Is equipment tax deductible?
It depends. Equipment is often deductible when it’s used for business, but some purchases must be written off over time (depreciation) instead of deducted all at once.
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On this page: Short answer · Who this applies to · When it’s deductible · When it’s not deductible · Example · Records · Specific lookups · FAQ
Short answer
Depends. Equipment is typically deductible when it’s used to earn business income, but the deduction may be immediate (expense) or spread over multiple years (depreciation), depending on the equipment type and your tax rules.
A good rule of thumb: if it’s a long-lasting asset, it often must be capitalized and written off over time.
Who this typically applies to
- Self-employed individuals buying tools or equipment for work
- Businesses purchasing equipment for operations, production, or services
- Contractors and tradespeople buying job-related equipment
- Creators and professionals buying specialized equipment (computers, cameras, etc.)
If equipment is used partly for personal reasons, you generally need a business-use percentage.
When it’s more likely deductible
- The equipment is ordinary and necessary for your business
- It’s used primarily (or entirely) for business purposes
- You have receipts and proof of payment
- You follow the correct method (expensing vs depreciation) for the asset type
- You can support business-use allocation for mixed-use equipment
When it’s not deductible (or risky)
- The equipment is primarily for personal use
- You don’t have receipts or proof of payment
- You claim a full deduction but can’t support business-use percentage
- You expense an item that must be depreciated (wrong timing)
- The purchase is for hobby use rather than income-producing activity
Example
A graphic designer buys a new computer used 90% for client work and 10% personal. The cost is generally deductible based on business use (90%), but the timing depends on whether your tax rules treat the computer as an asset that must be depreciated or allow immediate expensing.
What records to keep
- Receipt or invoice showing purchase date, seller, and item description
- Proof of payment (card statement, bank transfer, or paid invoice)
- Business-use notes (how/where the equipment is used)
- Allocation records for mixed-use equipment (reasonable business-use percentage)
- Depreciation schedule (if the equipment must be written off over time)
FAQ
What’s the difference between expensing and depreciating equipment?
Expensing deducts the cost right away. Depreciation spreads the deduction over multiple years. Which one applies depends on the equipment and your tax rules.
Can I deduct equipment bought with a personal credit card?
Often yes, as long as the equipment is for business and you keep documentation showing the purchase and business use.
Do I need to track business use for equipment?
Yes if it’s mixed-use. You generally claim only the portion related to business use and should keep records supporting your percentage.
Looking for other deductible expenses? See the full Expense Deductibility Guide.
Last reviewed: January 31, 2026