For most contractors, the last quarter of the year is when equipment decisions get made. The season’s numbers are mostly known, next year’s bids are taking shape, and there is a tax deadline on December 31 that can make a purchase you were planning anyway noticeably cheaper.
It is also when good intentions run out of time. A machine ordered in mid-December that arrives in January misses the deduction, a trailer bought without a plan for freight turns into an unbudgeted bill, and payments that start in the slowest month of the year are harder to carry than they need to be.
This guide is for construction businesses buying or financing equipment before year end: excavators, skid steers and compact track loaders, wheel loaders, dump trucks, trailers, lifts and the rest. It covers the tax deadline, timing, new versus used, the costs people forget, and how to structure payments around the way construction actually earns.
The deadline that matters: placed in service by December 31
Two federal tax provisions make year-end equipment purchases attractive in 2026:
- Section 179 lets a business expense up to $2,560,000 of qualifying equipment in 2026. The limit starts to shrink once a business places more than $4,090,000 of equipment in service in the year.
- Bonus depreciation is back at 100% and, under the 2025 tax law, has no scheduled end date.
The detail that catches people out is the deadline. To count for 2026, the equipment has to be placed in service by December 31, which means delivered and ready to use in your business. Signing the order, paying a deposit or paying in full is not enough. A machine sitting on a dealer’s lot on New Year’s Eve does not qualify.
Both deductions apply to financed equipment, not just equipment bought for cash, as long as the structure gives you ownership. With an equipment finance agreement or a $1 buyout lease, you can generally take the deduction this year while paying over several. With a fair market value lease you usually deduct the payments as you make them instead. Our Section 179 in 2026 post covers the rules in more detail.
A note for California contractors: California caps Section 179 at $25,000 and does not follow federal bonus depreciation. Your federal and state returns can treat the same excavator very differently, so have your accountant run both.
Work backwards from December 31
The practical question is not when you want to sign, but when the equipment needs to be on your yard and working. Work backwards from that:
- Lead time from the dealer or manufacturer. New machines in popular sizes can take weeks to arrive, and attachments or upfits can add more. Ask for a firm delivery date in writing.
- Freight and rigging. Heavy equipment moving across states needs a carrier and sometimes permits. Book it early in December, when carriers are busy.
- Financing. Most decisions come within one business day once we have a complete application, and documents follow quickly after that. Leave time for signatures and for the vendor to be paid.
- Setup. If the equipment needs installation, telematics or a safety inspection before it goes to work, count that too.
A good rule: if you want the deduction, have the financing approved and the equipment ordered by mid-November, and treat early December as the last safe week to start.
New or used?
Both qualify for Section 179 and bonus depreciation, as long as the equipment is new to your business. Each has its place:
- New brings a full warranty, current emissions compliance and the longest working life, which supports a longer term and a lower payment. The trade-off is price and, in some categories, lead time.
- Used is often available immediately, which matters in December, and can lower the amount financed substantially. Construction equipment holds its value well, so used machines finance readily. Expect the term to reflect the hours already on the machine.
We finance new and used equipment from any vendor you choose, whether that is a dealer, an auction or a private seller.
Do not forget the soft costs
The machine is rarely the whole bill. Before you settle on a budget, add up:
- Freight and delivery to the yard or job site
- Attachments: buckets, breakers, augers, forks, thumbs
- Telematics and GPS or machine-control systems
- Upfitting for trucks and trailers
- Training for operators on unfamiliar equipment
- Extended warranties and service plans
With American Capital Group, these can usually be written into the same agreement as the machine, so they become part of a monthly payment instead of a cash expense at the moment you can least spare it.
Structure payments around the season
Construction does not earn in twelve equal months. Winter slows work in much of the country, and new equipment is often bought before the contract that will pay for it starts. A flat payment from day one ignores both. A few options:
- Seasonal schedules set lower payments in the slow months and higher payments in the busy season.
- 90 days deferred pushes the first regular payment out three months, so a machine bought in December can be earning in spring before its first full payment is due. See 90 days deferred.
- Step-up schedules start lower and rise as a new machine, or a new crew, settles into full work.
- Matching the term to the contract. If the equipment was bought for a three-year job, a three-year term means it is paid for when the work that pays for it ends.
These have to be agreed before the documents are drawn, so mention your slow months on the first call.
What to have ready
For equipment from $10,000 to $150,000, our Application Only program needs a one-page application and no financial statements. Have these to hand:
- Business name, address and ownership breakdown
- A bank reference
- The equipment, with a quote or invoice from the vendor, including any attachments and freight
- The vendor’s contact details, since we pay the vendor directly
Larger fleets and purchases above that range take a fuller package. If you are a newer contracting business, our startup program has no minimum time in business.
A year-end checklist
- Ask your accountant how much deduction you can use this year, federal and state.
- Get a written quote from the vendor that includes attachments, freight and setup.
- Confirm the delivery date in writing, with time to spare before December 31.
- Decide whether you want to own the equipment (EFA or $1 buyout) or keep the payment lowest (FMV lease).
- Pick a payment schedule that fits your winter and your contracts.
- Apply early enough that financing is never the reason a machine misses the deadline.
Equipment we finance for contractors
We finance most of what a construction business runs, including excavators, skid steers, wheel loaders, dump trucks, cranes and trailers. See construction equipment financing for the full list.
Start before the rush
The best time to arrange year-end equipment financing is before December, while dealers still have stock, carriers still have trucks and nobody is racing the calendar. Apply online, request a free quote, or call (949) 822-3017 and tell us what you are buying and when you need it working.
This post is general information, not tax or legal advice. Tax figures are for tax years beginning in 2026 and come from IRS Revenue Procedure 2025-32. Confirm how they apply to your business with your accountant.
Frequently asked questions
When do I need to buy construction equipment to deduct it in 2026?
For Section 179 and bonus depreciation, the equipment has to be placed in service, meaning delivered and ready to use in your business, by December 31, 2026 for a calendar-year business. Ordering or paying for it by then is not enough, so allow for delivery and setup time.
Can I take Section 179 on construction equipment I finance?
Usually, yes. If you own the equipment, for example under an equipment finance agreement or a $1 buyout lease, you can generally take the deduction in the year it goes into use even though you pay for it over time. With a fair market value lease you usually deduct the payments instead. Your accountant makes the final call.
Does used construction equipment qualify for Section 179?
Yes, as long as it is new to your business and used for business more than half the time. Used excavators, loaders, trucks and trailers can all qualify.
Can my equipment payments be lower in winter?
Often, yes. A seasonal payment schedule can set lower payments in the slow months and higher payments in the busy season, and a 90-day deferred start can push the first regular payment past the winter. These need to be set up before the documents are drawn.
Does California follow the federal Section 179 limit?
No. California caps Section 179 at $25,000 and does not follow federal bonus depreciation, so a California contractor's state deduction can be much smaller than the federal one. Ask your accountant how it applies to your business.