Writing off work trucks, vans, and equipment: Section 179 vs. bonus depreciation

Trade businesses buy a lot of rolling stock, and the timing and method of each purchase can change the tax bill by tens of thousands of dollars.

Two ways to deduct the full cost at once

Section 179 lets you elect to expense qualifying property up to $2,560,000 for 2026, reduced dollar for dollar once total purchases exceed $4,090,000. Because it is limited to business taxable income, it can't create a loss.

Bonus depreciation is 100% for property acquired after January 19, 2025, and that rate is now permanent. Bonus has no dollar cap and can create or increase a loss. It applies automatically unless you elect out by class.

Most contractors rely on bonus by default and use Section 179 selectively, for example to choose specific assets or in states that conform to Section 179 but not to bonus.

In Connecticut

Connecticut decouples from bonus entirely and from Section 179 in part. Pass-through owners add back 100% of federal bonus depreciation and deduct it 25% a year over the next four years. They add back only 80% of Section 179, recovered the same way, so Section 179 leaves 20% deductible on the state return in year one. C corporations compute Connecticut depreciation without bonus and follow the same 80% Section 179 rule. The Connecticut contractor guide works through a van purchase.

Key numbers: Section 179 $2,560,000 · phase-out at $4,090,000 · 100% bonus depreciation · SUV Section 179 cap of $32,000 for 2026 (Rev. Proc. 2025-32).

Vehicles and the 6,000-pound line

Passenger autos under 6,000 lbs gross vehicle weight rating are subject to annual "luxury auto" depreciation caps. Vehicles over 6,000 lbs GVWR escape those caps, and within that heavier group the treatment depends on the type of vehicle:

• Cargo vans with no seating behind the driver, box trucks, and pickups with a bed of at least six feet that is not easily accessible from the cab are generally fully eligible for Section 179 and bonus.
• Heavy SUVs are limited to a reduced Section 179 amount, but the remainder can usually be taken as bonus depreciation.

Business use must exceed 50%, and personal use reduces the deduction, so keep a mileage log.

A worked example

An electrical contractor buys two cargo vans for $62,000 each and a mini-excavator for $85,000 in November 2026, all placed in service before year-end. With 100% bonus depreciation, the full $209,000 is deductible in 2026. At a 32% federal rate plus a 5% state rate, if the state conforms, that is roughly $77,000 in tax savings, which can fund much of the down payment.

Recapture when you sell or trade in

When you sell or trade in a fully expensed vehicle, the gain up to the amount deducted is recaptured as ordinary income. For example, trading in a truck you expensed three years ago for $20,000 creates $20,000 of ordinary income. Plan for that income, and time replacements so the new purchase offsets the recapture. Recapture also applies even with no sale if business use of an expensed vehicle drops to 50% or less in a later year.

Common mistakes

1. Buying in December but taking delivery in January, even though the date the asset is placed in service is what counts.
2. Expensing a vehicle that is mostly driven home and on weekends.
3. Assuming every state follows federal bonus depreciation, when many do not.
4. Using Section 179 in a year with low profit when bonus would have created a usable loss.

How Summer Associates helps

Summer Associates' trades team projects your year-end income, recommends which assets to expense and which to depreciate normally, and models state differences before you sign the purchase order.

This guide is general education based on federal and Connecticut law as of 2026-11-15. State rules differ and facts matter. Before acting, get advice for your situation from Summer Associates or another qualified advisor.