Landscaping Equipment Financing and Section 179: Deducting Equipment You Haven't Paid Off

Landscaping businesses are equipment-intensive. A single crew needs a truck, a trailer, mowers, trimmers, blowers, and hand tools, with a total cost of $80,000-$150,000. Financing is the norm: few landscaping companies pay cash for a new truck or a commercial zero-turn mower. The tax benefit of financing is that the full purchase price is deductible in Year 1 under Section 179 or 100% bonus depreciation, even though the loan payments extend over several years.

How does financing work with Section 179?

What about the heavy vehicle deduction?

Vehicles over 6,000 lbs GVWR qualify for full Section 179 expensing without the luxury auto depreciation cap. Most landscaping work trucks qualify:

Qualifying trucks (6,000+ lbs GVWR): Ford F-150 (some models), F-250, F-350, F-450, F-550; Chevy Silverado 1500 (some models), 2500, 3500; RAM 1500 (some models), 2500, 3500; Toyota Tundra; GMC Sierra.

Key requirements:

1. The vehicle must exceed 6,000 lbs GVWR (check the door sticker or the manufacturer specs, not the curb weight)
2. The vehicle must be used more than 50% for business
3. If business use is less than 100%, only the business-use percentage is deductible

A landscaping company that purchases a $55,000 F-250 used 90% for business deducts $49,500 in Year 1 ($55,000 x 90%). The remaining 10% personal use isn’t deductible.

What’s the difference between financing and leasing?

Equipment loan (financing): The company owns the equipment. The full purchase price is deductible under Section 179 or bonus depreciation. Loan principal payments aren’t deductible (they’re balance sheet transactions). Loan interest is deductible.

Capital lease ($1 buyout): The company does not technically own the equipment during the lease, but the $1 buyout option at the end makes this functionally equivalent to a purchase. The IRS treats capital leases as purchases, and the full equipment cost is deductible under Section 179 in Year 1.

Operating lease (fair market value buyout): The company rents the equipment. Lease payments are deductible as paid, spread over the lease term. No Section 179 deduction. This produces a smaller deduction in Year 1 but spreads the deduction over the lease term.

Most equipment financing offered by dealers (John Deere Financial, Kubota Credit, equipment-specific lenders) is either a loan or a capital lease with a $1 buyout, both of which qualify for the full Year 1 deduction.

Related guides:

• Landscaping Crew Classification Employee Contractor
• Landscaping Entity Structure Scorp
• Landscaping Estimated Taxes Seasonal Income
• Landscaping Retirement Plans Crew
• Landscaping Snow Removal Add On

What is bonus depreciation and how has it changed recently?

Bonus depreciation allows you to deduct a large percentage of an asset’s cost in the first year, rather than spreading it over the full MACRS recovery period. Under the Tax Cuts and Jobs Act, bonus depreciation was 100% for assets placed in service from September 27, 2017 through December 31, 2022. It began phasing down by 20% per year: 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and 0% in 2027. Unlike Section 179, bonus depreciation can create or increase a net operating loss, which you can then carry forward to offset future income. Bonus depreciation applies to new and used property (the TCJA removed the new-only requirement), as long as you have not previously used the asset.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.