Section 179 and Bonus Depreciation for Aerial Equipment

Equipment that goes in the air in December can reduce your tax bill before January. Section 179 of the Internal Revenue Code lets businesses deduct the full purchase price of qualifying equipment in the year of purchase rather than depreciating it over a multi-year schedule. Bonus depreciation works alongside it, and together these two provisions can change the after-tax cost of a boom lift or scissor lift purchase significantly. The deal is real; it just requires the machine to be placed in service before the calendar year closes.

We finance aerial lift purchases that buyers intend to take advantage of through Section 179 or bonus depreciation. The financing and the tax strategy are separate decisions, but they interact: buying the lift on a loan still qualifies for the full deduction even though you financed it, and the tax savings can materially offset the early payments in the first year. Understanding how the two pieces fit together helps you make the right decision before year-end.

How Section 179 Actually Works for Aerial Equipment

Section 179 allows a business to deduct the cost of qualifying equipment immediately rather than spreading the deduction over a five- or seven-year MACRS depreciation schedule. For aerial lifts, which are classified as five-year property under MACRS, this means taking a deduction in year one that would otherwise be spread over six tax years under the standard schedule.

The deduction limit under Section 179 adjusts periodically for inflation. For recent tax years it has been set at $1,160,000 (for tax year 2023) with a phase-out beginning at $2,890,000 in total equipment placed in service during the year. Most aerial lift buyers operate well inside those thresholds. Both new and used equipment qualify for Section 179, which matters for operators buying used boom lifts or used scissor lifts at auction or from a dealer's fleet.

The equipment must be placed in service during the tax year. Placed in service means the machine is ready and available for use, not necessarily that it has accumulated hours. Buying a telescopic boom lift in December and having it on the yard, operational, before the 31st qualifies. A machine still in transit or at the dealer pending delivery does not.

Bonus Depreciation: The Other Piece

Bonus depreciation works alongside Section 179 and has historically allowed businesses to deduct a large percentage of qualifying asset cost in the year of purchase. Under the Tax Cuts and Jobs Act of 2017, bonus depreciation was set at 100 percent for assets placed in service through 2022. The rate has been phasing down since: 80 percent for 2023, 60 percent for 2024, 40 percent for 2025, and 20 percent for 2026 under current law unless Congress acts to extend or modify it.

Bonus depreciation applies to both new and used equipment, applies after the Section 179 deduction is taken, and has no dollar cap on the deduction itself (though it is limited by taxable income in some circumstances). For a fleet purchase above the Section 179 threshold, bonus depreciation continues to provide accelerated deductions on the remaining balance.

The interaction between Section 179 and bonus depreciation is a tax planning question best resolved with your accountant for your specific situation. The general pattern is to apply Section 179 first, then bonus depreciation on the remainder, with standard depreciation covering what is left.

Does Section 179 apply to used aerial lifts bought from auction or private sellers?

Yes, used equipment qualifies for Section 179 as long as it is new to you, meaning you have not previously owned it, and it is placed in service during the tax year. Used boom lifts and scissor lifts purchased from a dealer fleet, auction, or private seller all qualify on that basis.

What does 'placed in service' mean for a boom lift I'm buying at year-end?

Placed in service means the equipment is ready and available for use in your business. For a boom lift, that generally means it is on your yard, operational, with title in your name. A machine sitting at a dealer awaiting paperwork, or in transit, has not yet been placed in service. Coordinate closing and delivery timelines carefully if you are targeting a December purchase for the current year deduction.

Can I take Section 179 on a leased aerial lift?

In most true lease structures, the lessor (the lender) owns the equipment and takes the depreciation, not the lessee. Some lease structures, particularly $1 buyout leases which are functionally loans in lease form, may allow the lessee to take Section 179. The specific tax treatment depends on how the lease is classified under IRS rules. Your accountant should confirm which lease structure qualifies for depreciation in your specific situation.

Can I use Section 179 if my business had a loss this year?

Section 179 deductions are limited by your business's taxable income from active trade or business. You cannot use Section 179 to create or deepen a loss. However, any Section 179 deduction that exceeds your taxable income can be carried forward to future years. Bonus depreciation does not have the same taxable-income limitation and can be used to create a loss that may be carried back or forward depending on your tax situation and the applicable tax year rules.

How much can I actually save on a $150,000 boom lift using Section 179?

The tax savings depend on your effective tax rate. At a 35 percent combined federal and state rate on $150,000 of equipment cost, the Section 179 deduction would generate roughly $52,500 in tax savings. At a 25 percent rate, the savings are approximately $37,500. These are not deductions from the loan payment; they are reductions in the tax you owe. Exact savings require your specific income situation and your accountant's calculation.