Should a contractor buy equipment just to reduce tax?

Begin with operational need and liquidity. Model purchase, finance and defer alternatives before accepting a tax-led recommendation.

Current federal guidance provides 100% additional first-year depreciation for qualifying property acquired after 19 January 2025, subject to the applicable conditions. Eligibility and the placed-in-service facts still require review; a purchase order alone is not a complete tax analysis. IRS — IR-2026-06: Additional first-year depreciation guidance, 14 January 2026

In an illustrative cash purchase of $100,000 with a $30,000 tax cash benefit three months later, cash initially falls by $100,000. The later benefit cannot finance payroll in the intervening period. Run a downside case with customer receipts delayed and tax benefits delayed; check lender and surety implications with the people responsible for those relationships.