The equipment lease vs. buy decision compares the net present value of leasing payments against the after-tax cost of purchasing — accounting for Section 179 deductions, depreciation, and financing interest. This calculator shows your true 5-year cost for both options so you pick the path that minimizes cash outflow, not just the one with the lowest monthly payment.
Equipment Lease vs. Buy Calculator
Compare the true after-tax cost of leasing vs financing equipment using the 2026 Section 179 limits.
2026 Equipment Finance: Lease vs. Buy
Calculate your true after-tax cost utilizing the 2026 Section 179 deduction limit of $2.56M.
Equipment Details
Buy Option (Loan)
Lease Option
Year 1 Section 179 Savings
If you buy the equipment, you can deduct up to $2,560,000 immediately in 2026. This translates to an immediate tax savings of:
Total True Cost to Own
After tax deductions
Monthly Loan Payment:$3,077
Total True Cost to Lease
After operating expense deductions
Monthly Lease Payment:$3,100
Cumulative Cash Flow Comparison
Lower cumulative cost is better. Buying often has a lower initial cost due to the massive Year 1 Section 179 deduction.
How the Lease vs. Buy Comparison Works
The core comparison is Net After-Tax Cost: the total cash you actually spend after tax deductions are applied. Buying benefits from Section 179 + Bonus Depreciation front-loading; leasing benefits from 100% deductible operating expense payments.
| Factor | Buying | Leasing |
|---|---|---|
| 2026 Tax Benefit | Sec 179 + 100% Bonus Depr. | 100% deductible payments |
| Balance Sheet | Asset appears (affects DTI) | Off-balance-sheet (operating lease) |
| End of Term | Own the asset (resale value) | Return or upgrade to newer model |
Buying wins for profitable businesses with large tax bills, because the immediate Section 179 deduction creates a tax savings that effectively subsidizes the purchase price. Leasing wins for cash-constrained operations or businesses in rapidly advancing equipment categories (medical, tech).
⚠️ Expert Pro-Tip
Never compare a lease payment to a loan payment — compare total after-tax cash outlays. A $1,500/month lease looks cheaper than a $2,200/month loan payment. But if you’re in the 35% tax bracket and financed a $150,000 excavator with Section 179, your Year 1 tax savings of $52,500 effectively drops the real cost of that loan to $139,000. Over 5 years, buying often wins by 15–25%.
Leasing vs. Buying Equipment in 2026: The Section 179 Guide
The 2026 Section 179 Advantage
If your business is profitable and looking to acquire heavy machinery, medical devices, or fleet vehicles, 2026 is a massive year for equipment financing rates and tax benefits. The Section 179 deduction limit is set at a generous $2,560,000.
This means if you buy or finance qualifying equipment, you can deduct the entire purchase price from your gross income in the very first year. Furthermore, with 100% bonus depreciation reinstated for 2026, the tax advantages of buying over leasing have never been stronger for high-revenue operations. Our Section 179 calculator helps you visualize these immediate cash-flow benefits.
Benefits of Buying (Financing)
- Ownership: At the end of the loan term, you own the asset outright.
- Massive Tax Write-offs: Utilize the $2.56M Section 179 limit to wipe out your tax liability.
- Equity Building: Heavy machinery and medical equipment retain significant resale value.
Heavy Machinery Leasing Benefits
Despite the massive tax advantages of purchasing, leasing still holds strong benefits for certain business models. If your company prefers to keep debt off the balance sheet, an operating lease is a great choice.
- 100% Deductible Payments: Your monthly lease payments are entirely deductible as operating expenses.
- No Down Payment: Leases often require little to zero money down, preserving your working capital.
- Easy Upgrades: Avoid obsolescence. At the end of the lease, simply return the equipment and upgrade to the latest model—crucial for rapidly advancing medical equipment.
How to choose?
The decision ultimately comes down to your current cash flow and tax burden. If you expect a massive tax bill this year, buying and financing the equipment allows you to take the Section 179 deduction immediately, slashing your tax bill while spreading the payments out over 5-7 years. If you want a lower monthly payment and predictable expenses without the burden of long-term ownership, leasing is the way to go.