Quick Answer
Bonus depreciation phases down to 80% for 2026 purchases, meaning freelancers can only deduct 80% of qualifying equipment costs in year one instead of 100%. A $10,000 MacBook purchase now gives an $8,000 first-year deduction versus $10,000 previously, with the remaining $2,000 depreciated over multiple years.
Best Answer
Priya Sharma, Small Business Tax Analyst
Best for freelancers with significant equipment purchases who need to understand the full depreciation strategy
What is the bonus depreciation phasedown?
Bonus depreciation allows you to deduct a percentage of qualifying business equipment costs in the year you purchase them, rather than spreading the deduction over several years. Under the Tax Cuts and Jobs Act, this was 100% from 2017-2022, but it's now phasing down: 80% in 2023-2026, 60% in 2027, 40% in 2028, 20% in 2029, and 0% starting in 2030.
For 2026 tax returns, you can deduct 80% of qualifying equipment purchases immediately, with the remaining 20% depreciated using the Modified Accelerated Cost Recovery System (MACRS) over the equipment's prescribed useful life.
Example: $15,000 video editing setup purchased in 2026
Let's say you're a video editor who purchases $15,000 worth of equipment:
Under 2026 rules (80% bonus depreciation):
If this were 2022 (100% bonus depreciation):
Tax impact: If you're in the 24% tax bracket, the lost $3,000 in immediate deduction costs you $720 in additional taxes for 2026.
Comparison of depreciation schedules
Strategic timing considerations
Equipment purchases before year-end: If you're planning major equipment purchases, consider timing them before December 31, 2026, to capture the 80% bonus depreciation rather than waiting until 2027 when it drops to 60%.
Section 179 election alternative: You can still elect Section 179 depreciation for up to $1,220,000 in 2026 (with phase-out beginning at $3,050,000 in total purchases). This allows 100% immediate deduction but has income limitations and doesn't apply to all equipment types.
Cash flow impact: The phasedown means less immediate tax savings, affecting your cash flow. A $20,000 equipment purchase in 2026 provides $4,800 less in tax savings (at 24% bracket) compared to 2022 rules.
What qualifies for bonus depreciation
What doesn't qualify:
What you should do
1. Inventory your equipment needs for the next few years and consider accelerating purchases to 2026
2. Use our deduction-finder tool to identify all qualifying equipment purchases
3. Compare Section 179 vs. bonus depreciation for your specific situation
4. Track your asset basis carefully since you'll have mixed depreciation methods
5. Consult with a tax professional for purchases over $50,000 to optimize your depreciation strategy
Key takeaway: The 2026 bonus depreciation reduction to 80% costs high-earning freelancers significant immediate tax savings. A $25,000 equipment purchase now provides $1,200 less in tax benefits (at 24% bracket) compared to previous years, making purchase timing and depreciation method selection crucial.
*Sources: [IRS Publication 946](https://www.irs.gov/pub/irs-pdf/p946.pdf), [IRC Section 168(k)]*
Key Takeaway: The bonus depreciation phasedown to 80% in 2026 reduces immediate tax savings by $240 per $10,000 of equipment purchased for freelancers in the 24% tax bracket.
Bonus depreciation percentages and tax impact by year
| Tax Year | Bonus % | $10K Equipment: Immediate | Remaining | Tax Savings Lost (24% bracket) |
|---|---|---|---|---|
| 2022 | 100% | $10,000 | $0 | $0 |
| 2026 | 80% | $8,000 | $2,000 | $480 |
| 2027 | 60% | $6,000 | $4,000 | $960 |
| 2028 | 40% | $4,000 | $6,000 | $1,440 |
| 2029 | 20% | $2,000 | $8,000 | $1,920 |
More Perspectives
James Okafor, Self-Employment Tax Specialist
Best for freelancers making moderate equipment purchases who need practical planning advice
How this affects your typical equipment purchases
As a full-time freelancer, you probably make equipment purchases throughout the year - a new laptop, printer, desk setup, or software subscriptions. The bonus depreciation phasedown means you'll get less immediate tax relief from these purchases.
Practical example: Freelance writer's equipment
Say you purchase $5,000 in equipment for your writing business in 2026:
2026 tax treatment:
If this were under old 100% rules:
Planning around the phasedown
For 2026 purchases: Focus on items you genuinely need. Don't buy equipment just for the tax deduction, but if you're planning purchases anyway, consider timing them before the percentage drops further in 2027.
Track everything carefully: With mixed depreciation schedules, keeping accurate records becomes more important. Use accounting software or spreadsheets to track which equipment gets which treatment.
Consider financing implications: Since you get less immediate tax benefit, factor this into decisions about financing vs. paying cash for equipment.
Alternative strategies to consider
Section 179 still allows full expensing for many freelancers, but it has a $1.22 million limit for 2026. For most solo freelancers, this covers all your equipment purchases, potentially giving you the full immediate deduction you're used to.
Key takeaway: The phasedown reduces your immediate tax savings from equipment purchases by about 20%, but Section 179 may still provide full immediate deductions for most freelance equipment needs under $100,000 annually.
Key Takeaway: Most full-time freelancers can still get 100% immediate deductions through Section 179 election, making the bonus depreciation phasedown less impactful for typical equipment purchases under $50,000 annually.
Priya Sharma, Small Business Tax Analyst
Best for consultants with mixed equipment and client-specific purchases who need strategic depreciation planning
Strategic implications for consulting businesses
As a consultant, you likely have a mix of general business equipment and client-specific purchases. The bonus depreciation phasedown affects your tax planning differently depending on your purchase patterns and income variability.
Client-specific equipment considerations
Many consultants purchase equipment for specific client projects - specialized software, industry-specific tools, or presentation equipment. With 80% bonus depreciation in 2026:
Example: You purchase $8,000 in specialized analytics software for a 6-month client engagement:
Income timing and depreciation strategy
Consultants often have lumpy income - high-earning quarters followed by slower periods. The reduced bonus depreciation affects your ability to offset high-income periods:
Scenario: You have a $100,000 contract in Q4 2026 and need $15,000 in equipment:
Multi-year equipment planning
Consider spreading large equipment purchases across years to optimize depreciation benefits:
2026-2027 strategy:
Mixed-use asset complications
Consultants often have mixed business/personal use assets (vehicles, home office equipment). The phasedown makes the business percentage calculation more critical since you're getting less immediate benefit from the business portion.
Key takeaway: Consultants should align equipment purchases with high-income periods to maximize the 80% bonus depreciation benefit, while considering Section 179 for critical items requiring full immediate deduction.
Key Takeaway: Consultants with variable income should time major equipment purchases during high-earning quarters to maximize the reduced 80% bonus depreciation benefit against peak income periods.
Sources
- IRS Publication 946 — How to Depreciate Property
- IRC Section 168(k) — Special Allowance for Certain Property
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.