You Don’t Need That $75K Truck to “Save on Taxes”
Every December, I watch the same movie play out.
A contractor calls me up. Business was good this year, really good. Maybe they landed that big commercial job. Maybe they finally got paid on three projects that had been dragging. Whatever it is, they made money.
Then their CPA calls with the tax estimate. Let’s say it’s $80,000. Anger sets in.
“I’m not giving the government eighty grand,” they tell me. “I need to buy something. Maybe that new truck I’ve been looking at. Or that excavator. Write it off, right?”
Next thing I know, they’re at the dealership on December 28th, signing papers on a $75,000 pickup they don’t actually need.
Then January comes.
Payroll’s due. The supplier wants payment on that material order. Suddenly, the checking account’s looking thin. Real thin. And that shiny new truck is sitting in the driveway while they’re scrambling to figure out how to make it through the month.
Here’s the truth nobody wants to hear: If you have to spend a dollar to save 40 cents, you’re not saving money. You’re just wasting money.
It’s late October right now. That means you’ve still got time to plan smart instead of panic in December. And this year, with the new tax law that just passed, you actually have more flexibility than ever.
The Math That Sounds Good Until You Think About It
Let’s say you go out and buy that $100,000 piece of equipment in December.
You’re in a 40% tax bracket (federal and state combined—pretty normal for a successful contractor). So that purchase saves you $40,000 in taxes. Your CPA shows you the numbers. Looks great on paper.
But here’s what actually happened to your bank account:
You spent: $100,000
You saved on taxes: $40,000
You’re still out $60,000 in real cash
That $60,000 is money you can’t use for payroll. Can’t use for materials. Can’t use when that big customer pays you 60 days late instead of 30. Can’t use when you need to cover an unexpected cost on a job.
Now, if you were planning to buy that equipment anyway—if you’ve got three jobs lined up in January that need it—then great. The timing works, and the tax benefit is a bonus.
But if you’re buying it just because “I need a write-off,” you’re making a mistake.
The trap here is emotional. Nobody likes paying taxes. I get it. When you see that $80,000 tax bill, your first instinct is to make it smaller. But spending money you don’t need to spend doesn’t make you richer. It makes you broker.
Your CPA can help you save on taxes. But they can’t help you if you’ve spent all your cash by December 31st.
What Changed & Why It’s Actually Simple Now
First, let me explain what we’re talking about. “Bonus depreciation” is a tax rule that lets you write off the full cost of business equipment in the first year instead of spreading it out over 5, 7, or 10 years.
A few years ago, you could write off 100% immediately. But then it started phasing down—it dropped to 80% in 2023, was supposed to go to 60% in 2024, then 40% in 2025, 20% in 2026, and eventually zero in 2027. That phase-down created pressure: “If I don’t buy it this year, I’ll lose part of the deduction next year.” A lot of contractors made rushed decisions because of that countdown.
In July, Congress made bonus depreciation 100% again—permanently. That means no more deadlines, no more phase-downs, no reason to panic-buy in December. They also raised the Section 179 limit to $2.5 million (it was $1.22 million before).
What does this actually mean for you?
The deduction will be exactly the same whether you buy something in December 2025, March 2026, or November 2027. There’s no “beat the deadline” pressure. There’s no “use it or lose it” situation.
Which means you should make equipment decisions based on your business needs and your cash flow—not based on the calendar.
If you need an excavator in January for three projects you’ve got lined up, buy it when it makes sense for those projects. If the tax benefit happens to land this year or next year, who cares? You needed it anyway.
But if you don’t have a clear business need for equipment, there’s zero tax reason to rush out and buy it in December.
The rules are working in your favor now. Don’t mess it up by making emotional decisions.
So what should you do instead? Let’s talk about how to make smart, profitable choices with your cash.
How to Think About Equipment Purchases
Whether it’s December or any other time of year, here’s how to think about buying equipment.
The “Zero Tax Benefit” Test
Before you buy anything—and I mean anything—ask yourself this question:
“If this purchase saved me zero dollars in taxes, would I still buy it?”
If the answer is no, walk away. Seriously. Just walk away.
If the answer is yes, then dig deeper with these questions:
What’s the Actual Return on Investment?
That $75,000 excavator saves you $30,000 in taxes at a 40% rate. Fine. But will it generate $75,000 or more in additional revenue or cost savings?
Be specific. “I think I can get more jobs” doesn’t count.
“I’ve got three projects starting in February that will each save me $15,000 in rental costs” counts.
Do the math. Write it down. Make yourself prove it.
Have You Run the Rent vs. Buy Numbers?
Maybe you’ve got two jobs coming up that need an excavator. Renting one for those jobs might cost you $5,000 total. Buying one costs you $75,000.
Yeah, you get the tax deduction. But you’re still out $45,000 after the tax savings. Could you rent for the next nine jobs and still come out ahead? Probably.
Run the actual numbers over the actual time period you’ll need it.
Stop the Year-End Spending Trap
Get our free guide that breaks down how to save on taxes without burning your cash on trucks and tools.
A Real Example (Don’t Be This Guy)
Let me tell you about Joe. I’m changing his name, but this actually happened.
