Is equipment tax deductible?
Generally yes — business equipment is deductible, and most small businesses can deduct the full cost immediately using Section 179 rather than spreading it over several years. The main questions are business-use percentage, whether Section 179 applies, and where it goes on your return.
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On this page: Short answer · Who this applies to · When it's deductible · When it's not deductible · Expensing vs depreciation · Section 179 · Mixed business/personal use · Schedule C · Example · Records · Specific lookups · FAQ
Short answer
Generally yes. Business equipment is tax deductible. Most small businesses can deduct the full cost immediately in the year of purchase using Section 179. Equipment used for both business and personal purposes is deductible based on the business-use percentage.
Equipment used more than 50% for business qualifies for Section 179. Below 50% business use, you must use straight-line depreciation over the asset's useful life.
FreshBooks — Track equipment purchases and business expenses automatically
Record equipment costs, attach receipts, and keep your Section 179 and depreciation records organized for tax time.
Who this typically applies to
- Self-employed individuals and freelancers buying computers, cameras, tools, or specialized equipment for client work
- Small business owners purchasing machinery, vehicles, or technology for business operations
- Contractors and tradespeople buying job-related tools and equipment
- Content creators and professionals purchasing cameras, audio gear, lighting, or studio equipment
Employees generally cannot deduct unreimbursed equipment costs under current tax rules. These deductions apply to Schedule C filers and business returns.
When equipment is tax deductible
- The equipment is ordinary and necessary for your business or income-producing activity
- It is used for business purposes — client work, operations, service delivery, or administration
- You placed it in service during the tax year (purchased and available for use)
- You keep the receipt, proof of payment, and documentation of business purpose
- For mixed-use equipment: you can support a reasonable business-use percentage
When equipment is not deductible
- The equipment is used primarily for personal purposes
- You claim Section 179 on equipment with 50% or less business use — this triggers recapture
- You lack receipts or proof of purchase
- The equipment is for a hobby rather than a profit-motivated business activity
- You expense an item that must be capitalized under your method of accounting
Expensing vs depreciating equipment: What's the difference?
When you buy business equipment, you have two main approaches to deducting the cost. Most small businesses prefer immediate expensing.
| Method | How it works | Best for |
|---|---|---|
| Section 179 (immediate expensing) | Deduct the full cost in the year of purchase | Most small business equipment — maximizes current-year deduction |
| Bonus depreciation | Deduct a large percentage in year one (100% through 2022, phasing down — confirm current rate) | Equipment exceeding Section 179 limits or businesses with net losses |
| MACRS depreciation | Deduct over 5 or 7 years (most equipment) using IRS depreciation tables | Equipment with less than 50% business use, or when spreading deductions is preferred |
| De minimis safe harbor | Immediately expense items costing $2,500 or less per item | Small tools, minor equipment, accessories — no Form 4562 required |
Section 179 for equipment in 2026
Section 179 is the most commonly used method for deducting business equipment. It allows you to deduct the full purchase price of qualifying equipment in the year it is placed in service.
- Deduction limit: Up to $1,220,000 in qualifying equipment purchases
- Phase-out threshold: The deduction begins to phase out when total equipment purchases exceed $3,050,000
- Business use requirement: Equipment must be used more than 50% for business
- Placed in service: Equipment must be purchased and placed in service during the tax year
- Cannot exceed net income: Section 179 cannot create a business loss — unused deductions carry forward
For most freelancers and small businesses, Section 179 limits are rarely a concern — the $1,220,000 threshold far exceeds typical annual equipment purchases. The practical benefit is a full deduction in year one with no complex depreciation schedule to maintain.
Mixed business and personal use: How to calculate your deduction
When equipment is used for both business and personal purposes, only the business-use percentage is deductible.
Mixed-use calculation examples
- Laptop: $1,500 cost × 80% business use = $1,200 deductible
- Camera: $2,000 cost × 90% business use = $1,800 deductible
- Smartphone: $900 cost × 60% business use = $540 deductible
Equipment with less than 50% business use cannot use Section 179 or bonus depreciation — it must be depreciated using the straight-line method over the asset's class life.
