100% Bonus Depreciation Is Back — What Contractors and Tradespeople Need to Know Before Year-End
Monday, September 07, 2026
If you're a contractor or tradesperson planning to purchase equipment, tools, machinery, or a work vehicle, there's an important tax change worth knowing about before year-end: 100% bonus depreciation is back.
Under current federal tax law, certain qualified property acquired and placed in service after January 19, 2025, may qualify for 100% bonus depreciation. That means businesses may be able to deduct the full eligible cost of certain purchases in the year they’re placed in service rather than depreciating those costs over several years.
For electricians, plumbers, HVAC companies, construction contractors, and other trades, that could make year-end equipment decisions especially important.
What Types of Purchases May Qualify?
Bonus depreciation generally applies to eligible depreciable business property with a recovery period of 20 years or less. For contractors and tradespeople, that could include certain tools, equipment, machinery, computers and technology, office equipment, and qualifying work vehicles.
Both new and certain used property may qualify.
But simply buying something before December 31 isn't necessarily enough. Generally, eligible property must also be placed in service during the tax year. This means it must be ready and available for use in your business.
What About Work Vehicles?
This is where things can get more complicated.
While certain business vehicles may qualify for bonus depreciation, passenger automobiles are subject to additional rules and depreciation limits. The amount of business use can also affect the deduction.
So don't assume that purchasing a new truck or SUV automatically means you can deduct the entire purchase price. If you're considering a significant vehicle purchase, talk with your tax professional about how the rules apply to your particular situation.
Don't Buy Something Just for the Tax Deduction
A tax deduction can reduce taxable income, but it doesn't make the purchase free.
Before investing in new equipment or a vehicle, consider whether your business actually needs it, whether you have the cash flow to support the purchase, and how it fits into your plans for the coming year.
The potential tax benefit can be an important part of the decision, but it shouldn't be the only reason for making the purchase.
Good Bookkeeping Matters, Too
Major equipment and vehicle purchases need to be recorded correctly in your books. Keeping invoices, financing documents, purchase agreements, and information about when an asset was placed in service gives your tax professional the records needed to determine the appropriate tax treatment.
Accurate bookkeeping also gives you a clearer picture of how a major purchase affects your cash flow and overall financial position, before and after you make it.
The Bottom Line
The return of 100% bonus depreciation may create valuable opportunities for contractors and tradespeople investing in their businesses, but the rules aren't one-size-fits-all.
Before making a major year-end purchase, consider both the business need and the potential tax impact, and consult your tax professional about how the rules apply to you.
Planning an equipment or vehicle purchase before year-end? Contact J&S Accounting to make sure your books are current and major purchases are properly recorded, giving you and your tax professional accurate financial information to work with.
About J&S Accounting
At J&S Accounting, we provide expert bookkeeping services tailored to the unique needs of small businesses and non-profits. We recognize the challenges that come with maintaining accurate financial records and how vital this is for the smooth operation and growth of your business. As a woman and minority-owned firm, we’re proud to offer our expertise to businesses in Savannah, GA, and across the nation, helping them navigate financial complexities and achieve better financial management.
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Disclaimer:This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business from a professional accountant. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. J&S Accounting does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. J&S Accounting does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers and viewers should verify statements before relying on them.
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Disclaimer
This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business from a professional accountant. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. J&S Accounting does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. J&S Accounting does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers and viewers should verify statements before relying on them.