You just bought a $180,000 truck. Your CPA asks: "Do you want to write off the entire truck this year with Section 179, or spread it over five years with MACRS?"

You have no idea what either of those means, but your answer will determine whether you owe $45,000 in taxes or $8,000.

Depreciation is the most powerful tax strategy available to owner operators. It's also the most confusing.

Here's every depreciation option available in 2026, how they work, when to use each strategy, and how to avoid expensive mistakes.

Tax Disclaimer: This guide provides general information about equipment depreciation for educational purposes. Tax laws are complex and change frequently. Depreciation strategy depends on your specific income, expenses, and business goals. Consult a CPA who specializes in trucking before making depreciation decisions. This is not tax advice.

What Equipment Depreciation Is (And Why It Matters)

Depreciation is a tax deduction that lets you write off the cost of equipment over time as it loses value.

Example: $150,000 Truck Purchase

Without depreciation:

You spend $150,000 on a truck
You don't get to deduct anything
You pay full taxes on your income

With depreciation:

You spend $150,000 on a truck
IRS lets you deduct that $150,000 from your taxable income
Either all at once (Section 179) or spread over 5 years (MACRS)
You save $30,000-$45,000 in taxes (depending on your tax bracket)

Key point: You WILL deduct the entire truck cost eventually. The question is WHEN.

Three Depreciation Methods for 2026

Option 1: Section 179 Deduction (Immediate Write-Off)

Section 179 lets you deduct the entire equipment cost in the year you buy it.

2026 Limits:

Maximum deduction: $2.56 million
Phase-out threshold: $4.09 million in total equipment purchases
Must use truck more than 50% for business

Weight class matters:

Trucks over 14,000 lbs GVWR (Class 8 semi-trucks):

No caps - deduct full purchase price up to $2.56 million
Most owner operator trucks qualify

Trucks 6,000-14,000 lbs GVWR (heavy pickups, smaller trucks):

$32,000 maximum deduction
Anything above $32,000 must use regular depreciation

Example: $180,000 Class 8 Semi-Truck

You buy a $180,000 Freightliner Cascadia in March 2026. Your net income before depreciation is $120,000.

With Section 179:

Deduct full $180,000 in 2026
Taxable income: $0 (actually -$60,000, which carries forward)
Taxes owed: $0
Tax savings: ~$36,000 (assuming 30% effective tax rate on $120,000)

Without Section 179:

No deduction in 2026
Taxable income: $120,000
Taxes owed: ~$36,000

When Section 179 makes sense:

You had a high-income year
You want to minimize this year's taxes
You don't expect higher income next year
You're confident you'll stay profitable

From TruckersReport, one owner operator explains the strategy:

"If you do it smartly, you will take a HUGE chunk when you have a HUGE year. Flip side, bad year, depreciate it a little." - Dave_in_AZ

Option 2: Bonus Depreciation (100% First-Year Deduction)

Bonus depreciation is similar to Section 179, but it works differently.

2026 Rules - MAJOR CHANGE:

Equipment purchased AFTER January 19, 2025:

100% bonus depreciation (full deduction in year 1)
No dollar limits
Stacks with Section 179

Equipment purchased BEFORE January 20, 2025:

Only 20% bonus depreciation under old phase-out schedule

How bonus depreciation works:

Take Section 179 deduction (up to $2.56 million)
Take 100% bonus depreciation on remaining balance
Use MACRS for anything left

Example: $180,000 Truck + $15,000 Trailer (Purchased March 2026)

Total equipment: $195,000

Option A: Section 179 only

Deduct $195,000

Option B: Section 179 + Bonus

Section 179: $180,000 (truck)
Bonus depreciation: $15,000 (trailer)
Total deduction: $195,000

Both give the same result, but bonus depreciation has no phase-out threshold, so it's useful if you buy multiple trucks or exceed $4.09 million in purchases.

Key difference from Section 179:

Section 179 phases out after $4.09 million in purchases
Bonus depreciation has no limit

When bonus depreciation makes sense:

You're buying multiple trucks
Your total equipment purchases exceed Section 179 limits
You want maximum first-year deduction

Option 3: MACRS Depreciation (Spread Over 5 Years)

MACRS (Modified Accelerated Cost Recovery System) spreads depreciation over multiple years.

