Section 179 for IT Equipment: What a Small Business Can Deduct in 2026

A U.S. small business can generally elect to deduct the eligible business cost of laptops, network gear and off-the-shelf software under Section 179. For a calendar-year business, the equipment has to be ready and available for its intended business use by December 31, 2026. A December invoice alone doesn't establish that date. The rules below come from IRS Publication 946, How To Depreciate Property, unless noted.

For tax years beginning in 2026, the federal Section 179 maximum is $2,560,000. It drops dollar for dollar once the total cost of Section 179 property placed in service exceeds $4,090,000. These figures come from IRS Revenue Procedure 2025-32. The amount you can claim also depends on business use and taxable income. If you're scheduling a purchase now, start with the year-end worksheet.

What IT equipment qualifies for Section 179?

Eligible property generally has to be bought for use in an active trade or business. A new or refurbished laptop from an unrelated seller can qualify under the same rules; IRS Publication 225 notes that new or used equipment acquired by purchase qualifies. Gifts and purchases from certain related parties fall outside the IRS definition of a purchase.

For a mixed-use purchase, business use has to exceed 50% in the year the item goes into service for Section 179. For example, an eligible laptop with a hypothetical cost of $1,500 and 80% business use has a $1,200 business share before the deduction limits. A deduction reduces taxable income. The tax savings depend on the return. If business use later falls to 50% or less during the recovery period, you may have to report part of the prior deduction as income.

Financing or leasing. A financed purchase can qualify if your business is treated as the purchaser and the other Section 179 rules are met. Under a true lease, payments may instead be deductible as rent. The federal tax treatment depends on the agreement and circumstances. Send the contract to your accountant if ownership is unclear. The IRS explains the difference in its FAQ on equipment leases and conditional sales contracts.

What must be ready by December 31?

The IRS calls equipment placed in service when it is “ready and available for a specific use.” Actual use can start later. An item ready for its intended job on delivery can qualify that day. Equipment that still needs installation generally goes into service once that work is complete. The following examples apply that test to common office purchases; they illustrate the wording and are not IRS rulings.

Schedule the work before placing the order

For an office deployment, I would start with the date someone can finish setup and verify the equipment works. Allow time for the work that applies to your purchase, such as enrolling laptops, testing a switch after hours or checking file-share permissions.

Section 179 vs. bonus depreciation

Both can accelerate a federal deduction. Section 179 lets you choose how much to expense on each qualifying asset, subject to its limits. Additional first-year (bonus) depreciation applies to eligible depreciable cost that remains after any Section 179 deduction. Regular depreciation may apply to any cost left after both.

Both are reported on IRS Form 4562. For an individual, the Section 179 income calculation can include employee wages. Ask your accountant to apply the rules to your entity and return.

Ask about the de minimis safe harbor for smaller purchases. A business without an applicable financial statement can generally elect to expense qualifying tangible items costing up to $2,500 per invoice or per item as substantiated by the invoice. It must have an expensing procedure in place at the start of the tax year and follow it in its books. The election is made annually with the timely filed original federal return, including extensions. Check the policy before assuming a dock, monitor or laptop can be expensed this way. The IRS sets out the conditions in its tangible property regulations FAQ.

For a broader look at these methods, including expense tracking for tax season, see our business tech tax guide.

Year-end IT purchase worksheet

Use these columns in a spreadsheet and make a row for each asset. Record the model and an asset tag or serial number if you have one. The laptop and dollar amount below are an example. Send the list to your accountant with the invoices and setup records.

• Keep itemized invoices and related charges. Note freight, installation, service plans and subscriptions separately where possible. Your accountant can decide which costs belong in the equipment basis.
• Record what was ready. A dated ticket can show which staff member could sign in, when a switch passed its checks or when a file share became available.
• Flag anything that may affect the deduction. Note personal use, financed purchases, lease terms, deposits on back orders and work that spans December and January.
• Keep the records with the purchase. If your books are in QuickBooks Online or Xero, attach the invoice and the setup record to the purchase entry, so your accountant finds the in-service evidence where the cost is recorded.

How this looks in a small office

The tax treatment can affect when you recover the cost, but it works best on purchases the office already needs. Start with equipment that already belongs in your IT budget or hardware refresh plan.

Replacing four laptops. In a Windows office, the ThinkPad E14 Gen 7 is an example. Confirm the exact configuration and Windows edition before ordering. For a team already set up to manage Macs, the 13-inch MacBook Air (M5) is an alternative. Set aside time for enrollment and verify that each user can sign in and open their work apps. Our laptop deployment guide covers the setup and management choices.

Replacing an aging switch and adding battery backup. For a small UniFi network, the UniFi Standard 24 PoE has 24 gigabit Ethernet ports, 16 with PoE+, and a 95 W total PoE budget. Compare those limits with your access points and cameras before ordering. For battery backup, the APC Back-UPS Pro BR1500MS2 is a 900 W tower unit; if the network sits in a rack, the APC Smart-UPS SMC1500-2UC is a 2U rackmount model. Size either one for the actual load and the runtime you need; our UPS guide covers sizing and clearance. Book time to test the network after the cutover.

Moving shared files to a NAS. The Synology DS925+ is a four-bay appliance with two built-in 2.5GbE ports. Plan for drives if you buy the diskless unit. Before handoff, test whether staff can reach the intended shares with the right permissions and set up a separate backup.

The UGREEN DXP4800 Plus is another four-bay model, with one 10GbE and one 2.5GbE port, for a network that can use the faster link. Compare software and backup support in the small-business NAS guide and use the restore testing guide to verify you can recover a file.

Questions to bring to your accountant

• Which purchases should we expense under Section 179, bonus depreciation or the de minimis safe harbor? Should we depreciate any of them over time?
• How much Section 179 can we use this year under the income limit, and does our state follow the federal rules?
• How should we record any mixed use, in-wall cabling, prepaid subscriptions or lease agreements?
• Which invoices and setup records do you need, and when do you need them?

Related Resources

• Business tech tax guide: filing 2025 and planning 2026 — Section 179, bonus depreciation and the de minimis election compared, with expense tracking for tax season.
• Best time to buy a laptop in 2026 — Pricing, buying events and lease-versus-buy for business laptops.
• Where small businesses waste their IT budget — Why replacement should follow performance and support status, not the calendar.
• Small business IT roadmap — How this year's purchases fit a plan from a few people to twenty.