Where does equipment go on Schedule C?
| Deduction method | Where it goes | Form required |
|---|---|---|
| Section 179 expensing | Schedule C, Line 13 (Depreciation) | Form 4562 |
| Bonus depreciation | Schedule C, Line 13 (Depreciation) | Form 4562 |
| MACRS regular depreciation | Schedule C, Line 13 (Depreciation) | Form 4562 |
| De minimis safe harbor (≤$2,500) | Schedule C, Line 22 (Supplies) or Line 27a (Other) | None required |
TurboTax Self-Employed and most tax software handle Form 4562 automatically when you enter equipment as a business asset — you don't need to calculate depreciation schedules manually.
Example: Equipment deductions for a freelance photographer
Example: Freelance photographer, $55,000 annual revenue
- Camera body: $2,800 × 95% business use = $2,660 → Section 179, full deduction in year one
- Lens kit: $1,400 × 100% business use = $1,400 → Section 179, full deduction
- Lighting equipment: $900 × 100% business use → De minimis safe harbor (under $2,500), immediate expense
- Laptop: $1,600 × 75% business use = $1,200 → Section 179, deduct $1,200
- External hard drives (2 × $120): $240 → De minimis, immediate expense
- Total equipment deductions: $6,500
At a 22% effective tax rate, $6,500 in equipment deductions saves approximately $1,430 in taxes. All items fully deducted in the year of purchase — no multi-year depreciation schedules to track.
What records to keep
- Receipt or invoice showing purchase date, seller, item description, and cost
- Proof of payment (card statement, bank transfer, or paid invoice)
- A note describing the business purpose and how the equipment is used
- Business-use percentage estimate for mixed-use equipment, with the method used to calculate it
- For Section 179 claims: retain documentation confirming the equipment was placed in service during the tax year
- Form 4562 from your tax return (for depreciation records spanning multiple years)
TurboTax Self-Employed — Claim Section 179 and equipment deductions on Schedule C
TurboTax Self-Employed handles Form 4562, Section 179 elections, and mixed-use equipment calculations automatically — so equipment deductions are calculated correctly.
FAQ
Is equipment tax deductible for business?
Yes, business equipment is generally tax deductible. You can deduct the full cost immediately using Section 179 or bonus depreciation, or write it off over time using MACRS depreciation. The method depends on the equipment type, cost, and your business situation.
What is Section 179 for equipment?
Section 179 lets businesses immediately deduct the full cost of qualifying equipment in the year it is purchased and placed in service, rather than depreciating it over several years. For 2026, the Section 179 deduction limit is $1,220,000 (subject to phase-out above $3,050,000 in total equipment purchases). Most small business equipment purchases qualify.
Can I deduct equipment used for both business and personal use?
Yes, but only the business-use percentage is deductible. A computer used 80% for business and 20% personally yields a deduction for 80% of the cost. Equipment used more than 50% for business qualifies for Section 179 — below 50% business use, you must use straight-line depreciation.
What is the difference between expensing and depreciating equipment?
Expensing via Section 179 or bonus depreciation deducts the full equipment cost in the year of purchase. Depreciation spreads the deduction over the equipment's useful life — typically 5 or 7 years for most business equipment under MACRS. Most small businesses prefer immediate expensing since it maximizes the current-year deduction.
Where does equipment go on Schedule C?
Equipment deducted under Section 179 or depreciation is reported on Form 4562 and flows to Schedule C, Line 13 (Depreciation). Small equipment purchases under $2,500 can be expensed directly under the de minimis safe harbor on Schedule C, Line 22 (Supplies) or Line 27a (Other Expenses) — no Form 4562 required.
Do small equipment purchases have to be depreciated?
Not always. The IRS de minimis safe harbor allows businesses to immediately expense tangible property costing $2,500 or less per item (or $5,000 with an applicable financial statement). Items under this threshold can be deducted in full in the year of purchase without filing Form 4562.
Can I deduct equipment bought with a personal credit card?
Yes, the payment method does not affect deductibility. Equipment purchased with a personal credit card for business use is deductible as long as you have the receipt, proof of payment, and documentation of the business purpose and use percentage.
Looking for other deductible expenses? See the full Expense Deductibility Guide.
Last reviewed: April 14, 2026