Section 179 deductions, TRAC leases, FET, and equipment loan structures for Class 5–8 commercial trucks. 2026 tax year guidance.
| Tax Year | Section 179 Limit | Phase-out Starts | Bonus Depreciation |
|---|---|---|---|
| 2026 | $1,220,000 | $3,050,000 | 60% |
| 2027 | $1,250,000 (est.) | $3,130,000 (est.) | 40% |
| 2028 | TBD | TBD | 20% |
Estimates for 2027+ are projections based on current law. Consult a CPA before making tax decisions.
Equipment financing is a broad term for any loan or lease product where the truck itself serves as collateral. It includes installment loans (you own at payoff), TRAC leases (preset residual, option to purchase), operating leases (return truck at end of term), and sale-leaseback arrangements. Equipment lenders underwrite differently from consumer auto lenders — they focus on the asset's commercial value and your operation's cash flow.
Section 179 of the US tax code allows businesses to deduct the full purchase price of qualifying equipment — including commercial trucks — in the year placed in service, rather than depreciating over 5 years (MACRS). For 2026, the deduction limit is $1,220,000 with a phase-out starting at $3,050,000 in total equipment spending. The truck must be used more than 50% for business. Bonus depreciation (60% in 2026, phasing down) can supplement Section 179 for additional cost recovery. Consult a CPA for your situation.
A Terminal Rental Adjustment Clause (TRAC) lease is the most common commercial truck lease structure. At signing, the lessor and lessee agree on a residual value. At lease end, if the truck sells for more than the residual, the lessee gets the surplus; if it sells for less, the lessee pays the difference. TRAC leases provide lower monthly payments than loans while giving the lessee exposure to residual value — common in fleet financing.
FET is a 12% federal tax on the first retail sale of new heavy trucks (GVWR > 33,000 lbs) and new trailers (GVWR > 26,000 lbs). On a $170,000 new Class 8 tractor, FET adds approximately $20,400 to the purchase price — and that increased base is what your loan amount and monthly payment are calculated on. Used trucks are FET-exempt. FET does not apply to truck repairs, parts, or services.
Bonus depreciation allows businesses to deduct a percentage of the cost of qualifying property (including commercial trucks) in the first year, beyond Section 179. For 2026, bonus depreciation is 60% (down from 100% in 2022). Combined with Section 179, a business can potentially deduct a very large portion of a new truck's cost in year one. The phase-down schedule: 40% in 2027, 20% in 2028, 0% in 2029 (under current law).
In a sale-leaseback, a fleet owner sells its trucks to a finance company and simultaneously leases them back, converting equity in the trucks into immediate working capital while retaining use of the vehicles. This is used by fleets needing liquidity without selling operational capacity. Terms typically mirror the remaining useful life of the equipment. Tax treatment depends on the specific structure — consult a CPA.