It’s fourth quarter. Do you know what your 2026 tax bill is shaping up to look like?
If the answer is “not really,” now is a good time to pay attention. Technology purchases, equipment, software, and even some ongoing IT expenses may help lower your taxable income, but the rules, limits, and timing are important.
Before you start buying things just for the deduction, here’s what business owners should know about what may qualify in 2026 and what needs to happen before year-end.
Your IT Spending Can Work for You at Tax Time
Your monthly IT services (managed IT support, cybersecurity, Microsoft 365, cloud backup) are generally deducted as business expenses in the year you pay them. New equipment and software can often be deducted in full the year you start using it, thanks to Section 179, instead of a little at a time over several years.
If you’re wondering whether that new laptop or Wi-Fi upgrade counts, here’s the list.
What Qualifies Under Section 179
- Desktops, laptops, and monitors
- Servers and storage
- Firewalls, switches, and Wi-Fi equipment
- Phones and phone systems
- Printers and scanners
- Off-the-shelf software (the kind anyone can buy, not custom-built)
- Used equipment, as long as it’s new to your business
And if you’re worried about hitting a limit, you almost certainly won’t.
The 2026 Numbers
For 2026, the Section 179 limit is $2,560,000, and the deduction starts phasing out after $4,090,000 in total equipment purchases. (IRS Publication 946)
For most small businesses, those limits will never come into play. The practical takeaway is simpler: you can likely deduct the full cost of this year’s technology purchases on this year’s taxes.
The 2026 Deadline
The limit isn’t the catch, but the calendar is a bigger deal. Buying equipment isn’t enough. It has to be placed in service, meaning set up and in use, by December 31st. That takes longer than most people expect. Equipment has to be ordered, shipped, configured, and installed, and December is the busiest month of the year for all of it. A laptop ordered December 20th that’s still in its box on January 2nd counts toward next year, not this one.
Not sure what’s worth buying? Here’s where we’d start.
Smart Year-End Technology Moves
- Replace aging computers. Machines more than four or five years old slow your team down, and they may not support Windows 11.
- Upgrade your firewall or Wi-Fi. Network equipment is easy to put off, and it protects everything else.
- Fill gaps before they become emergencies. A failing server or an overloaded network is cheaper to replace on your schedule than in a crisis.
Need Help?
We’ll review what you have, flag what’s due for replacement, and give your CPA a clear list of costs, timing, and options, so your year-end decisions are made on purpose, not in a December rush.
Planning ahead for year-end? Let’s Talk!
Frequently Asked Questions
What is Section 179?Richelle Calicott2026-10-07T19:28:37+00:00Section 179 is a part of the U.S. tax code that lets businesses deduct the full cost of qualifying equipment and software in the year it’s put to use, instead of spreading the deduction out over several years. For example, a $3,000 computer could be deducted all at once this year rather than a little at a time. (IRS Publication 946, Chapter 2) Your CPA can tell you whether it makes sense for your business.
Does leased or rented equipment qualify for Section 179?Richelle Calicott2026-10-07T19:27:47+00:00It depends on the type of agreement.
Financed equipment and some leases can qualify. If the agreement works like a purchase, such as a loan or a lease with a $1 buyout at the end, the equipment is often treated as yours for tax purposes, and Section 179 may apply.
Rentals and true leases, where you return the equipment at the end, usually don’t qualify for Section 179. The good news is that the monthly payments are typically deductible as regular business expenses.
Lease agreements vary a lot, so share yours with your CPA before counting on a Section 179 deduction.
What is the Section 179 limit for 2026?Richelle Calicott2026-10-07T19:26:10+00:00$2,560,000, with a phase-out beginning at $4,090,000 in total purchases. Most small businesses won’t come close, but your CPA can tell you how the limits apply to you.
Does used equipment qualify for Section 179?Richelle Calicott2026-10-07T19:29:21+00:00It can, as long as it’s new to your business. Your CPA can confirm whether a specific purchase qualifies.
Do I have to buy equipment by December 31 to deduct it this year?Richelle Calicott2026-10-07T19:29:33+00:00Generally, buying it isn’t enough. Equipment usually needs to be placed in service by December 31 to count for this year. The IRS describes that as “ready and available for a specific use.”
What that means in practice can vary. Some CPAs consider equipment placed in service once it’s delivered and on-site; others look for it to be set up and in use. Your CPA can tell you how they apply the rule to your purchases.
Either way, shipping delays and end-of-year schedules can push equipment into the next year, so it’s smart to order well before December.
Is software tax deductible?Richelle Calicott2026-10-07T19:16:38+00:00Generally, yes, but how depends on the type of software.
Software you buy outright, the kind anyone can purchase (accounting, design, or practice management software you own a license to), generally qualifies for Section 179, so you may be able to deduct the full cost in the year you start using it.
Subscriptions like Microsoft 365, cloud backup, or other monthly or annual software plans are usually deducted as regular business expenses when you pay for them.
Custom-built software, developed specifically for your business, follows different rules and typically doesn’t qualify for Section 179.
Because the treatment depends on how the software is licensed and paid for, ask your CPA or tax professional how your specific purchases should be handled.
Are managed IT services tax deductible?Richelle Calicott2026-10-07T19:15:25+00:00Generally, yes. They’re typically deducted as business expenses in the year you pay for them. How they’re handled can depend on your business structure and accounting method, so check with your CPA or tax professional before making decisions based on tax savings.
