For bonus depreciation in 2026, the main rule is simple: qualifying business equipment you acquired after January 19, 2025 and place in service this year can generally be deducted 100% in the first year. The One Big Beautiful Bill Act made the full first-year deduction permanent, so the old schedule that would have cut it to 20% for 2026 no longer applies to most new purchases.
For an Amazon or Shopify seller, that covers warehouse racking, a forklift, label printers, computers and camera gear. Buy and install a $40,000 racking and packing setup this year, and the full $40,000 can come off your 2026 federal taxable income instead of trickling out over seven years. What that deduction is worth still depends on the contract date, the install date, your state and whether you plan to sell the business soon, which is where the planning happens.
Acquisition Dates Decide Which Rules Apply
The acquisition date decides which set of rules your asset follows. The placed-in-service date decides which tax year gets the deduction. Property acquired after January 19, 2025 falls under the permanent 100% rate, while older deals and long building projects follow different tests.
The permanent 100% rate and Notice 2026-11
The OBBBA, signed July 4, 2025, amended Section 168(k) to make 100% bonus permanent for qualified property acquired after January 19, 2025. It also removed the placed-in-service deadlines that had squeezed the old rules, one of several changes in our overview of how new tax laws affect online businesses. The IRS has since issued Notice 2026-11, interim guidance that applies rules consistent with the existing bonus depreciation regulations, with the new dates substituted, until proposed regulations come out. You can rely on it if you apply its rules to all eligible property placed in service in those years.
Acquired versus placed in service
The acquisition date is when you bought the asset or signed a binding contract for it. The placed-in-service date is when the asset is ready and available for its job in your business.
Say you order a pallet racking system in November 2026. It arrives December 20 but sits in crates until a crew installs it in January 2027. You acquired it in 2026, but it went into service in 2027, so the deduction lands on your 2027 return. To count for 2026, the racking has to be installed and ready to hold inventory before the year ends.
Older contracts still follow the phase-down
Property acquired before January 20, 2025 stays on the old Tax Cuts and Jobs Act schedule: 40% bonus for property placed in service in 2025 and 20% for 2026. A written binding contract signed before January 20, 2025 pulls property back under that schedule even when delivery came much later. If you signed for a forklift in December 2024 and it went to work in March 2026, expect 20% bonus, with Section 179 or regular depreciation covering the rest.
Self-constructed assets
For self-constructed property, such as a custom mezzanine or a packing line your team builds, the acquisition date is when physical work of a significant nature begins. A safe harbor treats work as starting once you have paid or incurred more than 10% of the total cost, excluding land and preliminary activities. Notice 2026-11 also allows an election that lets eligible components of a larger self-constructed project qualify for 100% on their own, which helps when the project started before the cutoff.
Which Seller Assets Qualify
Most physical equipment you use to store, pack, photograph and ship products qualifies. The test is tangible personal property with a MACRS recovery period of 20 years or less. Used equipment counts if it is new to you and did not come from a related party.
Warehouse, packing and studio equipment
Shelving and pallet racking, forklifts and pallet jacks, carton sealers, scales, thermal label printers and poly baggers are generally 7-year property. Computers, monitors and most photo and video gear are 5-year property. All of it is eligible for 100% bonus. If you shoot product photos in a spare room, the cameras, lights and backdrops can qualify, while the room itself falls under the separate home office rules.
A pattern from our year-end reviews: sellers book a $2,500 printer and a $12,000 racking order as “supplies” and lose track of them. Record each item as an asset with its cost, acquisition date and placed-in-service date so it can be claimed and later tracked if you sell it.
Software, subscriptions and inventory
Off-the-shelf software you buy outright, such as a perpetual license, is 3-year property and qualifies. Monthly subscriptions to listing tools, A2X or Shopify apps are ordinary operating expenses deducted as you pay them, so bonus never comes into it.
Inventory never qualifies. Products held for sale flow through cost of goods sold as units sell, so $100,000 of stock bought in December does not create a $100,000 deduction.
Vehicles
Passenger cars, small SUVs and light trucks are listed property under Section 280F. They need more than 50% business use for bonus, and the first-year deduction is capped at an IRS dollar limit that changes each year. Vehicles with a gross vehicle weight rating above 6,000 pounds, such as many cargo vans and full-size pickups, avoid the passenger car caps. In every case the deduction scales with your business-use percentage, so a van used 90% for supplier pickups and FBA drop-offs gets 90% of its cost as business basis. Keep a mileage log from day one.
Warehouse improvements and production property
Qualified improvement property (QIP) is interior work on a nonresidential building after it was first placed in service, such as lighting, interior walls or an office buildout in a leased warehouse. It is 15-year property, so it qualifies for 100% bonus. Enlargements, elevators and escalators, and changes to the internal structural framework do not count. If you buy a warehouse, a cost segregation study can move parts of the price, such as certain electrical work, fixtures and parking lots, into shorter classes eligible for bonus, while the shell stays on a 39-year schedule.
The OBBBA also created a separate election under Section 168(n) for qualified production property, meaning nonresidential real property used in manufacturing, production or refining. Sellers who buy finished goods will not meet it, but if you make your own products in a building you own, raise it before construction starts.
Bonus Depreciation Compared With Section 179
Both let you write off equipment in year one. The Section 179 deduction lets you choose asset by asset how much to expense, but it is capped by business income. Bonus depreciation has no income cap and applies to a whole class of property unless you elect out.
2026 Section 179 limits
Under Rev. Proc. 2025-32, the Section 179 limit for tax years beginning in 2026 is $2,560,000, reduced dollar for dollar once you place more than $4,090,000 of Section 179 property in service. The separate Section 179 cap for a heavy SUV is $32,000. Few sellers come near the main limits.
