Yes, a business can finance qualifying equipment with a Bitcoin-backed loan and still claim the Section 179 deduction. For tax years beginning in 2026, Section 179 lets a business deduct up to $2,560,000 of qualifying equipment in the year it is placed in service, with the deduction phasing out once total purchases pass $4,090,000. The equipment must be in service by December 31, 2026 for a calendar-year business. Borrowing against Bitcoin instead of selling it lets a company fund the purchase without realizing a capital gain that would eat into the tax savings the deduction was supposed to create.
This guide covers the 2026 limits, what qualifies, why the placed-in-service rule is the deadline that actually matters, a side-by-side example of selling versus borrowing, and the risks to weigh before you pledge BTC as collateral.
SALT is not a tax advisor or accountant, and nothing in this article is tax, legal, or accounting advice. Section 179 eligibility depends on your entity type, taxable income, state rules, and how the property is used. Confirm your situation with a qualified CPA before you buy equipment or borrow.
Key Takeaways
- 2026 deduction limit: $2,560,000, with a dollar-for-dollar phase-out starting at $4,090,000 in total qualifying purchases.
- Deadline: equipment must be placed in service, not just ordered or paid for, by the end of the tax year.
- Financed equipment qualifies: you can deduct the full eligible cost even if a loan paid for it.
- Borrowing is generally not a taxable event: pledging Bitcoin as collateral does not trigger capital gains the way selling does.
- Bitcoin itself does not qualify: Section 179 covers tangible business property and certain software, not digital assets.
- The main risk is volatility: a falling BTC price raises your loan-to-value (LTV) ratio and can lead to a margin call.
What Is Section 179?
Section 179 of the Internal Revenue Code lets a business expense the cost of qualifying property in the year it is placed in service instead of depreciating it over several years. Rather than writing off a $150,000 machine a little at a time over its useful life, an eligible business can deduct the full $150,000 on its current return, subject to the annual dollar limit and a business income limit.
The deduction is elective. A business claims it on IRS Form 4562, Depreciation and Amortization, and the IRS explains the rules in detail in Publication 946. Importantly, the deduction is based on the cost of the property, not on how you paid for it. Equipment bought with cash, a bank loan, an equipment lease structured as a purchase, or a Bitcoin-backed loan is treated the same way.
The One Big Beautiful Bill Act, signed in July 2025, roughly doubled the Section 179 limits starting with 2025 tax years and made them a permanent, inflation-indexed part of the tax code. That is why the 2026 figures are so much higher than what many business owners remember from a few years ago.
2026 Section 179 Limits at a Glance
| Item | 2026 Figure | What It Means |
|---|---|---|
| Maximum deduction | $2,560,000 | The most you can expense under Section 179 this tax year. |
| Phase-out threshold | $4,090,000 | Each dollar of qualifying purchases above this reduces the deduction by one dollar. |
| Full phase-out | $6,650,000 | At this level of purchases, the Section 179 deduction is gone entirely. |
| Heavy SUV cap | $32,000 | Limit for SUVs between 6,000 and 14,000 lbs gross vehicle weight. |
| Bonus depreciation | 100% | Available for qualifying property beyond the Section 179 limit, with no dollar cap. |
| Deadline | Dec 31, 2026 | Placed-in-service date for calendar-year businesses. |
| Form | IRS Form 4562 | Filed with the business tax return to make the election. |
Two limits apply at the same time. The dollar limit above is one. The other is the business income limit: Section 179 cannot create or increase a net loss, so the deduction is capped at the taxable income from your active trade or business. Any amount you cannot use carries forward to future years.
What Equipment Qualifies for Section 179
Most tangible personal property used more than 50% for business qualifies, whether it is new or used, as long as it is new to you. Common examples include:
- Machinery, tools, and manufacturing or production equipment.
- Computers, servers, networking gear, and office furniture.
- Off-the-shelf software available to the general public.
- Business vehicles, including heavy trucks and vans, with the $32,000 cap applying to heavy SUVs.
