Walk your floor, then pull your depreciation schedule. Many laundromat owners find machines on the schedule that went to the scrapyard years ago. Each of those ghost assets is a deduction you never took, and the trade-in you made last spring may have created taxable income you haven't planned for. Year-end is when you can still fix both.

What the rules allow

Expensing new machines. For 2026, §179 lets you expense up to $2,560,000 of equipment. That limit starts to phase out once your purchases pass $4,090,000. For 2025 the figures are $2,500,000 and $4,000,000 (Rev. Proc. 2025-32). The §179 deduction can't exceed your business income, but anything over that carries forward.

Bonus depreciation. OBBBA brought back 100% bonus depreciation. Property is eligible only if it was acquired after January 19, 2025. Property under a written binding contract signed before January 20, 2025 doesn't qualify. Unlike §179, bonus depreciation can create a loss.

Recovery period. Commercial washers and dryers are generally 5-year property (asset class 57.0, Rev. Proc. 87-56).

Building work. Qualified improvement property is 15-year and eligible for bonus. Roofs, HVAC, fire protection and alarm/security systems on nonresidential buildings can be expensed under §179.

Small purchases and repairs. The de minimis safe harbor lets you expense items up to $2,500 each if you don't have audited statements. You have to elect it on each year's return (Reg. §1.263(a)-1(f)). Routine maintenance, meaning work you expect to do more than once during the asset's class life (or within 10 years for buildings), is deductible as a repair (Reg. §1.263(a)-3(i)).

State rules. Many states don't follow federal bonus depreciation, and some cap §179 lower. Your preparer checks your state.

The trade-in trap

Since 2018, §1031 exchanges cover only real property. When you trade in a washer, the IRS treats it as a sale. Any trade-in credit above the machine's remaining tax basis is §1245 recapture, which is taxed as ordinary income.

Example only, not client data: the dealer gives you a $10,000 credit for a fully depreciated washer. You have $10,000 of ordinary income, even though no cash changed hands.

What to do

1. Walk the floor with your asset list: Mark every machine on the schedule that's no longer in the store. For machines you got rid of this year, write off the remaining basis on this year's return. For older ones, ask your preparer how to fix prior years. Either way, document the disposal date and method.
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2. Put the policy in writing: Without audited statements, the de minimis rule only requires an accounting procedure in place on January 1. A written, dated policy is what proves you had one. Sign it before January 1.
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3. Sort this year's spending into repairs and improvements: Belts, pumps and door seals are usually repairs. A new roof or HVAC unit is capitalized, but on a nonresidential building it can be expensed under §179.
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4. Match any trade-in credits to tax basis: Know your recapture before December 31, while you can still time purchases to offset it.
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5. Choose between §179 and bonus with your preparer: Use §179 when you want control over the amount. Use bonus when you want to deduct more than you earned. Check your state before you decide.

The tradeoff

Expensing everything now lowers this year's bill but leaves nothing to depreciate later, and it makes more of each future sale recapture. If you expect higher income next year, or plan to sell the business, spreading the deductions out may cost less over time. Run both scenarios before you sign for new machines.

If you aren't sure what's sitting on your depreciation schedule, book a 30-minute Tax Leak Review (https://cal.com/mister-moneysleeves/tax-leak-review).
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Tristan D. Taylor, EA