BLUE COLLAR CFOsBoots before spreadsheetsFinance it or lease it: what each costs after tax.
A loan and a lease side by side, with the Section 179 or bonus depreciation write-off on the purchase and the lease payments written off as you make them. See year one, every year after, and the full term. Nothing you enter leaves your browser.
The numbers filled in are examples. Replace them with your quotes and your own tax rate.
After tax
Finance it
- Monthly payment
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- Paid out in year one
- —
- Tax saved in year one
- —
- Year one, net of tax
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- Full term, net of tax and the sale
- —
Lease it
- Monthly payment
- —
- Paid out in year one
- —
- Tax saved in year one
- —
- Year one, net of tax
- —
- Full term, net of tax
- —
- Year one
- —
- Full term
- —
Year by year
Net cash out after tax in each year. A negative number means the tax saved that year was more than you paid. The loan's last year includes selling the equipment for the value you entered, after tax.
| Year | Finance it | Lease it |
|---|
How the write-off works in 2026
When you buy equipment, whether with cash, a loan or a $1 buyout lease, you can generally write off the full price in the first year instead of depreciating it over several years. Two rules make that possible:
- Section 179. For tax years beginning in 2026, up to $2,560,000 of qualifying equipment can be expensed. The limit shrinks dollar for dollar once you place more than $4,090,000 of equipment in service in the year, and the deduction cannot be more than your business income.
- Bonus depreciation. Qualified equipment acquired and placed in service after January 19, 2025 can be written off 100% in the first year, with no dollar limit.
On a true lease, where you hand the equipment back or buy it at market value, you generally deduct the payments as you make them instead.
What the numbers show
If your tax rate stays the same, the write-off changes when you save the tax more than how much. Buying puts a large deduction in year one. Leasing spreads it across the term. And when you sell equipment you have written off, the sale comes back as taxable income, which is why the calculator counts the end value after tax.
Timing still matters. Tax saved in year one is cash you can use in year one: for the down payment, for working capital or for the next truck. And if your tax rate is higher this year than it will be later, the write-off is worth more now.
When each one wins
- Finance it when you will run the equipment well past the term and it will still be worth real money at the end. That value is yours.
- Lease it when you replace the equipment on a cycle, or it will be tired by the end of the term. You pay for the part of its life you use, and the leasing company carries what it is worth at the end.
- Do not pick either one for the lowest payment. That is how owners end up leasing equipment they meant to keep, and paying for it twice.
Holding a quote with a payment but no rate? Turn it back into a rate on bestequipmentrates.com »
Straight answers.
What is the Section 179 limit for 2026?
For tax years beginning in 2026, you can expense up to $2,560,000 of qualifying equipment under Section 179. The limit shrinks dollar for dollar once you place more than $4,090,000 of equipment in service in the year, and the deduction cannot be more than your business income for the year.
What is bonus depreciation in 2026?
Qualified equipment acquired and placed in service after January 19, 2025 can be written off 100% in the first year through bonus depreciation, with no dollar limit. Your CPA decides how Section 179 and bonus depreciation are used in your year.
Can I write off a leased truck?
On a true lease, where you hand the equipment back or buy it at market value, you generally deduct the lease payments as you make them. A $1 buyout lease is usually treated as a purchase, so the equipment is written off like a loan. Run a $1 buyout lease in the finance column.
Does the write-off make buying cheaper than leasing?
Over the full term, if your tax rate stays the same, it mostly changes when you save the tax, not how much. Buying with the write-off puts the savings in year one. If you later sell equipment you wrote off, the sale comes back as taxable income.
Buying equipment this year?
Send us the quote and your last two years of financials. We will tell you which lenders fit, which structure makes sense, and what the payment does to the business in a bad month.