Joe runs a small excavation company. End of 2024, he had a good year. Made about $300,000 profit. Tax bill was coming in around $100,000. He decided he needed to buy an $80,000 mini excavator to “save on taxes.”
Saved him $32,000 on the tax bill. Felt good in December.
By spring, he hadn’t used it once. And when one of his big customers paid him late, he didn’t have the cash to make payroll on time. Had to delay paying his subs, which almost cost him his crew.
Here’s the kicker: When he finally did need an excavator for two jobs, he could have rented one for about $3,000 total.
He spent $80,000 to save $32,000 on a problem he could have solved for $3,000.
Don’t be Joe.
Look at Your Actual Pipeline
Pull out your project list. What have you got signed for the next three months?
What equipment will you actually use on those jobs? Not what you might use. Not what would be nice to have. What will you definitely need?
If you’ve got signed contracts for projects starting in January that require a piece of equipment, and you were going to buy it anyway, and you’ve got the cash—fine. Buy it in December if that timing works better.
But if you’re inventing reasons to spend money just because it’s December, stop.
The deduction will be exactly the same in January. Or June. Or next December. There’s no rush.
Call Your Bonding Company First
If you’ve got a bonding requirement—or think you’ll need bonding for future work—make this phone call before you sign anything over $50,000.
Your bonding company looks at your financial statements to decide how much work they’ll bond. They care about:
Working capital: Your current assets minus your current liabilities. They want to see this number stay healthy.
Cash reserves: They want to see money in the bank for emergencies.
Debt: If you’re financing equipment, those monthly payments reduce your bonding capacity.
When you spend $75,000 in cash in December, your working capital drops, your cash reserves drop, and if you financed it, your debt goes up. All three can hurt your bonding capacity.
So before you sign anything big, call your bonding agent and ask:
“Hey, I’m thinking about buying this excavator for $75,000. How does that affect my bonding capacity?”
They might say, “You’re fine. You’ve got plenty of room.”
Or they might say, “If you spend that cash right now, you’ll drop below the working capital we need to see for your next bond. Can you wait 60 days?”
That second answer just saved you from a massive mistake.
What bonding companies hate is seeing a balance sheet that looks great in November and terrible in January because you went on a December shopping spree.
One phone call can save you from a mistake that costs you your next bonding line.
Other Smart Year-End Moves
Equipment purchases get all the attention this time of year, but there are other things you should be thinking about that actually make more sense.
Fund Your Retirement First
Want to know the best tax move most contractors never make?
Max out your retirement contributions.
SEP-IRA. Solo 401(k). Profit-sharing plan. Whatever structure your CPA recommends.
Here’s why this is genius:
It still reduces your taxable income (you get the deduction)
But the money doesn’t leave your world—it’s your money, just in a retirement account
You’re building your personal financial safety net
You can make these contributions up until your tax filing deadline, including extensions
So instead of spending $75,000 on a truck to save $30,000 in taxes, you could put $75,000 into your retirement account, save the same $30,000 in taxes, and still have $75,000—it’s just in your retirement account instead of a dealer’s pocket.
This is spending that builds wealth, not spending that depletes cash.
Most contractors don’t do this because it’s not as exciting as buying equipment. But twenty years from now, when you’re thinking about retirement, you’ll be really glad you did.
Meet with Your CPA Now (And Get Your Numbers Ready)
Not in December. Not on December 28th when they’re slammed and stressed. Now.
Block two hours in the next two weeks. Pull your year-to-date profit and loss statement and your 2026 Q1 project pipeline. Have them project what your 2025 tax liability looks like.
When you’ve got two months to plan, you’ve got options. When you’ve got two days, you’ve got panic.
Figure out what equipment you’ll actually need for actual jobs. Write it down. Make yourself articulate the business case. “I might need it someday” is not a business case.
The more specific you are now, the better decisions you’ll make in the next two months.
The Bottom Line
The tax rules are better and more stable than they’ve been in years. You can take 100% bonus depreciation whenever you need to. Section 179 limits are way higher. There’s no deadline pressure. No “use it or lose it” situation.
So make smart business decisions. The tax benefits will follow.
Don’t let the tail wag the dog. Don’t buy equipment you don’t need because you’re afraid of a tax bill.
Plan in October. Make smart choices in November. Keep your cash working for you, not sitting in a dealer’s lot.
Your January self—and your bank account—will thank you.
Three Things to Do This Week
Schedule your CPA meeting. Block two hours in the next two weeks. Get it on the calendar now.
Pull your year-to-date P&L and your 2026 Q1 project list. Match your spending to actual business needs.
If you’re considering any purchase over $50,000, call your bonding advisor first. One phone call can save you from a costly mistake.
Remember: The question isn’t when to buy. It’s whether to buy at all.
Next week, we’ll talk about something else that’s quietly eating into your profits—rising insurance costs and the “nuclear verdicts” behind them. You need to know what’s coming.
Thanks for reading Dragonfly Insurance! Subscribe for free to receive new posts and support my work.
Stay Informed
Sign up with your email address to receive news and updates.
