100 percent bonus depreciation is back and permanent. Here is what that changes before December 31.

Every fall the equipment dealers run the same ad: buy before December 31 and write the whole thing off. This year the ad is more accurate than usual, and it is still not the whole story.

What the law says now

The One Big Beautiful Bill Act, signed July 4, 2025, made two changes that matter for farm equipment:

• Section 179 expensing for 2026 is capped at $2,560,000, phasing out dollar for dollar once total qualifying purchases pass $4,090,000. That is roughly double where the limits were.
• 100 percent bonus depreciation is permanent for qualifying property acquired and placed in service after January 19, 2025. It had been phasing down (it was at 40 percent for 2025 under the old schedule) and is now fully restored, with no sunset.

Both apply to new and used equipment, tractors, combines, trucks over 6,000 pounds, grain bins, fencing, drainage tile, and single-purpose ag structures. Bonus depreciation also applies to breeding livestock you purchase.

How they stack

Section 179 goes first, and you choose which assets to apply it to. Bonus depreciation then covers whatever Section 179 did not, automatically, unless you elect out by asset class. In practice, with bonus at 100 percent, Section 179 matters mostly for people who want to expense some of a purchase and depreciate the rest normally, which is a real strategy this year.

Why you might not want the whole write-off

A deduction is worth the tax rate you would have paid on that income. If 2026 is a low-income year for you, which for a lot of row-crop operations it is, then a $300,000 write-off against $80,000 of net farm income wastes most of the deduction: it drives your income to zero, then it drives it negative, and the loss carries forward at whatever rate applies later.

Meanwhile a cattle operation coming off two years of record calf prices may have exactly the problem this write-off solves.

The questions to ask your accountant, before you sign for the combine:

1. What is my projected 2026 taxable income, and what bracket does the deduction save me from?
2. Would spreading the deduction over several years via regular MACRS depreciation, or partial Section 179, save more tax in total?
3. What does this do to my Social Security self-employment income? Zeroing out farm income for a decade shows up in your benefit later.
4. Am I buying this because I need it, or because the write-off is the sales pitch?

The timing rule that bites

"Placed in service" means delivered and ready to use, not ordered, not paid for. A tractor with a December 20 delivery date that slips to January 5 is a 2027 deduction. If the write-off is the point, get delivery in writing, and get it before the last week of the year.

For anyone selling equipment

The flip side is depreciation recapture. Equipment you fully expensed and sell for cash produces ordinary income up to the amount previously deducted. Trading it in on a new machine used to defer that; since 2018, equipment trades are treated as a sale plus a purchase. The new machine's write-off usually more than covers the recapture, but it is a line on the return your accountant should see coming.