Heavy equipment financing calculator

How the comparison works

At this price point, the Section 179 limit matters. For 2026, the Section 179 deduction limit is $1,220,000 (phase-out begins at $3,050,000 in total property placed in service). A $250,000 excavator is well within the limit, so you can deduct the entire purchase price in year one — a $62,500 tax saving at a 25% rate. That front-loaded deduction is one of the main advantages of buying at the heavy-equipment price tier.

The lease option gives you smaller, evenly spread deductions each year. The NPV comparison depends on your discount rate: if your cost of capital is high, the front-loaded Sec 179 benefit of buying is worth more in today's dollars.

Example: 20-ton excavator at 2026 market pricing

These are the pre-filled defaults. Replace them with your actual quote before making a decision.

Note that the loan term (72 months) is longer than the lease (60 months). The calculator uses the lease term as the analysis window and includes the remaining loan balance as a cash flow at month 60. Use the calculator to compare the full after-tax NPV for your specific numbers.

Assumptions and limitations

• Price range is wide. The $250,000 default represents a mid-size 20-ton excavator. Smaller 13-ton machines (Cat 313, Komatsu PC130) start around $160,000; large 30-ton machines (Cat 330, Komatsu PC360) exceed $400,000. Configure the machine you actually intend to buy.
• Section 179 on large purchases requires strong income. The deduction is limited to your taxable business income for the year. On a $250,000 machine, you need at least $250,000 in net business income to use the full deduction in year one. If not, the remainder carries forward — switch to MACRS 5-year or bonus depreciation in the calculator for a more conservative estimate.
• Residual value varies by hours and condition. The $90,000 residual (36% of cost after 5 years) is a conservative estimate for a machine with normal usage. Low-hour, well-maintained excavators can achieve 45–55% resale. Adjust the residual to your expected sale scenario.
• Loan term is 72 months. Six-year terms are common on heavy equipment. The analysis window is set to the 60-month lease term; the calculator includes the remaining loan balance at that point as a lump-sum cost of the buy option. You can equalize the terms by setting both to 60 or 72 months.
• State and local property taxes on heavy equipment can be significant — $3,000–$8,000/year in some jurisdictions. These are not modeled and favor leasing in high-tax states.

Frequently asked questions

Does the Section 179 limit apply to the whole business, or per machine?

The Section 179 limit ($1,220,000 for 2026) applies to the total qualifying property placed in service during the year across your entire business — not per machine. If you buy multiple pieces of equipment in the same year, the combined cost counts toward the limit and the income cap.

What down payment do heavy equipment lenders typically require?

Most lenders require 10–20% down on heavy equipment. The standard for a well-qualified borrower is around 15% (used here). Some manufacturers' captive finance programs offer 0% down with a promotional rate on new machines; those rates are usually higher than market for non-promotional periods.

Is heavy equipment 5-year or 7-year MACRS property?

General construction equipment (excavators, dozers, graders, cranes) is typically 5-year MACRS property under asset class 00.12. Some specialized equipment falls in a different class. Always confirm with your CPA before filing — placing equipment in the wrong MACRS class can result in either understating or overstating your deduction.

Should I use Section 179 or bonus depreciation?

For 2026, the One Big Beautiful Bill restored 100% bonus depreciation for property placed in service after January 19, 2025. Both Section 179 and 100% bonus give you a full year-one deduction. Section 179 is limited to business income (no net operating loss carryback); bonus depreciation can create a loss. If you want to avoid an NOL, choose Section 179. If you want to maximize the deduction regardless of income, choose bonus. The calculator shows results for both — compare them side by side.