Small and medium sized businesses- such as family farms, ranches and forest- can take a tax deduction when you purchase equipment used for your business. Known as a Section 179 tax deduction, this provision allows you to deduct the cost of qualifying purchases of equipment from your annual taxes and is designed to encourage you to buy equipment and invest in yourself. 
 
When you elect to use the Section 179 deduction, you can deduct up to a certain amount of the purchase price of machinery, equipment, vehicles, furniture and other qualifying property. Qualifying property is described here.
 
How it works:
Generally, when your business buys equipment you can write it off a little at a time through depreciation (this is known as MARCS depreciation, compare it with other deductions here). However, when you take a section 179 deduction you write off the entire equipment purchase price the year you buy the item. Essentially this deduction allows you to treat the purchase as a business expense that can be deducted on your tax return.
 
Limitations:
This deduction is only available for equipment that was purchased and put into use in that year. However, you can amend past tax returns to take the deduction in previous years if needed. Read more here. 

There is also a cap on the total amount allowed to be written off and is not available for equipment that cost over a certain amount. These limitations ensure that the deduction is targeted to smaller operations.