Semi-trucks are 5-year property.

MACRS 200% Declining Balance Schedule (5-year):

Example: $180,000 Truck

Year 1: 20.00% = $36,000 deduction
Year 2: 32.00% = $57,600 deduction
Year 3: 19.20% = $34,560 deduction
Year 4: 11.52% = $20,736 deduction
Year 5: 11.52% = $20,736 deduction
Year 6: 5.76% = $10,368 deduction

Total: $180,000 over 6 years (5-year property takes 6 calendar years due to half-year convention)

When MACRS makes sense:

You want to spread deductions over multiple years
You expect higher income in future years
You want depreciation to offset income every year
You don't want to "waste" depreciation in a low-income year

From TruckersReport, one owner operator shared his approach:

"I did $7,500 first year then $27,500 the next two years." - 77fib77

This shows you have flexibility in how much depreciation you claim each year (you can take less than the maximum).

Section 179 vs MACRS vs Bonus: Which Should You Use?

Scenario 1: High-Income Year, Planning to Upgrade Regularly

Your situation:

Net income: $150,000 this year
Just bought $180,000 truck
Plan to trade in 3-5 years
Want to minimize taxes NOW

Best strategy: Section 179 or Bonus Depreciation

Deduct full $180,000 this year
Reduces taxable income to $0 (or negative)
Save ~$45,000 in taxes
In 3-5 years, trade truck and repeat

From TruckersReport:

"I depreciated 100% on my purchase the year I bought it." - Opus

Scenario 2: First-Year Owner Operator (Low or Negative Income)

Your situation:

Net income: $20,000 (or negative) in year 1
Bought $180,000 truck in December
Expect income to grow as you establish business

Best strategy: MACRS (spread depreciation)

Don't "waste" $180,000 deduction in low-income year
Year 1: Deduct $36,000 (offsets $20,000 income + carries forward)
Year 2-3: Larger deductions when income is higher
Maximizes tax benefit over time

You can't carry forward Section 179 to future years, so if you claim $180,000 deduction but only have $20,000 income, you lose $160,000 of benefit.

Scenario 3: Paying Cash, Want to Own Outright

Your situation:

Paid $150,000 cash for truck
Don't want debt
Plan to keep truck 10+ years

Best strategy: Pay cash, then decide depreciation based on income

From TruckersReport, one operator suggests:

"Pay cash for an asset then depreciate it, putting aside the money into a savings account to pay cash again." - BennysPennys

Why this works:

You own the truck outright (no payments)
Depreciation saves taxes
Bank the tax savings to replace truck later

Scenario 4: Variable Income (Good Years and Bad Years)

Your situation:

Some years you net $120,000
Some years you net $40,000
Unpredictable freight market

Best strategy: Use MACRS and time your purchases strategically

Buy truck in high-income year
Take maximum depreciation in high-income years
Take minimum depreciation in low-income years

From TruckersReport:

"If you do it smartly, you will take a HUGE chunk when you have a HUGE year. Flip side, bad year, depreciate it a little." - Dave_in_AZ

What Happens When You Sell the Truck?

Depreciation recapture means you pay taxes on the difference between your sale price and the depreciated value.

Example: Fully Depreciated Truck

Original purchase: $150,000 Depreciation claimed: $150,000 (Section 179, full deduction) Depreciated value (tax basis): $0

You sell for $50,000:

Sale price: $50,000
Tax basis: $0
Taxable gain: $50,000
Taxes owed: ~$12,500-$15,000 (depending on tax bracket)

From TruckersReport:

"You depreciate the whole thing and adjust when you sell it. If you keep a truck 7 years and sell it for $20,000 after depreciating $150,000, the $20,000 becomes positive revenue." - 77fib77

Key insight: You don't avoid taxes forever. You defer them. When you sell, you pay taxes on the depreciation you claimed.

Trade-ins reduce recapture: If you trade in the truck for a new one, you can defer depreciation recapture through like-kind exchange rules (1031 exchange for equipment).

