026), bonus depreciation has no upper limit. Large equipment purchases qualify for the full 100% write-off.
Permanent — No More Guessing
Prior law had bonus depreciation phasing down to zero by 2027. Now that it is permanent at 100%, you can plan multi-year equipment investments with confidence.
New and Used Equipment Qualifies
Both new and used equipment placed in service after the effective date qualify — giving you flexibility to buy from any source, including auctions and resellers.
Combine with Section 179
Use Section 179 first to maximize that deduction, then apply bonus depreciation to any remaining eligible basis. The two provisions stack for maximum savings.
How Bonus Depreciation + Financing Works Together
You identify the equipment your business needs
Any qualifying tangible business property — machinery, vehicles, technology, medical equipment, construction equipment, and more.
LeaseSource structures the financing
We arrange a loan or lease with competitive rates and terms matched to your cash flow. Most transactions close in 2–5 business days.
Equipment is placed in service
Once the equipment is delivered and ready for use, the clock starts. The deduction is tied to the in-service date, not the payment schedule.
You claim the full deduction on your tax return
Your CPA files Form 4562 and claims 100% bonus depreciation on the full purchase price — regardless of how much you have paid so far.
Tax savings offset your payments
At a 35% combined tax rate, a $200,000 equipment purchase generates $70,000 in tax savings — often arriving before you have made a full year of payments.
Estimated Tax Savings by Equipment Cost
Illustrative examples at a 35% combined federal + state tax rate. Actual savings depend on your tax situation — consult your CPA.
| Equipment Purchase | Year-One Deduction | Estimated Tax Savings | Effective Net Cost |
|---|---|---|---|
| $75,000 diagnostic equipment | $75,000 | $26,250 | $48,750 |
| $200,000 CNC machine | $200,000 | $70,000 | $130,000 |
| $500,000 fleet vehicles | $500,000 | $175,000 | $325,000 |
| $1,000,000 production line | $1,000,000 | $350,000 | $650,000 |
* Assumes 100% business use, sufficient taxable income, and a 35% combined tax rate. State conformity varies. Not tax advice.
Bonus Depreciation vs. Section 179: What's the Difference?
| Feature | Bonus Depreciation | Section 179 |
|---|---|---|
| Dollar limit | None | $2,560,000 (2026) |
| Phase-out threshold | None | Begins at $4,090,000 |
| Can create a tax loss? | Yes | No — limited to taxable income |
| New equipment | Yes | Yes |
| Used equipment | Yes | Yes |
| Apply to specific assets? | No — applies to all eligible property | Yes — you choose which assets |
| Best for | Large purchases, no income limit | Targeted deductions, smaller purchases |
The most common strategy: use Section 179 first to maximize that deduction, then apply bonus depreciation to any remaining eligible basis. Your CPA can determine the optimal combination for your situation.
Frequently Asked Questions
QDoes the equipment have to be paid in full to claim bonus depreciation?
No. The deduction is based on the cost of the equipment, not how much you have paid. If you finance $300,000 of equipment and make your first monthly payment before year-end, you can deduct the full $300,000 in that tax year.
QWhat types of equipment qualify?
Most tangible business property qualifies: manufacturing equipment, medical and dental equipment, construction machinery, technology systems, vehicles over 6,000 lbs GVWR, office furniture, and certain software. Real property (buildings) generally does not qualify, though certain improvements may.
QCan bonus depreciation create a tax loss?
Yes — unlike Section 179, bonus depreciation can create or increase a net operating loss (NOL), which can then be carried forward to offset future taxable income. This makes it especially powerful for businesses with large equipment purchases.
QHow does this interact with Section 179?
The typical strategy is to use Section 179 first (up to the $2.56M limit for 2026), then apply bonus depreciation to any remaining eligible basis. Both deductions can be used in the same year on the same equipment.
QIs there a deadline to place equipment in service?
For calendar-year taxpayers, equipment must be placed in service by December 31 of the tax year you want to claim the deduction. "Placed in service" means the equipment is ready and available for use — not just ordered or delivered.
QShould I consult a CPA before making a large equipment purchase?
Always. While the rules are straightforward, your specific tax situation — entity type, taxable income, state conformity, and other deductions — affects how much you benefit. LeaseSource can help you structure the financing; your CPA confirms the tax strategy.
Ready to Put Bonus Depreciation to Work?
LeaseSource has structured equipment financing for businesses across every industry since 1994. We'll help you move fast, close quickly, and get your equipment in service.
This page is for informational purposes only and does not constitute tax or legal advice. Consult a qualified CPA or tax professional regarding your specific situation.