Buying business equipment before year-end: what the deduction rules actually mean

The run of Markets and Festivals between now and the end of December is the biggest income stretch of the year for a lot of vendors — which also makes it the stretch when a worn canopy finally gets replaced, a second card reader gets added, or a bigger kiln or sewing machine finally gets ordered. There's a tax-timing question tangled up in that purchase that's easy to miss: a few federal rules can turn equipment bought now into a deduction against this year's income instead of something spread thin over several years to come, but only if it's bought and actually put to use before the calendar turns over.

The idea behind all three rules

Ordinarily, a piece of equipment that lasts more than a year — a canopy, a commercial sewing machine, a kiln, a point-of-sale terminal — isn't deducted all at once. It's "depreciated," meaning its cost gets spread across the years it's expected to last, so a $3,000 kiln might only produce a few hundred dollars of deduction in its first year. Three separate provisions let a lot of ordinary equipment skip that slow schedule and get deducted in full the year it's bought instead:

• The de minimis safe harbor. This is the one that quietly covers the most ground for a small vendor. Under IRS rules that have been stable since 2016, a business without a formal "applicable financial statement" — which describes most sole proprietors and small LLCs — can elect to deduct, rather than depreciate, anything costing $2,500 or less per item or per invoice. A new card reader, a set of folding tables, replacement tent weights, a sewing machine on sale: a lot of booth gear simply falls under this line on its own.
• Section 179. For anything over that per-item line — a pricier kiln, a trailer, a heavier-duty canopy system — this election lets a business deduct the full cost in the year it's placed in service instead of depreciating it, up to limits set each year that are, for the overwhelming majority of small vendors, nowhere close to being a real constraint. The one real limit that does matter for a small business: a Section 179 deduction can't be used to create a loss, so it's capped by how much taxable business income you actually have for the year.
• Bonus depreciation. Recent federal legislation (the One Big Beautiful Bill Act) restored 100% bonus depreciation, permanently, for qualifying equipment acquired and placed in service after January 19, 2025 — after several years of that percentage stepping down. Unlike Section 179, bonus depreciation isn't limited to the amount of income you have, which matters more for a business making a genuinely large purchase than it does for most individual vendors.

Why "placed in service" matters more than the receipt

Here's the part that trips vendors up most: none of these three rules care about the date on the invoice. They care about the date equipment is actually placed in service — unpacked, set up, and ready to be used in the business, not just paid for or sitting in a box by the back door.

Order a new canopy on December 28th and it doesn't arrive until January 3rd, and it's next year's deduction, not this year's, no matter how the invoice is dated. The same goes for something bought now but left in its packaging until the first show of next spring — if it isn't actually ready for business use by December 31, the clock on this year's deduction hasn't started. If the plan is to use a purchase to offset this year's income specifically, that means buying with enough lead time to receive, assemble, and start actually using the item before the year ends, not just placing the order before then.

What this doesn't change

A few things are worth being clear-eyed about before any of this changes a buying decision:

• It's a deduction, not a discount. None of these rules make the purchase free — they change when its cost reduces your taxable income, not whether you still had to pay for it. A $3,000 kiln you didn't otherwise need doesn't become a good idea just because the deduction lands sooner.
• Records still matter. The de minimis election in particular depends on having a written accounting policy in place for expensing items under your threshold before the year it applies to, and on keeping the invoice that shows the per-item price. A receipt that just says "equipment" without a breakdown is the kind of thing that turns an easy deduction into a drawn-out argument later.
• Business-use matters, not just ownership. Equipment has to be used in the business to qualify for any of these — a sewing machine that also handles the household's mending some of the time still counts, but the deduction logic assumes real business use, and mixed personal use is its own separate wrinkle worth asking about directly.
• Which option is actually better depends on your income this year, not just on the purchase. A vendor having a strong year might want the deduction now; one who expects a stronger year next season might prefer to spread it out instead. That's a real planning choice, not something to default on without thinking about it.

Questions worth bringing to whoever does your taxes

• Does my purchase fall under the $2,500 de minimis per-item line on its own, or does it need a Section 179 or bonus depreciation election instead?
• Do I already have a written de minimis expensing policy in place, or does one need to be adopted before year-end to use it this year?
• Based on what my business income actually looks like this year, does it make more sense to deduct this purchase now or spread it out?
• If I order something now, what's the realistic chance it's delivered, set up, and actually in use before December 31?
• Does anything about this purchase (financed, leased, partly personal use) change which of these rules actually applies?

The bottom line

The run of Shows between now and year-end is exactly when a lot of equipment purchases that have been on hold all season finally happen — and a purchase made and genuinely put to use before December 31 can land very differently on a tax return than the same purchase made three weeks later. The specifics depend on your income, your filing status, and the equipment itself in ways a general post can't resolve for you.

This article is general information, not tax or legal advice. Deduction elections, dollar thresholds, and depreciation rules change by tax year and depend on your specific business structure and income. Talk to a CPA or other qualified tax preparer before deciding how to handle a particular purchase.

The Tracker's expense log keeps a running record of what you've spent on the business all season, which is exactly the kind of documentation a conversation about this year's equipment purchases should start from. Artisans Almanac offers a 30-day free trial if you want this season's expenses organized in one place before that conversation happens.