Business tax filing deadlines are just around the corner,and how you plan for the season can financially impact your business. Recentfederal tax law changes under the “One Big Beautiful Bill Act” have increasedequipment write-offs and pass-through deductions, updated depreciation rules,and changed expensing and reporting thresholds, allowing contractors to reducetaxable income.

For green industry contractors, these updates can make ameaningful difference in cash flow. Rising labor costs, fuel prices, andmaterials have tightened margins, making smart tax planning more important thanever.

Traditionally, tax season is seen as a once-a-year chore.However, working with a tax expert to understand changing laws can turn necessarypurchases into strategic investments that support business growth and meetcompliance requirements. The key is knowing which deductions apply to yourbusiness and how to use them without creating unnecessary audit risk.

Here’s a look at a significant change to deductions anddepreciation limits that you should be asking your accountant about for the2025 and 2026 tax season.

Return Section 179 100% Deduction

Under the OBBBA, businesses can once again write offequipment investments in full for the year they were purchased. That meansbusinesses can deduct the full purchase price of qualifying property—includingtools, machinery, and equipment—the year they are first used in the businessinstead of taking deductions over several years under Section 179. This appliesto new and used tangible property with a depreciable life.

Work with a CPA to confirm which tools and equipment fallunder Section 179, but these are examples of tools that may qualify: :

• Fertilizer and seed spreaders
• Sprayers and blowers
• Masonry tools and blades
• Tools from wheelbarrows to shovels, rakes, ladders, and more
• Electrical testers
• Sports field rollers, spreaders, and sprayers
• Edgers
• Commercial mowers and zero-turn mowers
• String trimmers and edgers
• Aerators and dethatchers
• Dump trailers and enclosed trailers
• Sod cutters and power rakes
• Skid steers and compact excavators
• Design software

One important requirement is that the equipment you purchasemust be placed in service during the tax year it is deducted not just paid for.That means the tool or machine must be ready and available for use in yourbusiness operations before year-end to qualify for the deduction.

Contractors spend thousands on equipment each year, and thisis an opportunity to accelerate deductions and reduce taxable income freeing upcash flow for other areas of growth. The immediate 100% write-off frees up more cash for day-to-day operationsand future growth and covers much of the equipment your business needs.

Expanded Section 179 Expensing Limits

In addition to allowing equipment expenses to be deducted,Section 179 also defines the threshold limits for deductions. Not only does thededuction now allow a 100% write-off for tool and equipment purchases, but the threshold has also increased from $1.25 million to $2.25million beginning with the 2025 tax season.

This higher cap provides more room to invest in fleetupgrades or large equipment purchases without losing the benefit of immediateexpensing.

Do Your Due Diligence

Tax laws provide powerful tools to lower the incomethreshold at which you pay taxes, protecting your cash flow. However, the IRSknows business owners lean into—sometimes stretch qualifying deductions.Section 179, in particular, can catch the IRS's attention.

Hire a reputable accountant experienced in business tax lawto guide you through the nuances of the tax law. Keep good records, includingthorough mileage logs, if you’re claiming vehicle deductions, and be diligentabout using equipment purchased and deducted for business use.

Other ways to reduce an audit include:

• Limiting Section 179 use in down business years.
• Reporting consistently across forms, owners, and the business.
• Avoiding large vehicle deductions paired with poorly maintained mileage logs.

Treat Taxes as a Tool

Tax laws are just one component of year-round strategicbusiness planning, but they are a useful tool for keeping more cash in thebusiness. Working with a certified public accountant who is familiar with thegreen industry helps your business avoid costly missteps, from missedtax-reduction opportunities to compliance issues and incorrect paperworkfiling.

When approached proactively, tax planning becomes less aboutreacting to deadlines and more about supporting long-term stability.

Today’s tax decisions shape your business growth by allowingyou to maximize investments in the tools, supplies, and labor you need tooperate.