Section 179 deduction calculator

Yes — the Section 179 calculator shows your instant deduction.

Enter your equipment purchase cost and see your total 2026 write-off in seconds. No credit-score impact, no signup required. Use the calculator now to lock in your deduction figure before year-end.

The specifics

Section 179 is an IRS tax rule that lets you deduct (or "expense") the full cost of qualified business equipment in the year you place it in service. For construction contractors, this means you can write off excavators, dozers, cranes, concrete mixers, compressors, telehandlers, and most other depreciable machinery.

The 2026 Section 179 deduction limit is $1,220,000. This is your annual ceiling. If you spend $850,000 on equipment, you can deduct the full $850,000 in 2026, provided your business earned enough taxable income to absorb it.

Equipment purchased with construction equipment financing loan proceeds still qualifies for the Section 179 deduction. The financing method does not disqualify you — what matters is that you own the equipment, it is "tangible property," and you place it in service in 2026.

Your taxable business income for 2026 sets a hard cap: your total Section 179 deduction cannot exceed your net business income for the year. If your taxable income is $600,000 and you bought $900,000 of equipment, you can claim only $600,000 as a Section 179 deduction in 2026. The remaining $300,000 carries forward and can be deducted in 2027, assuming you have income that year.

Land, buildings, vehicle interiors, and property used more than 50% for personal purposes do not qualify. Vehicles purchased primarily for commuting or personal use, even if titled to the business, are excluded.

Qualification & edge cases

Your business must have placed the equipment in service (actually used it on a job) by December 31, 2026 for a 2026 deduction. Simply purchasing or receiving equipment on December 30 does not qualify if it isn't put to work.

If your business generated a loss or minimal income in 2026, your Section 179 deduction is limited to that year's profit. You cannot use Section 179 to create a loss. Excess deduction automatically carries to 2027. A contractor with $200,000 of taxable income who bought $1,220,000 of equipment claims $200,000 in 2026 and carries forward $1,020,000 to offset 2027 income.

Pass-through entities (S-Corps, LLCs, partnerships) must allocate the Section 179 deduction to owners based on ownership share. A single-member LLC or sole proprietor claims the full deduction on their individual return if their business income allows it.

If you're considering whether to finance or lease equipment, keep in mind that construction equipment leasing offers immediate tax deductions of 100% of lease payments as operating expenses each year — an alternative to the upfront Section 179 claim. Your accountant can model both paths to see which preserves more cash.

Background & how it works

Section 179 is part of the Internal Revenue Code and is administered by the IRS. It was created to help small and mid-sized businesses invest in equipment without waiting years for depreciation deductions. Instead of depreciating a $100,000 excavator over 5–7 years, you write off the full $100,000 in Year 1.

Construction contractors benefit because equipment is central to revenue generation. According to the Equipment Leasing and Finance Foundation, construction equipment finance is one of the largest segments of the broader equipment finance market, with contractors financing or leasing billions of dollars annually. Proper tax planning — including Section 179 strategy — can recapture thousands in cash.

The deduction works differently from depreciation. Depreciation spreads the cost over the asset's useful life (typically 5–7 years for construction machinery). Section 179 collapses that entire deduction into the current year, reducing taxable income immediately. That reduction may lower your current-year tax bill or create a loss that carries back or forward, depending on your situation.

Section 179 is paired with bonus depreciation rules and regular depreciation. If you don't claim Section 179, you can still depreciate equipment over time. Your tax advisor can recommend the best strategy based on your income level and equipment purchase schedule.

When you finance equipment through an SBA loan, traditional bank loan, or specialized equipment financing for contractors, the Section 179 deduction applies to the full fair market value of the equipment — not just the down payment. You own the asset, so the IRS treats it as your property for tax purposes, regardless of the loan balance.

Bottom line

The Section 179 deduction limit for 2026 is $1,220,000. Your deduction cannot exceed your taxable business income that year. Calculate your exact write-off using the calculator above, then coordinate with your accountant to file the form correctly and capture your savings.

Disclosures

This content is for educational purposes only and is not financial advice. constructionequipmentfinancing.finance may receive compensation from partner lenders, which may influence which products are featured. Rates, terms, and availability vary by lender and applicant qualifications. For tax guidance, consult a licensed CPA or tax attorney. Section 179 rules are subject to change; verify current limits and eligibility with the IRS or a tax professional.

Sources

• Equipment Leasing and Finance Foundation – Horizon Report
• IRS Publication 946 – How to Depreciate Property
• SBA 7(a) Loan Program