The limit that bites is the taxable income limitation. Section 179 cannot exceed your business taxable income for the year, and the excess carries forward. Bonus can create a loss. Some states follow Section 179 but not bonus, which can make 179 the better choice for state purposes.
Order of deductions
Start with depreciable basis: the purchase price plus sales tax, shipping and installation. Multiply by your business-use percentage to get business-use basis. Section 179 comes first on whatever amount you choose, bonus applies to the adjusted basis left, and regular MACRS covers anything remaining. At 100% bonus, nothing usually remains.
Worked example: a fall equipment purchase
You run an Amazon FBA and Shopify brand as a single-member LLC and expect $140,000 of net profit before depreciation for 2026. In September you buy and set up:
- Pallet racking and installation: $28,000
- Used forklift from an unrelated dealer: $18,000
- Laptop used 80% for business: $3,000, so $2,400 of business-use basis
- Camera and lighting kit: $4,600
Total business-use basis is $53,000. Federally, 100% bonus covers all of it. If your state follows Section 179 but not bonus, you might instead elect Section 179 on the full $53,000, which sits well inside both the dollar limit and your $140,000 of business income, so the state deduction matches the federal one. Either way the first-year federal deduction is $53,000, and taxable profit falls from $140,000 to $87,000.
If your combined federal income and self-employment tax rate on that profit were around 35%, the deduction would cut your 2026 federal bill by about $18,550. Your own figure depends on your bracket, the QBI deduction and your state. The total write-off over the life of the equipment is the same with or without bonus. Bonus moves it to the front.
Planning the Deduction Well
Good planning matches the deduction to the year it saves the most and backs it with clean records.
When electing out is smarter
Electing out of bonus depreciation makes sense when this year’s rate is lower than the rate you expect later. A launch year with thin profit, a year already at a loss or the year before a big jump in sales are common cases. A deduction used at 12% now is worth less than the same deduction at 24% or 32% later. The election covers a whole class of property, such as all 7-year assets placed in service that year, and is made on a statement with a timely filed return, including extensions.
State conformity, QBI and loss limits
Many states do not follow federal bonus depreciation. California does not allow it, and New York and New Jersey are among the states that require an addback. Florida, which taxes corporations but not individuals, enacted HB 7031 in June 2026 and kept its existing addback of federal bonus depreciation rather than adopting the OBBBA change, so a C corporation filing there still spreads that deduction out for state purposes. If you file in several states, expect separate depreciation schedules.
A large deduction can also shrink your Section 199A qualified business income deduction, since lower profit means a smaller 20% deduction. If bonus pushes you into a loss, the excess business loss and net operating loss rules decide how fast you use it.
Selling the equipment or the brand
When you sell equipment you fully expensed, gain up to the amount you deducted is taxed as ordinary income under the depreciation recapture rules. A forklift written off for $18,000 and sold two years later for $10,000 creates $10,000 of ordinary income. An asset sale of your brand recaptures expensed equipment the same way, so if an exit is a year or two away, piling on deductions now may only move tax into the sale year.
Records and Form 4562
You claim both deductions on Form 4562, Section 179 in Part I and bonus in Part II. Keep the invoice, proof of payment, the contract date, the delivery date and a dated photo or note showing when the item was set up and used. For vehicles, keep the mileage log.
Mistakes that cost more than they save
Buying only for the write-off is the first. Spending $30,000 to save perhaps $9,000 of tax leaves you $21,000 poorer if you did not need the gear. Missing the placed-in-service date is the second: racking delivered December 28 and installed January 5 is a 2027 deduction, so book installers early in Q4. The third is draining cash before peak season. December equipment buys collide with Q1 restock orders and supplier deposits, and a forklift that leaves you short on a container order costs more in lost sales than it saves in tax. Checking whether your next FBA restock can still clear should come before the purchase order.
With December getting closer, the useful question is which of your planned purchases should land in 2026 and which should wait. A year-end equipment review with an ecommerce CPA can test each one against your projected profit, state and cash position. This article is general information for the 2026 tax year, so confirm the treatment for your own assets before you buy.
Frequently Asked Questions
Is there a dollar limit on bonus depreciation in 2026?
No. Federal bonus depreciation has no annual dollar cap and no business income limit, so it can create a loss. Section 179 is the one with a ceiling, at $2,560,000 for 2026, plus the taxable income limit.
Can I take bonus depreciation on equipment I finance?
Yes. If you buy the equipment with a loan, your basis is the full purchase price, not just the down payment, so the whole cost can qualify in the year it is placed in service. A true lease is different: you deduct the lease payments instead, and the leasing company claims the depreciation.
Does bonus depreciation reduce self-employment tax?
For a sole proprietor or single-member LLC, yes. Depreciation is a business deduction on Schedule C, so it lowers net earnings for self-employment tax as well as income tax. For an S corp owner, it reduces the pass-through profit but not the payroll taxes on your salary.
Will 100% bonus depreciation continue in 2027?
Under current law, yes. The 100% rate is permanent for property acquired after January 19, 2025, with no phase-down or end date, though Congress can always change the law. Property under contracts signed before January 20, 2025 still follows the old schedule.
How do heavy SUVs work with Section 179 and bonus?
An SUV rated over 6,000 pounds escapes the passenger car caps. Section 179 on it is limited to $32,000 for 2026, but bonus can cover the remaining business-use basis, so the combined first-year deduction can still reach the full business share of the cost if business use is over 50%.
Time Your 2026 Equipment Purchases
Bonus depreciation can move a large deduction into this year, but the wrong timing, state or exit plan can shrink what it is worth to your Amazon or Shopify business. AMZ Accountant has helped clients save a combined $2.9 million in taxes, and our business advisory team can help you decide what to buy before December 31 and what to hold. Book a free 15-minute discovery call to plan it out, with no obligation.