What Section 179 is

Normally a business deducts the cost of equipment over several years through depreciation. Section 179 is an election that lets a business deduct part or all of the cost of qualifying property in the year it is placed in service. You make the election on IRS Form 4562, filed with your return for that year.

The IRS adjusts the dollar limit for inflation each year. The One Big Beautiful Bill Act (Public Law 119-21), signed in July 2025, raised it. These are the figures the IRS has published:

If the cost of Section 179 property you place in service during the year is more than the threshold, the maximum deduction is reduced by the amount over the threshold.

There is also a business income limit. Publication 946 says the total you can deduct is limited to the taxable income from the active conduct of your trades or businesses during the year. An amount you cannot deduct because of that limit can be carried to the next year.

A simple illustration

This is an example with round numbers, not a calculation for your business. A company buys a $100,000 machine and places it in service in December 2026. If the machine qualifies and the company has enough taxable business income, it may be able to elect to deduct up to the full $100,000 on its 2026 return instead of spreading the cost over several years. What that is worth depends on the deduction at your tax rate. Your CPA works that out.

Bonus depreciation in brief

Bonus depreciation is a separate rule. The IRS calls it the special depreciation allowance. The same 2025 law made it permanent at 100% for qualified property acquired after January 19, 2025, according to IRS news release IR-2026-06 and Notice 2026-11.

Section 179 and bonus depreciation have different rules, and both are reported on Form 4562. Which one to use is a decision for your CPA.

The December 31 placed-in-service deadline

This is the rule owners miss most often. Ordering, paying a deposit or signing a financing agreement in December is not enough. The Form 4562 instructions say you can elect to expense Section 179 property that you placed in service during the tax year.

Publication 946 defines the term. You place property in service when it is ready and available for a specific use. The publication gives an example of a machine bought in one year that was not installed and operational until the next year. It is treated as placed in service in the later year.

For a business that files on a calendar year, the 2026 deadline is December 31, 2026. If your business uses a fiscal year, ask your tax preparer which date applies.

Why ordering early matters

Between the order and the first day of use there are steps you do not control:

• Vendor lead time and delivery
• Installation, wiring or site preparation
• Testing and any required inspection
• Holiday closures at the vendor, the carrier and the installer

Ask the vendor for delivery and installation dates in writing before you commit.

What counts as qualifying equipment

Publication 946 lists what can be Section 179 property. For most businesses the relevant categories are:

• Tangible personal property, such as machinery and equipment
• Off-the-shelf computer software

The property also has to meet these conditions, per Publication 946:

• Acquired for business use. It must be acquired for use in your trade or business.
• Acquired by purchase. If you plan to lease instead of buy, ask your CPA how the agreement is treated.
• Used more than 50% for business in the year you place it in service. If business use later drops to 50% or less, you may have to recapture part of the deduction.

Some property does not qualify. Publication 946 names land and land improvements, and property acquired from a related person, among others.

Ways to fund a year-end equipment purchase

RAN Funding is a business financing company. We work with a network of lenders and arrange these products for established businesses. Timing below is for the funding only. It does not include vendor delivery or installation.

Amounts run $20,000–$500,000+. For bigger projects, larger funding is available: up to $2 million funded in as little as 72 hours once approved.

A note on SBA loans. At 30–60 days, an SBA loan started late in the year is likely too slow for a December 31 deadline.

A year-end timeline

October

• Decide what the business actually needs.
• Ask your CPA whether the equipment qualifies and how much deduction your income can support.
• Get vendor quotes with delivery and installation dates in writing.
• Apply for funding so you know your options before you order.

November

• Choose your funding and place the order.
• Book the installer and any site work.

December

• Take delivery, install and test.
• Have the equipment ready and available for use by your year-end.
• Keep the invoice, the delivery record and the installation date for your tax preparer.

What to have ready

• A short application
• The last 3 months of business bank statements (4 months in California, New York and Virginia)
• The vendor quote or invoice for the equipment, if you have it

RAN Funding is built for established businesses: most clients have 1+ year in business and $20,000+ in monthly revenue. See the full business loan requirements.

Mistakes to avoid

• Ordering too late. Equipment installed after your year-end is placed in service in the next tax year.
• Buying equipment the business does not need. A deduction lowers taxable income. It does not make an unneeded machine pay for itself. Buy for the business case first.
• Not checking with a CPA. The income limit, the business-use test and the related-person rule can each change the answer.

This is not tax advice

This article is general information based on IRS publications. It is not tax, legal or accounting advice, and RAN Funding is not a tax adviser. Tax rules have limits and exceptions that depend on your business, and state rules can differ from federal rules. Confirm eligibility, amounts and timing with your CPA or tax preparer before you buy or finance equipment.

How RAN Funding helps

You complete one application for our lender network and one dedicated specialist handles your file. We give decisions in hours on complete files, and clients are funded in as little as 24–48 hours once approved.

We do not decide your tax treatment, and approval is not automatic. What we can do is tell you quickly which funding options your business fits, so you can order with time to spare. Use our business funding calculators to plan.

Common questions