- Bitcoin mining hardware such as ASIC miners, power distribution units, and cooling equipment used in a mining business.
- Certain improvements to nonresidential buildings, including roofs, HVAC, fire protection and alarm systems, and security systems.
What does not qualify: land, most buildings and structural components outside the improvements listed above, property used 50% or less for business, property bought from a related party, and intangible assets. That last category matters here. Bitcoin and other digital assets are not Section 179 property, so buying BTC for your treasury does not generate a deduction, even though buying the mining rigs that earn it can.
The Placed-in-Service Rule: Why December 31 Is the Real Deadline
The most common Section 179 mistake is treating the purchase date as the deadline. It is not. Property is placed in service when it is ready and available for its intended use in your business. A machine that is paid for on December 20 but still sitting in a freight depot on January 3 counts toward next year, not this one.
Working backward from December 31, the realistic timeline usually looks like this:
- Delivery and installation. Large equipment, vehicles, and mining hardware can take weeks to ship, especially in the fourth quarter when demand spikes.
- Vendor lead time. Many suppliers need a deposit or full payment before they release an order.
- Funding. Whatever source pays for the purchase has to settle before the vendor will ship.
- Planning. Your CPA needs enough time to estimate taxable income and confirm the deduction will actually be usable.
For most businesses, that means decisions made in October and early November have the best chance of landing inside the tax year. Funding speed is one of the few variables you control, and it is one of the practical reasons some owners look at collateral-based credit instead of a traditional bank loan with a longer underwriting process.
Selling Bitcoin vs. Borrowing Against It: A Side-by-Side Example
Consider a profitable C corporation that holds Bitcoin on its balance sheet and needs $200,000 for qualifying equipment before year end. The company bought the BTC it would sell for $60,000, so selling $200,000 worth would realize a $140,000 gain. The example uses the 21% federal corporate rate, ignores state taxes, and assumes enough taxable income to use the full deduction.
| Sell $200,000 of BTC | Borrow $200,000 Against BTC | |
|---|---|---|
| Cash for equipment | $200,000 | $200,000 |
| Capital gain realized | $140,000 | $0 |
| Federal tax on the gain (21%) | $29,400 | $0 |
| Section 179 tax savings (21% of $200,000) | $42,000 | $42,000 |
| Interest cost (1-year, 8.75% APR, interest-only) | $0 | About $17,500 before tax |
| Interest cost after a 21% deduction, if deductible | $0 | About $13,825 |
| Net first-year tax benefit after costs | About $12,600 | About $28,175 |
| Bitcoin position | Reduced by $200,000 | Kept, pledged as collateral |
| Price risk | None on the sold BTC | Margin call risk if BTC falls |
In this illustration, selling turns a $42,000 deduction into roughly $12,600 of net benefit, because a large share of the savings goes straight back out as tax on the gain. Borrowing keeps more of the deduction and keeps the company’s Bitcoin exposure intact. The $17,500 interest figure assumes a 50% LTV, one-year loan at 8.75% APR with interest-only payments, based on SALT’s published rates. At 50% LTV, the company would pledge roughly $400,000 of BTC.
Be clear about what this comparison does not say. Borrowing defers the capital gain rather than erasing it, so the tax comes due whenever the company eventually sells. The loan principal still has to be repaid. Interest deductibility depends on how the proceeds are used and, for larger businesses, the business interest limitation under Section 163(j). And if Bitcoin falls sharply, the company that sold would have come out ahead. Our guide to whether Bitcoin loan interest is tax deductible and our breakdown of borrowing versus selling Bitcoin for taxes cover both sides in more depth.
How Much Bitcoin Do You Need to Fund an Equipment Purchase?
