…and why waiting costs more
If you’re considering upgrading your shop, tax incentives enable you to deduct the full purchase price of CNC equipment in the same year it’s put in service. So, rather than spreading depreciation across several years, you can take advantage of the entire cost upfront, lowering your tax liability and improving your cash flow.
To maximize your tax savings, apply Section 179 first:
- Write off 100% of the purchase price of equipment (up to $2,560,000) on your 2026 tax return.
Here are some example calculations:
No Equipment Purchase
| Taxed Income | $450,000 |
| Corporate Tax Rate | 21% |
| Tax Payment | $94,500 |
CNC Machine Purchase
| Taxed Income | $450,000 |
| Equipment Purchase | $200,000 |
| Taxed Income After Purchase | $250,000 |
| Corporate Tax Rate | 21% |
| Tax Payment | $52,500 |
| Savings | $42,000 |
Note: the Section 179 deduction phases out when the total cost of the qualifying equipment placed in service exceeds $4,090,000. It is fully phased out at $6,650,000.
If the Section 179 deduction exceeds your business’s net taxable income (i.e., your net taxable income is lower than the cost of the equipment you purchased), you cannot write off the entirety of the equipment, but you can apply 100% bonus depreciation the first year. The unused portion carries forward to subsequent tax years, ensuring you never lose the benefit.
- Bonus Depreciation is 100% in the first year, and there’s no dollar limit. This is an immediate and substantial tax saving that frees up cash flow for further investment.
Total Equipment Purchase
| Equipment Purchase | $3,150,000 |
| Section 179 Write Off | $2,560,000 |
| Bonus Depreciation (100% First Year) | $590,000 |
| Total First Year Deduction | $3,150,000 |
With the savings, you can reinvest in your business and gain a competitive advantage.
Even if you’ve financed your equipment, you can still deduct the purchase price in the year the asset was placed in service. In many cases, the shop’s tax savings exceeds the first-year payment!
C.R. Onsrud has machines available for quick delivery to help you capitalize on these tax advantages this year and expand your operations. Give us a call: 1-704-508-7000.
Important: C.R. Onsrud is a manufacturer of American-made CNC machinery, not a tax consultant. It’s critical you seek professional advice from your tax advisor to ensure you qualify and are fully capitalizing on these incentives in relation to your finances, future tax planning goals, and state’s tax laws.