My friend says buy a $70,000 truck because it's a write-off. Is it free?

The question

An illustrative letter.

The answer

My dear, congratulations on your best year. That is something to be proud of. And your friend is right about one thing: a truck used for your business can usually be deducted. Where he goes wrong is the word "free." A deduction is a discount on your taxes, not a refund of the price, and confusing the two is one of the most common and costly mistakes I have seen business owners make.

What does a write-off actually save?

A deduction lowers the income you are taxed on. The tax you save is the deduction multiplied by your tax rate. If your federal income tax rate is 22 or 24 percent, and you also pay self-employment tax for Social Security and Medicare on your business profit, your combined rate on the last dollars you earn might be somewhere around a quarter to a third. Texas has no state income tax, so there is no state savings to add.

So on a $70,000 truck, at a combined rate of 25 percent, you save about $17,500 in tax. You still spend $52,500 of your own money. Even at a rate of a third, the truck costs you more than $46,000. Spending $70,000 to save $17,500 only makes sense if you needed the truck anyway.

Can I really deduct the whole truck this year?

Often, yes, under today's rules. Section 179 lets businesses deduct the cost of qualifying equipment in the year it is put to use, up to $2.56 million in 2026, and bonus depreciation of 100 percent is now permanent for qualifying property acquired after January 19, 2025. But some conditions matter a great deal:

• It must be in service by December 31. Buying the truck is not enough. It needs to be delivered and working for the business before the year ends.
• It must be used mostly for business. For a vehicle, business use generally has to be more than 50 percent to take the Section 179 deduction, and you can deduct only the business share.
• Personal use can claw it back. If business use later falls to 50 percent or less, part of the deduction can be added back to your income.
• Selling it brings tax later. When you sell a vehicle you deducted, the gain up to the amount you wrote off is generally taxed as ordinary income. The deduction moves tax into the future; it does not erase it.

Is a big deduction now always a good thing?

Not always. If you deduct the whole truck this year, there is nothing left to deduct in later years, when your income might be higher. A CPA can tell you whether spreading the deduction out would save more overall. And if you finance the truck, you get the deduction now while paying interest for years.

When does buying the truck make sense?

When the business genuinely requires it. If your old pickup is failing, costing you jobs or repairs, or too small for the equipment you now haul, a truck can be a sound investment that helps you earn more. In that case, the tax break is a welcome bonus on a decision you would make anyway. Ask yourself: would I buy this truck if there were no tax deduction? If the answer is yes, the timing can follow the tax rules. If the answer is no, the deduction is not a reason to buy it.

You might also compare a reliable used truck, which may do the same work at a much lower price, and can still qualify for the deduction if it is new to your business.

What else could a strong year do?

If you want to lower your tax bill and keep the money, a retirement contribution may be the better write-off. As a self-employed owner, you can open a plan such as a SEP IRA or a solo 401(k) if you have no employees, and contributions are generally deductible. For 2026, total contributions can reach up to $72,000, depending on your profit and the plan. Unlike a truck, that money stays yours and grows for your future.

A good year is also the time to build a cash reserve for slow seasons, and to pay down any high-interest business debt. A landscaping business has quiet months, and money set aside now carries you through them.

What should I do before December?

Sit down with your CPA in November, before the year-end rush. Ask what you will owe, what a truck purchase would save, what a retirement contribution would save, and how each affects your cash. Then decide with the full picture in front of you.

You built a business strong enough to have this problem. Spend its profits on what makes it stronger, and let the tax savings follow.

One thing to do this week

Book a meeting with your CPA for November, and ask them to compare a truck purchase with a retirement contribution for this year.