The collateral you pledge depends on the LTV tier you choose. Lower LTV means more collateral, a lower rate, and more room before a margin call. For a fourth-quarter purchase, when volatility can be high and the deadline leaves little room for error, many treasury teams start with a conservative tier.
| Equipment Cost | 30% LTV | 50% LTV | 70% LTV |
|---|---|---|---|
| $50,000 | About $166,667 | $100,000 | About $71,429 |
| $100,000 | About $333,333 | $200,000 | About $142,857 |
| $250,000 | About $833,333 | $500,000 | About $357,143 |
| $500,000 | About $1,666,667 | $1,000,000 | About $714,286 |
Figures show the approximate value of Bitcoin collateral required at origination. The 70% tier carries additional eligibility requirements and is not available on every term. You can model your own numbers with the SALT loan calculator or read more about how much you can borrow against your Bitcoin.
How to Fund a Section 179 Purchase With a Bitcoin-Backed Loan
- Confirm the deduction is usable. Ask your CPA to estimate this year’s taxable business income, check your state’s Section 179 rules, and confirm the equipment qualifies.
- Lock down the purchase. Get a written quote and a firm delivery and installation date that lands before December 31.
- Choose an LTV tier and term. Size the loan to the purchase, and leave a cushion for price swings between now and the end of the year.
- Apply for a business loan. Complete the application under your business entity through SALT’s business lending page.
- Transfer collateral and receive funds. Once approved and collateral is received, proceeds are sent in USD or stablecoins.
- Buy the equipment and put it to work. Pay the vendor, take delivery, and get the property installed and ready for use.
- Document everything. Keep the invoice, proof of payment, delivery confirmation, and the date the equipment entered service.
- Make the election. Your tax preparer claims the deduction on Form 4562 with the business return.
- Plan the repayment. Interest-only payments can keep monthly cash outflows low while the new equipment starts producing revenue, with principal due at maturity.
Section 179 vs. Bonus Depreciation
Bonus depreciation is the other major first-year write-off, and the two often work together. The One Big Beautiful Bill Act restored 100% bonus depreciation permanently for qualifying property acquired after January 19, 2025.
| Feature | Section 179 | Bonus Depreciation |
|---|---|---|
| 2026 dollar limit | $2,560,000 | No dollar limit |
| Phase-out | Starts at $4,090,000 | None |
| Can create a loss | No, limited to business income | Yes |
| How it applies | Elected asset by asset | Applies by asset class unless you opt out |
| State treatment | Varies widely | Many states do not follow it |
Businesses often take Section 179 first up to the limit or their income cap, then apply bonus depreciation to anything left over. Your CPA can model which combination produces the best result over several years, not just this one.
Risks to Weigh Before You Borrow
Price volatility. If Bitcoin falls after you borrow, your LTV rises. Cross the margin call threshold and you will need to add collateral or pay down the loan. Our explainer on margin calls on crypto-backed loans walks through the mechanics, and the BTC margin event calculator shows the price levels that matter for your loan.
Downside protection options. Stabilization can convert collateral to stablecoins during a sharp decline and re-enter BTC as prices recover, and SALT Shield® offers no-liquidation protection on eligible loans. Each has its own costs and conditions, so review them before you rely on either.
Income limits and carryforwards. If your business has a weaker year than expected, part of the deduction may carry forward instead of reducing this year’s tax, while the loan payments still come due.
Recapture. If business use of the property drops to 50% or less in a later year, part of the deduction can be recaptured as income.
State conformity. Not every state follows the federal limits. California, for example, caps its Section 179 deduction at $25,000, so the state tax benefit can be much smaller than the federal one.
Personal versus business borrowing. If the Bitcoin is held personally by an owner rather than by the business, how the loan is structured affects interest deductibility and liability. Sort that out with your CPA and attorney before you apply.
Who This Strategy Fits Best
Funding Section 179 purchases with a Bitcoin-backed loan tends to make the most sense for businesses that already hold BTC with a low cost basis, expect solid taxable income this year, and have a clear, near-term equipment need. Bitcoin mining operations upgrading hardware, construction and trades businesses buying vehicles and machinery, medical and dental practices replacing equipment, and growing companies building out offices or servers are all common fits.
It is a weaker fit if the business is near break-even, if the equipment cannot realistically be in service by December 31, or if the company cannot comfortably add collateral during a drawdown. For a broader look at how companies use collateral-based credit, see how businesses use crypto-backed credit for working capital and our practical guide to Bitcoin treasury management. If your company reports BTC at fair value, our post on ASU 2023-08 explains how pledged collateral shows up on the balance sheet.
