If you're considering a water jet investment or already have a project underway, Section 179 may make the potential return even more attractive. This federal accelerated-depreciation provision can improve the first-year economics of qualifying equipment purchases. Read on to learn about how it works, important timing requirements, and what questions to discuss with your tax professional.
A quick note before we begin: The financial and tax information in this article is provided for educational and illustrative purposes only and should not be construed as tax advice. We know water jets, not tax codes. Consult a qualified tax professional about your specific circumstances.
Section 179 Changes When You Can Take Depreciation
Section 179 encourages small to medium-sized businesses to invest in themselves by buying new or used capital equipment. It lets businesses deduct all depreciation in the first year, rather than over a multi-year period, generally improving cash flow.
The One Big Beautiful Bill Act roughly doubled the previous $1.25M deduction cap, made the higher limits permanent, and indexed them to inflation. This means the depreciation benefit is no longer a provision that might vanish next year so you can plan around it. The following table reflects the new amounts, as detailed in the IRS’s January 2026 guidance.
|
Item |
2026 amount |
|
Maximum Section 179 deduction |
$2,560,000 |
|
Phase-out begins at total equipment spend of |
$4,090,000 |
|
Fully phased out at |
$6,650,000 |
|
Bonus depreciation |
100% |
Bonus depreciation is permanent for property acquired after Jan. 19, 2025.
You still must pay for, finance, or lease the equipment. Still, you can deduct a large portion of the total qualified equipment’s cost in the form of accelerated depreciation in the first year rather than spreading it over multi-year depreciation schedules.
Note: Section 179 doesn’t change how much depreciation you take; it changes when you can take it.
What Equipment Can Qualify?
When it comes to water jet systems, the following equipment generally meets Section 179 requirements:
- New and used equipment.
- Machinery, motion systems, pumps, tooling, and in many cases the software that runs them.
Another requirement is that the equipment must be used more than 50% for business purposes to qualify.
The In Service Date Matters
The equipment must be placed in service during the tax year to qualify under Section 179. For example, if you place an order for a Jet Edge system in November 2026, but have delivery and installation in February 2027, the depreciation benefit would come in 2027, not 2026.
The depreciation benefit is tied to the year you put the equipment into service, and generally doesn't matter when you place a system in service within the year. In fact, it can result in a stronger cash position to install the system later in the year. More on that later.
Note: Jet Edge builds both its motion systems and its ultra-high-pressure intensifier pumps in-house in St. Michael, Minnesota. Domestic manufacturing shortens lead times, which matters for a placed-in-service deadline.
Financed Equipment Can Qualify
Section 179 can be especially beneficial to companies that routinely finance their equipment investments rather than buying them outright. Here’s how two common financing approaches are viewed under Section 179:
Financed Equipment Qualifies as Long as You're the Tax Owner.
You can deduct the full investment price up to the maximum allowed in Section 179 while paying the note over several years.
Leases Can Qualify
Finance leases (including $1-buyout structures) often qualify; true operating leases generally don't. Your tax professional can advise you if your preferred leasing solution qualifies.
A Theoretical Example
Let’s look at a theoretical example involving $500,000 of Section 179-qualified water jet costs to show the financial impact of Section 179.
Please note that in all financing examples, actual results depend on your company's entity structure, effective rate, taxable income, and state conformity.
|
|
Amount |
|
Section 179 Qualifying Costs* |
$500,000 |
|
Section 179 deduction (full price) |
$500,000 |
|
Assumed effective tax rate |
24% |
|
Estimated first-year tax savings |
$120,000 |
|
Effective net cost of the system |
$380,000 |
*Qualifying costs may include the equipment purchase price and certain expenses required to place it in service, such as freight, installation, and testing. Ask your tax professional which project costs you can include in the equipment’s tax basis. IRS Publication 551
Next, let’s look at how Section 179 plays out in terms of cash flow. Continuing with our theoretical example, we assume the $500,000 is financed over 84 months. Under those assumptions, the cash flow works as follows:
- Monthly payment on the $500,000 system: ~$8,045
- First twelve payments: ~$96,534
- Section 179 savings at 24%: $120,000
- Net position after year one: ~$23,466 ahead
- You place the water jet in service in September
- The first payment in October = three payments (~$24,135) against the full $120,000 deduction.
- Net position: roughly $95,865 ahead in year one.
It’s unlikely a project will be placed in service in January, which the preceding example assumes. However, starting later in a tax year can help the year-end net position. Here’s how:
The deduction doesn't prorate. The payments do. Buying mid-year is the stronger cash position, not the weaker one, a fact that may seem counterintuitive at first glance.
This Tax Treatment May Help You Bring Your Project to Life Sooner
You receive maximum financial benefit from Section 179 when the return on investment (ROI) of your project meets or comes very close to your internal financial performance requirements. Adding the cash-flow boost from the deduction can make the difference between moving forward now and waiting.
While Section 179 can push a project over the hump on financial thresholds, work with your financing and tax pros to adjust the ROI analysis and ensure the project remains viable after taking the Section 179 benefits. Using the tax benefit to “force fit” the project may result in poor returns later. In short, Section 179 does not make a water jet more productive. But it may allow you to realize more of the investment’s financial benefit sooner.
Talk to Your Tax Professional
Used in the right situations, the potential benefit of Section 179 is significant enough to bring in your financial and tax professionals to make a thorough analysis. When you talk to your tax professional, here are several questions to start the conversation:
- What do they think of Section 179?
- How do they see it helping your project?
- Does your state have different requirements that can help or hurt your project?
- How does the provision for bonus depreciation come into play?
- Does their preferred financing method qualify for Section 179?
- What do they see as pros and cons of Section 179?
- What information do they need about your project to make an accurate assessment?
The second portion of this post has additional information tailored to tax and finance professionals. Feel free to share it with yours if they're unfamiliar with the provisions of Section 179. Just remind them that it is for illustrative purposes only and does not constitute tax advice.
Talk To Jet Edge
Considering the Section 179 opportunity? We encourage you to talk to a Jet Edge representative about system configurations, lead times and when you can realistically expect to place your water jet in service. Like we said, we know water jets and how we can help meet Section 179 in-service requirements. Your finance and tax professionals will handle the tax portion.
Call us at 1-800-538-3343 (1-763-497-8700 internationally) or complete our online form today. Our skilled and experienced application engineers are here to help.
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