Financing vs Paying Cash: How It Affects Depreciation

Financed Truck

Depreciation:

You depreciate the FULL purchase price (not just what you've paid so far)
$180,000 truck with $20,000 down = $180,000 depreciation

Interest:

Interest on the loan is a SEPARATE deduction
Deduct interest as an operating expense

From TruckersReport:

"If you finance the truck the interest on the note is deductible and you will use the purchase price for your depreciation." - Long FLD

Paid Cash

Depreciation:

Same rules - depreciate full purchase price

No interest deduction:

Obviously no loan interest to deduct

Tax savings advantage: From TruckersReport, operators debate whether paying cash is better:

"I prefer paying 30% taxes on $1,500 monthly income over making truck payments to banks." - woolybully35us

Counter-argument:

"CPAs tell them they need depreciation to avoid tremendous taxes." - OldeSkool

The real debate: Do you want to be debt-free or maximize tax deductions?

Common Depreciation Mistakes

1. Taking Section 179 in a Low-Income Year

Mistake: You buy a $180,000 truck in your first year as an owner operator. You net $15,000. You claim full Section 179 deduction of $180,000.

Problem: You "wasted" $165,000 of deduction. Section 179 can't create a loss that carries forward.

Solution: Use MACRS instead. Spread the deduction over 5 years when you have income to offset.

2. Depreciating Personal Use Percentage

Mistake: You use your truck 80% for business, 20% personal. You claim 100% depreciation.

Problem: IRS disallows 20% of depreciation. You get audited and owe back taxes + penalties.

Solution: Only depreciate business-use percentage. If 80% business, depreciate 80% of cost.

3. Not Planning for Depreciation Recapture

Mistake: You fully depreciate a $180,000 truck. You sell it 5 years later for $60,000. You didn't plan for the tax bill.

Problem: You owe ~$15,000-$18,000 in taxes on the sale. You spent the money and can't pay.

Solution: Plan ahead. Set aside cash for depreciation recapture when you know you'll sell.

4. Buying Equipment in December

Mistake: You buy a truck on December 28. You take full Section 179 deduction.

Not actually a mistake: IRS allows full-year depreciation even if you only owned the truck for 3 days in December.

Strategy: If you're planning to buy a truck in January, buy it in late December instead and deduct it on THIS year's taxes.

Getting Professional Help

You NEED a CPA who specializes in trucking for depreciation decisions.

From TruckersReport:

"An accountant that specializes in transportation is imperative. The difference in your filings is thousands." - Kranky1

And:

"This is a question for your accountant/tax preparer. And find a good one that knows the trucking business." - RefMata

What a good trucking CPA does:

Analyzes your income to determine optimal depreciation strategy
Calculates whether Section 179 or MACRS saves more taxes
Projects future tax liability based on depreciation choices
Plans for depreciation recapture when you sell
Ensures you don't "waste" deductions in low-income years

Cost: $800-$2,000 for annual tax prep + planning

Savings: $5,000-$20,000 in taxes with proper strategy

See our guide: When to Hire an Accountant: What Owner Operators Need to Know

How FF Dispatch Helps Owner Operators Track Income for Tax Planning

Depreciation strategy depends on knowing your annual income. We provide year-to-date income tracking so you and your CPA can make informed decisions.

What we provide:

Real-time gross revenue tracking (updated daily)
Year-to-date income summaries (know exactly where you stand)
Settlement documentation for every load
Single 1099 at year-end (instead of 10-15 from different brokers)

Why this matters for depreciation planning:

Scenario: It's November. You're considering buying a new truck. You need to know: "Should I buy this year or wait until January?"

Answer depends on your income: If you're having a high-income year, buy in December and take Section 179. If you're having a low-income year, wait until January.

With FF Dispatch: You log into your dashboard and see exactly how much you've grossed and netted year-to-date. Your CPA can immediately tell you whether buying now or waiting saves more taxes.

Contact: (302) 608-0609 or gia@dispatchff.com Pricing: 6% of gross revenue No long-term contracts

If you want better income visibility for tax planning decisions, our real-time tracking helps you and your CPA make smarter choices.

Bottom Line

Equipment depreciation is the biggest tax deduction available to owner operators, but timing matters.

