AI agents for SMEs - now running in production. See how the pilot works →

Equipment Lease vs Buy Calculator 2026

Lease or buy equipment? Present value of after-tax cost under each — loan payments, §179 / 100% bonus depreciation, resale value, lease payments, buyout and the implied lease rate — plus year-1 cash flow and the break-even lease payment. IRS 2026 limits confirmed.

✅ Figures verified. 2026 §179 expensing limit ($2,560,000, phasing out above $4,090,000) and 100% bonus depreciation for property acquired after 19 January 2025 confirmed in IRS Publication 946 on 8 October 2026.
$0
Buy — loan payment—
Buy — year-1 tax deduction—
Buy — present value of after-tax cost—
Lease — total payments—
Lease — implied interest rate—
Lease — present value of after-tax cost—
Cheaper option—
Cash flow in year 1 (after tax)—
Break-even lease payment—

In short

Buying equipment usually wins in 2026 for profitable businesses because the entire price can be deducted in year one under 100% bonus depreciation or the $2,560,000 §179 limit, while lease payments are deductible only as paid; compare the present value of after-tax cash flows, including the tax saving on depreciation, the resale value and the lease's implied interest rate (often 8–20%). Leasing wins when cash is tight, there is no profit to shield or the equipment becomes obsolete quickly.

Who this is for: US businesses acquiring vehicles, machinery or technology in 2026.

Not tax or legal advice. Simplified: MACRS conventions, state non-conformity, sales tax, maintenance and AMT are not modelled. Compare actual quotes.
Ad space — insert AdSense unit here after approval

Lease or buy equipment?

  • Buying: down payment plus loan payments; interest and depreciation are deductible — and under the 2025 law the whole price can be expensed in year 1 (§179 up to $2,560,000, or 100% bonus depreciation with no limit). You own the resale value.
  • Leasing: lower upfront cash, payments deductible as paid, flexibility to upgrade; but you pay the lessor's implied rate (often 8–20%) and own nothing unless you exercise the buyout.
  • Compare on present value: discount each year's after-tax cash flows at your cost of capital, including the tax saving on depreciation and the after-tax resale value — that is what this calculator does.
  • Year-1 cash matters as much as total cost for growing businesses: a §179 write-off can make buying cheaper in year 1 even with a down payment.
  • $1 buyout vs FMV lease: a $1 buyout is a loan in disguise (you depreciate the asset); an FMV lease is a true rental.

See also: Cost Segregation Calculator 2026, Car Lease vs Buy Calculator.

Sources: IRS Publication 946; IRS — Section 179 deduction. Checked 8 October 2026.

Assumptions

  • Buy: down payment + loan payments − tax savings on interest and depreciation (full price in year 1 if expensed, else straight-line) − after-tax resale, discounted at the entered rate.
  • Lease: payments × (1 − tax rate) each year + buyout at the end, discounted.
  • Implied lease rate solved from payments and buyout against the price; break-even lease payment solved for equal present value.

Worked example

$150,000 machine: buy with 10% down at 8.5% over 5 years, §179 expensing, $40,000 resale; or lease at $2,950 a month for 5 years with a $15,000 buyout; 30% tax, 8% discount rate

Loan payment $2,770 a month on $135,000. Expensing the full $150,000 saves $45,000 of tax in year 1, and the $40,000 resale (taxed as recapture) is worth $28,000 after tax. Present value of buying: about $79,100. Lease: $192,000 of payments plus the buyout (implied rate about 9.45%) deductible as paid, PV about $109,100. Buying wins by roughly $30,100. Leasing would only beat buying below about $2,054 a month. Year-1 cash: buying is roughly break-even after the $45,000 write-off and interest deduction offset the down payment and loan payments, versus −$24,780 for the lease.

Frequently asked questions

Is it better to lease or buy equipment for taxes?

Buying usually wins in 2026 because 100% bonus depreciation and §179 let you deduct the entire cost in year 1; lease payments are only deductible as you pay them.

What is the Section 179 limit for 2026?

$2,560,000 of qualifying equipment, phasing out dollar-for-dollar above $4,090,000 of purchases — and bonus depreciation covers anything beyond that.

What interest rate is hidden in a lease?

Solve for the rate that makes the payments plus buyout equal the price — commonly 8–20% for equipment leases, higher for weaker credit.

What if my business has no profit?

Then the write-off has no immediate value (it carries forward), and leasing or a longer loan may be better for cash flow.

Does Section 179 apply to vehicles?

Yes, with limits: heavy SUVs and trucks over 6,000 lb GVWR get a larger first-year amount; passenger cars are capped by luxury-auto limits.

What is a TRAC lease?

A terminal rental adjustment clause lease for vehicles — you share in the resale gain or loss at the end; treated as a true lease for tax.

Ad space — insert AdSense unit here after approval

Related calculators

United States — same topic

RMD Calculator 2026 — Required Minimum DistributionYour 2026 required minimum distribution from the IRS Uniform Lifetime Table, the percentage of the balance, deadline, 25% penalty, tax estimate, starting age by birth year and a 15-year projection. Table confirmed against 26 CFR 1.401(a)(9)-9.Roth vs Traditional IRA Calculator 2026Roth vs traditional IRA on equal pre-tax dollars for 2026 — balance at retirement for each, the invested tax saving, the break-even retirement tax rate and a verdict, with the $7,500 / $8,600 limits confirmed on irs.gov.Child Tax Credit Calculator 2026Your 2026 child tax credit: $2,200 per child under 17 and $500 for other dependants, the refundable portion (up to $1,700, 15% of earned income over $2,500), the $200,000 / $400,000 phase-out and how much actually reduces your tax — figures confirmed against Rev. Proc. 2025-32.

Same topic in other countries

Pakistan Car Loan / EMI CalculatorCalculate your monthly car loan installment in Pakistan, for conventional bank financing or Islamic (profit-rate) financing.UAE Car Loan Calculator — Flat vs Reducing RateUAE car loan calculator: monthly instalment, total interest and the real APR of a flat-rate offer compared with reducing balance — for Dubai and Abu Dhabi bank car loans.Gold Zakat Calculator (Per Tola) — PakistanWork out zakat due on gold held in tola or grams, using the 7.5-tola nisab threshold and today's gold price.

See all United States calculators → · All free online calculators

Written by the Swift IT Sols editorial team · SWIFT SOLSRules sourced from the official authorities named on this page and last checked How we source and check calculators

Found an error? Report it — tell us the inputs, the result you got, what you expected and the rule or source. Confirmed corrections are published within a week.

Start here

Ready to build your next digital solution?

Send the brief and you get a scoped response with approach, milestones and a fixed price range. Not a sales call.

Book consultation Request proposal Or see one running first
1

A 30-minute call with the engineer who would run your project

Within 2 business days
2

A written scope: approach, module breakdown, milestones, fixed price range

Within 5 business days
3

You decide. No retainer, no obligation, and the scope document is yours to keep either way

Your timeline

Send your brief

Three fields to start. Add project details if you have them.

A real person replies, usually within one business day. Your details are stored on this site only and are never sold or shared.

Book a consultation