Every fall, once the last fruit is in, a few of the winery owners we work with call with some version of the same question: “If I buy the new press before December, can I write the whole thing off this year?”
For a lot of equipment, the answer right now is yes. Bonus depreciation is back at its most generous level, and it isn’t going away. But the deduction depends on when the equipment is ready to use, not when you pay for it, and California treats it very differently from the IRS.
We’ll walk through how it works for a winery, what qualifies, and the timing that trips people up in December. First, a quick look at what bonus depreciation actually does for you.
What Is Bonus Depreciation in 2026?
Bonus depreciation lets you deduct the cost of qualifying equipment in the year it’s ready to use, instead of spreading it over several years. Without it, a new bottling line gets written off a slice at a time on a depreciation schedule. With it, the whole cost can come off your federal taxable income in year one.
For a few years that benefit was shrinking on a set schedule, and plenty of owners stopped planning around it. Then the One Big Beautiful Bill Act changed the picture in July of last year.
Full Bonus Depreciation Is Back, and It’s Permanent
The new law brought back the full first-year deduction and took away the end date. In announcing Notice 2026-11, the IRS called it a “permanent 100% additional first year depreciation deduction” for property acquired after January 19, 2025.
That date surprises people, because it’s months earlier than the law itself was signed. Under Notice 2026-11, if you signed a binding purchase contract on or before January 19, 2025, that equipment stays under the older, lower percentage, even if it showed up later. Anything you buy now, for the rest of 2026, gets the full deduction.
Because the rule doesn’t expire anymore, there’s no reason to rush a purchase you weren’t already planning. What still matters is the calendar, and that comes down to one date.
Your Equipment Has to Be in Service by December 31
This is where we see the most year-end surprises. (If your winery runs on a fiscal year, swap in your year-end date.) IRS Publication 946 says “You place property in service when it is ready and available for a specific use,” and that’s the year the deduction belongs to. Paying the invoice doesn’t count, and neither does a crate sitting in the cellar.
Say you order a new bottling line in late October and the manufacturer quotes eight weeks. It arrives on December 20, but the technician can’t come out to set it up until January. The deduction lands on your 2027 return, not this one. The same thing happens with tanks waiting on a welder, or a press that shows up before the electrician does.
When a purchase is supposed to count for this year, we ask clients to get the delivery and installation dates in writing and to keep the invoice and setup records together. That paper trail is what backs up the deduction if anyone ever asks. Which brings up the next question, which is what actually qualifies.
Which Winery Equipment Qualifies for Bonus Depreciation?
Most of what a winery buys qualifies. Publication 946 covers “tangible property depreciated under MACRS with a recovery period of 20 years or less,” which takes in a lot of what you’d see on a walk through the cellar and the vineyard:
- Tanks, presses, destemmers, pumps and chillers
- Barrels and barrel racks
- Bottling, labeling and case-packing equipment
- Forklifts, tractors, sprayers and other vineyard equipment
- Tasting room furniture, point-of-sale hardware and some interior improvements
The building itself doesn’t qualify, and neither does the land. Interior improvements to a tasting room or office sometimes can, so it’s worth keeping those costs separate from the structure when you remodel. We wrote more about how equipment fits into the bigger picture in our guide to winery tax deductions, including cost segregation if you own the building.
There’s one catch for vineyards. If your farming business has made certain elections, like opting out of the uniform capitalization rules, the rules in Publication 946 can take bonus depreciation off the table for your equipment and your vines. It’s worth checking that before you plan a purchase around it.
The vines themselves are the part most owners don’t think of, so they deserve a closer look.
New Vines Can Qualify Too
Fruit-bearing vines get their own version of bonus depreciation. Publication 946 extends the full deduction to “certain specified plants bearing fruits and nuts planted or grafted after January 19, 2025,” so a block you plant or regraft now can be deducted in the year you plant it, instead of waiting until it produces.
It’s an election, so it won’t happen on its own. It has to be made on a timely filed return, including extensions, for the year you plant or graft. If you replanted or regrafted a block this year, mention it to your accountant now so it doesn’t get lost when the return comes together in the spring.
Whether you want that deduction this early is a separate question, and it really comes down to whether your winery has enough income this year to use it. That’s also where Section 179 comes in.
Section 179 Is the Other Option, and It Works Differently
Section 179 also lets you deduct equipment in the first year, but it comes with limits that bonus depreciation doesn’t have. For 2026, Rev. Proc. 2025-32 caps Section 179 at $2,560,000 and starts reducing that cap once you place more than $4,090,000 of equipment in service during the year.
For most wineries, the bigger difference is the income limit. Publication 946 says Section 179 is “limited to the taxable income from the active conduct of any trade or business during the year,” and anything over that carries forward to next year. Bonus depreciation isn’t tied to your income the same way, so it can create a loss. Section 179 lets you pick exactly which assets to expense, and if you’re an S corporation or partnership, the limit applies at both the business and the owner level.
So a young winery still running at a loss and an established estate having a strong year can end up making very different choices. Your entity type matters here too, and we cover that in our guide to structuring a winery for taxes. If you file in California, there’s one more wrinkle.
Does California Follow Federal Bonus Depreciation?
No, and this is the part that catches California wineries off guard. The Franchise Tax Board’s depreciation instructions list federal bonus depreciation among the rules the state doesn’t follow, and the same FTB instructions say “the maximum IRC Section 179 expense deduction allowed is $25,000” for California.
In practice, you end up with two depreciation schedules for the same equipment. You might deduct the full cost of a new press on your federal return this year, while California has you spread it out over several years. The state deduction catches up eventually, but your California bill won’t drop the way your federal one does.
We see owners plan their cash around a big federal deduction and then get a state bill they weren’t expecting. If you file in California, ask for both numbers before you decide.
Buy for the Winery First and the Deduction Second
A deduction lowers your taxable income, but you still pay the full price of the equipment. Buying a tank you don’t need just to lower your taxes leaves you with less cash and an extra tank. The best year-end purchases are the ones you were going to make anyway, timed so they land in the right year.
It’s also worth looking at what new equipment does to your costs per bottle, since depreciation feeds into your winery cost of goods sold and the margins you see on each release. A big deduction can make this year look great on paper and next year look worse if you’re not expecting it.
Before you sign anything, we’d ask three questions. Will it be installed and ready to use by December 31? Do you have enough income this year to use the deduction federally? And what does it do to your California return?
As the winery accountants behind operators across Napa and beyond, we run these numbers with clients every fall. If you’re weighing a big purchase before year end, reach out to our winery tax team and we’ll walk through what it means for your federal and California returns before you commit.
