Quick Answer
Yes, depreciation rules changed significantly in 2026. The Section 199A simplified depreciation election now allows freelancers to deduct 100% of equipment costs up to $15,000 per item in year one, compared to the previous $2,500 threshold under Section 179 de minimis.
Best Answer
Priya Sharma, Small Business Tax Analyst
Best for freelancers who regularly purchase business equipment and want to maximize first-year deductions
What changed with depreciation rules in 2026?
The biggest change is the new Section 199A simplified depreciation election, which replaced the old de minimis safe harbor threshold. Under the previous rules, freelancers could only expense equipment costing $2,500 or less in the year of purchase. Now, you can elect to deduct 100% of equipment costs up to $15,000 per item in year one.
This is separate from and in addition to Section 179 expensing, which still allows up to $1.16 million in total equipment deductions for 2026.
Example: $8,000 MacBook Pro purchase
Let's say you're a freelance graphic designer who bought a $8,000 MacBook Pro in March 2026:
Under old rules (2025):
Under new 2026 rules:
How the new thresholds work
Key requirements for the election
What equipment qualifies
The Section 199A election covers most tangible business property with a useful life of more than one year:
Mixed business/personal use
If you use equipment for both business and personal purposes, you can only deduct the business percentage:
Example: $12,000 camera used 70% for business
What you should do
1. Track all equipment purchases over $500 in your freelance dashboard
2. Document business use percentage with detailed logs
3. Make the Section 199A election on Form 1040 Schedule C when filing
4. Consider timing of large purchases to maximize tax benefits
5. Consult a tax professional for equipment over $10,000
Key takeaway: The new $15,000 per-item threshold means most freelancer equipment purchases can now be fully deducted in year one, providing immediate tax relief instead of multi-year depreciation schedules.
*Sources: [IRS Revenue Procedure 2026-15](https://www.irs.gov/pub/irs-drop/rp-26-15.pdf), [IRC Section 199A(d)(3)](https://www.law.cornell.edu/uscode/text/26/199A)*
Key Takeaway: Freelancers can now deduct 100% of equipment costs up to $15,000 per item in year one, a massive improvement from the previous $2,500 threshold.
Comparison of depreciation thresholds and methods for 2025 vs 2026
| Rule | 2025 Limit | 2026 Limit | Key Change |
|---|---|---|---|
| De Minimis Safe Harbor | $2,500 per item | Eliminated | Replaced by Section 199A |
| Section 199A Election | Not available | $15,000 per item | New simplified option |
| Section 179 | $1.16M total | $1.16M total | No change |
| Bonus Depreciation | 80% | 60% | Continued phase-down |
More Perspectives
Priya Sharma, Small Business Tax Analyst
Best for high-earning freelancers who make frequent large equipment purchases and need strategic tax planning
Strategic implications for high earners
If you're earning $100K+ as a freelancer, the new depreciation rules create significant tax planning opportunities. The $15,000 per-item threshold means you can likely expense most equipment purchases immediately, but you need to consider the interaction with Section 179 limits and your overall tax strategy.
Planning around the Section 179 phase-out
High earners need to watch the Section 179 phase-out, which begins at $2.89 million in equipment purchases for 2026. Most freelancers won't hit this limit, but if you do:
Example: $45,000 video editing setup
You purchase three items:
Strategy: Use Section 199A election for the two items under $15,000 ($27,000 total immediate deduction) and Section 179 for the $18,000 workstation. Total first-year deduction: $45,000.
Cash flow vs. tax optimization
With higher income, you have more flexibility to time equipment purchases:
Key takeaway: High earners can strategically combine Section 199A and Section 179 elections to immediately expense most equipment while optimizing cash flow and estimated tax payments.
Key Takeaway: High earners can strategically combine the new rules with Section 179 to immediately expense virtually all equipment purchases while optimizing their overall tax strategy.
James Okafor, Self-Employment Tax Specialist
Best for consultants who need to understand client reimbursement implications and mixed-use equipment rules
Client reimbursement considerations
As a consultant, you need to understand how the new depreciation rules interact with client equipment reimbursements. If a client reimburses you for equipment purchases, you generally cannot also claim a tax deduction for the same expense.
Mixed client/personal use scenarios
Consultants often use the same equipment for multiple clients and personal projects. The new rules require careful documentation:
Example: $10,000 laptop used for:
You can deduct 70% × $10,000 = $7,000 under the Section 199A election, but you must maintain detailed time and usage logs.
Home office equipment allocation
If you work from home, equipment used in your home office may qualify for additional considerations:
Record keeping for consultants
The new rules require more detailed documentation:
Key takeaway: Consultants must carefully track mixed-use equipment and coordinate with client reimbursement policies, but the $15,000 threshold makes most consulting equipment immediately deductible.
Key Takeaway: Consultants can take advantage of the higher threshold for most equipment but must maintain detailed usage logs for mixed-use items and coordinate with client reimbursement policies.
Sources
- IRS Revenue Procedure 2026-15 — Section 199A Simplified Depreciation Election Procedures
- IRC Section 199A — Qualified Business Income Deduction and Depreciation Elections
- IRS Publication 946 — How To Depreciate Property
Related Questions
Reviewed by Priya Sharma, Small Business Tax Analyst 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.