Quick Answer
Bonus depreciation drops to 60% in 2026, meaning freelancers can only deduct 60% of qualifying equipment costs in year one instead of 100%. A $10,000 laptop purchase now provides a $6,000 first-year deduction versus $10,000 previously, with the remaining $4,000 depreciated over the equipment's useful life.
Best Answer
Priya Sharma, CPA
Independent contractors who depend on equipment deductions for tax savings
How the 2026 bonus depreciation reduction impacts your equipment purchases
The phasedown to 60% bonus depreciation in 2026 means you can no longer write off the full cost of qualifying business equipment in the first year. Instead, you'll deduct 60% immediately and depreciate the remaining 40% using the Modified Accelerated Cost Recovery System (MACRS) over the equipment's assigned useful life.
This change affects computers, cameras, software, furniture, vehicles, and other tangible property with a recovery period of 20 years or less.
Example: $8,000 camera equipment purchase in 2026
Let's say you buy a camera and lens setup for your photography business:
2025 (100% bonus depreciation):
2026 (60% bonus depreciation):
Comparison of depreciation schedules
Key factors affecting your tax planning
What you should do
1. Accelerate 2025 purchases: If you're planning major equipment buys, complete them before December 31, 2025, to capture 80% bonus depreciation.
2. Compare Section 179: For purchases under $1.2 million, Section 179 might provide better immediate deductions than 60% bonus depreciation.
3. Adjust estimated taxes: Factor the reduced first-year deductions into your quarterly payment calculations.
4. Track everything: Use detailed records to maximize your allowable depreciation under the new rules.
[Link to freelance-dashboard: Track your equipment purchases and depreciation schedules →]
Key takeaway: The drop from 100% to 60% bonus depreciation means a $10,000 equipment purchase now provides roughly $6,000-7,000 in first-year deductions versus the full $10,000 previously, requiring better cash flow planning for tax obligations.
*Sources: [IRS Publication 946](https://www.irs.gov/pub/irs-pdf/p946.pdf), IRC Section 168(k)*
Key Takeaway: 60% bonus depreciation in 2026 reduces immediate tax deductions by 40% compared to previous 100% write-offs, requiring freelancers to plan for higher first-year taxable income and spread remaining deductions over equipment's useful life.
Bonus depreciation percentages by year showing the phasedown schedule
| Tax Year | Bonus Depreciation % | $10,000 Equipment First-Year Deduction | Remaining to Depreciate |
|---|---|---|---|
| 2022 | 100% | $10,000 | $0 |
| 2023-2024 | 80% | $8,000 + ~$400 | $1,600 |
| 2025 | 80% | $8,000 + ~$400 | $1,600 |
| 2026 | 60% | $6,000 + ~$800 | $3,200 |
| 2027 | 40% | $4,000 + ~$1,200 | $4,800 |
| 2028 | 20% | $2,000 + ~$1,600 | $6,400 |
| 2029+ | 0% | Regular depreciation only | $10,000 |
More Perspectives
Priya Sharma, CPA
Established freelancers with significant equipment investments and higher tax brackets
Strategic implications for high-income freelancers
With income over $100K, you're likely in the 22% or 24% federal tax bracket, making the timing of equipment deductions particularly valuable. The bonus depreciation phasedown affects your tax strategy in several ways:
Cash flow planning becomes critical. A $50,000 equipment purchase that previously provided a $50,000 deduction (saving $11,000-12,000 in taxes) now provides only $30,000 in immediate deductions, reducing your tax savings to $6,600-7,200 in year one.
Section 179 vs. bonus depreciation analysis: For high earners, Section 179 expensing (up to $1,220,000 in 2026) often makes more sense than 60% bonus depreciation. You can elect Section 179 for immediate 100% deductions, then use bonus depreciation for purchases exceeding the Section 179 limit.
Consider business structure implications. If you're operating as a sole proprietorship with significant equipment needs, the reduced deductions might make S-Corp election more attractive to manage self-employment taxes on the higher net income.
Quarterly estimated tax adjustments: With less immediate depreciation, your quarterly payments need recalculation. The reduced deductions effectively increase your taxable income, potentially triggering underpayment penalties if not properly planned.
Key takeaway: High earners should maximize Section 179 elections before using 60% bonus depreciation, and carefully model the cash flow impact on quarterly tax payments.
Key Takeaway: High-earning freelancers should prioritize Section 179 expensing over 60% bonus depreciation for maximum immediate deductions and adjust quarterly estimated tax payments to account for reduced first-year equipment write-offs.
James Okafor, EA
Professional service providers who primarily purchase technology and office equipment
Consultant-specific equipment depreciation strategies
As a consultant, your equipment purchases typically include computers, software, office furniture, and presentation technology. The 60% bonus depreciation change affects these assets differently based on their MACRS classification:
5-year property (computers, software): Your $3,000 laptop gets $1,800 bonus depreciation plus ~$240 regular depreciation in year one, totaling $2,040 first-year deduction instead of the full $3,000.
7-year property (office furniture): That $2,000 desk setup provides $1,200 bonus depreciation plus ~$229 regular depreciation, totaling $1,429 versus the previous $2,000 immediate write-off.
Software considerations: Off-the-shelf software under $1 million can be expensed immediately under Section 179, making it often better than bonus depreciation. Custom software development costs may need to be amortized over 15 years with no bonus depreciation benefit.
Planning tip for consultants: Since your equipment purchases are typically under $50,000 annually, consider using Section 179 for 100% immediate expensing rather than 60% bonus depreciation. This preserves your bonus depreciation capacity for any larger, unexpected purchases.
Client billing implications: If you bill equipment costs to clients, the reduced immediate deductions affect your cash flow timing. You'll receive client reimbursements immediately but spread the tax benefits over multiple years.
Key takeaway: Consultants should prioritize Section 179 expensing for routine equipment purchases, reserving 60% bonus depreciation for larger, unexpected technology investments that exceed their Section 179 planning threshold.
Key Takeaway: Consultants benefit most from using Section 179 expensing for routine technology purchases rather than 60% bonus depreciation, preserving bonus capacity for larger unexpected equipment needs.
Sources
- IRS Publication 946 — How To Depreciate Property
- IRC Section 168(k) — Bonus Depreciation Provisions
Reviewed by Priya Sharma, CPA on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.