Section 179 (2026):

Deduct full truck cost in year 1
Max: $2.56 million
No limits for trucks over 14,000 lbs
Best for: High-income years

Bonus Depreciation (2026):

100% deduction for equipment purchased after Jan 19, 2025
No dollar limits
Stacks with Section 179
Best for: Large equipment purchases

MACRS (5-year schedule):

Spread deduction over 5-6 years
Year 1: 20%, Year 2: 32%, Year 3: 19.2%, etc.
Best for: Low-income years, spreading deductions

Decision factors:

How much income do you have THIS year?
Do you expect higher income NEXT year?
How long will you keep the truck?
Will you trade or sell?
Do you want to maximize deductions now or spread them?

Common strategies:

High income + plan to trade regularly: Section 179 or Bonus
Low income in year 1: MACRS (spread it)
Variable income: Time purchases strategically
Paying cash + keeping long-term: Use depreciation to bank savings

Mistakes to avoid:

Don't use Section 179 in low-income years (you waste the deduction)
Don't forget depreciation recapture when you sell
Don't depreciate personal-use percentage
Do plan purchases around income (buy in December if high-income year)

Get professional help: Work with a CPA who specializes in trucking. Depreciation strategy is worth thousands in tax savings, but only if you do it right.

From TruckersReport, the consensus is clear:

"An accountant that specializes in transportation is imperative. The difference in your filings is thousands." - Kranky1

And:

"You're trading tax payment for truck payment." - skallagrime

Plan your depreciation strategy with a professional. The cost of a CPA ($800-$2,000) is nothing compared to the tax savings ($5,000-$20,000+) from doing it right.

Sources:

Equipment Depreciation Strategies for Owner Operators

What Equipment Depreciation Is (And Why It Matters)

Example: $150,000 Truck Purchase

Three Depreciation Methods for 2026

Option 1: Section 179 Deduction (Immediate Write-Off)

Option 2: Bonus Depreciation (100% First-Year Deduction)

Option 3: MACRS Depreciation (Spread Over 5 Years)

Section 179 vs MACRS vs Bonus: Which Should You Use?

Scenario 1: High-Income Year, Planning to Upgrade Regularly

Scenario 2: First-Year Owner Operator (Low or Negative Income)

Scenario 3: Paying Cash, Want to Own Outright

Scenario 4: Variable Income (Good Years and Bad Years)

What Happens When You Sell the Truck?

Example: Fully Depreciated Truck

Financing vs Paying Cash: How It Affects Depreciation

Financed Truck

Paid Cash

Common Depreciation Mistakes

1. Taking Section 179 in a Low-Income Year

2. Depreciating Personal Use Percentage

3. Not Planning for Depreciation Recapture

4. Buying Equipment in December

Getting Professional Help

How FF Dispatch Helps Owner Operators Track Income for Tax Planning

Bottom Line

Ready to Earn More Per Mile?

What Equipment Depreciation Is (And Why It Matters)

Example: $150,000 Truck Purchase

Three Depreciation Methods for 2026

Option 1: Section 179 Deduction (Immediate Write-Off)

Option 2: Bonus Depreciation (100% First-Year Deduction)

Option 3: MACRS Depreciation (Spread Over 5 Years)

Section 179 vs MACRS vs Bonus: Which Should You Use?

Scenario 1: High-Income Year, Planning to Upgrade Regularly

Scenario 2: First-Year Owner Operator (Low or Negative Income)

Scenario 3: Paying Cash, Want to Own Outright

Scenario 4: Variable Income (Good Years and Bad Years)

What Happens When You Sell the Truck?

Example: Fully Depreciated Truck

Financing vs Paying Cash: How It Affects Depreciation

Financed Truck

Paid Cash

Common Depreciation Mistakes

1. Taking Section 179 in a Low-Income Year

2. Depreciating Personal Use Percentage

3. Not Planning for Depreciation Recapture

4. Buying Equipment in December

Getting Professional Help

How FF Dispatch Helps Owner Operators Track Income for Tax Planning

Bottom Line

Ready to Earn More Per Mile?

Related Articles

Best load boards for owner operators in 2026

Getting Broker Authority as an Owner Operator

Bookkeeping Systems That Actually Work for Owner Operators