Talk Through Your Year-End Plan
Have an equipment purchase on the calendar before December 31? Schedule a call with the SALT team to talk through loan sizing, LTV, and timing so your funding lands before your deadline.
Frequently Asked Questions
Can I take the Section 179 deduction on equipment bought with a loan?
Yes. Section 179 is based on the cost of qualifying property placed in service during the tax year, not on how it was paid for. Equipment financed with a bank loan, an equipment loan, or a Bitcoin-backed loan can be deducted the same way as equipment bought with cash, subject to the annual dollar limit and the business income limit.
What is the Section 179 deadline for 2026?
For calendar-year businesses, qualifying property must be placed in service by December 31, 2026. Placed in service means the equipment is installed and ready for use in your business. Ordering or paying for it before that date is not enough on its own.
What is the Section 179 limit for 2026?
The 2026 Section 179 deduction limit is $2,560,000. The deduction phases out dollar for dollar once total qualifying purchases exceed $4,090,000 and is fully eliminated at $6,650,000. The heavy SUV limit is $32,000.
Can I deduct Bitcoin purchases under Section 179?
No. Section 179 applies to tangible business property and certain off-the-shelf software. Bitcoin and other digital assets are intangible property and do not qualify. Equipment used to mine Bitcoin, such as ASIC miners, generally does qualify when it is used in an active trade or business.
Is taking out a Bitcoin-backed loan a taxable event?
Generally, no. Pledging Bitcoin as collateral and receiving loan proceeds is not a sale, so it does not trigger capital gains tax. A taxable event can occur if collateral is sold or liquidated, for example to satisfy a margin call or repay the loan.
Is interest on a Bitcoin-backed business loan tax deductible?
Interest on a loan used for business purposes is generally deductible as a business expense, but the rules depend on how the proceeds are traced and, for larger businesses, on the Section 163(j) business interest limitation. See Are Bitcoin Loan Interest Payments Tax Deductible? and confirm with your CPA.
How much Bitcoin do I need to borrow $100,000 for equipment?
At origination, roughly $333,333 of Bitcoin at 30% LTV, $200,000 at 50% LTV, or about $142,857 at 70% LTV, where available. Lower LTV tiers require more collateral but carry lower rates and more cushion against a price drop.
What happens if Bitcoin drops after I borrow?
Your LTV rises as the value of your collateral falls. If it reaches the margin call threshold, you can add collateral or make a payment to bring the ratio back down. Features like Stabilization and SALT Shield® are designed to help borrowers manage that risk, each with its own terms and costs.
This article is for informational and educational purposes only and does not constitute tax, legal, accounting, financial, or investment advice. Section 179 limits, bonus depreciation rules, and other figures cited reflect publicly available information as of October 2026 and may change. Tax outcomes depend on your entity type, taxable income, state of residence, and how property is used. Consult a qualified tax professional before making purchasing or borrowing decisions.
All examples, including the sell versus borrow comparison and collateral tables, are hypothetical illustrations, do not reflect any actual borrower, and are not a guarantee of future results or tax treatment. Rates shown reflect SALT’s published rates at the time of writing and are subject to change. APRs may vary based on loan amount, term, qualifications, jurisdiction, and collateral profile. Some LTV tiers carry additional eligibility requirements.
SALT loans are originated by SALT Lending LLC, NMLS 1711910. Loan products, terms, and features may not be available in all jurisdictions, and some jurisdictions are eligible for business loans only. See saltlending.com/map-list for current availability. SALT Loans are subject to jurisdictional limitations and other restrictions, and SALT does not offer loans to all prospective borrowers.
Borrowing against digital assets entails risk, including the risk of margin calls and liquidation of collateral, and may not be appropriate for your needs. Digital currency is not legal tender, is not backed by the United States or any other government, and SALT accounts are not subject to FDIC or SIPC protections.
