Is equipment tax deductible?
Generally yes — equipment used for your business is usually deductible based on the business-use portion. Depending on the cost and how you use it, you may deduct it using the de minimis safe harbor, Section 179, 100% bonus depreciation, or regular depreciation.
← Back to Expense Deductibility Guide
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 · IRS sources · FAQ
Short answer
Generally yes. Business equipment is deductible when it is used in your trade or business. If an item is also used personally, only the business-use portion is deductible.
For Section 179, the equipment must be used more than 50% for business in the year you place it in service. Other deduction rules can apply when business use is 50% or less.
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 only for personal purposes
- You try to claim Section 179 when business use is 50% or less
- The equipment was bought but was not ready and available for business use during the tax year
- The activity is a hobby rather than a business
- You cannot support the purchase, business purpose, or business-use percentage with reasonable records
If you claimed Section 179 when business use was above 50% and the business use later falls to 50% or less, part of the earlier deduction may have to be added back to income.
Expensing vs depreciating equipment: What's the difference?
There is more than one way to deduct equipment. The best choice depends on the item, its cost, business use, and your tax situation.
| Method | How it works | Common use |
|---|---|---|
| De minimis safe harbor | Qualifying items up to $2,500 per item or invoice can be expensed when you make the annual election | Smaller tools, accessories, and equipment |
| Section 179 | Can deduct qualifying business equipment in year one, subject to business-use, dollar, and income limits | Higher-cost equipment used more than 50% for business |
| 100% bonus depreciation | Eligible property acquired and placed in service after January 19, 2025 can generally receive a 100% first-year deduction | Eligible equipment when Section 179 is not the best fit |
| Regular depreciation | Spreads the business-use cost over the property's IRS recovery period | When you do not or cannot deduct the full cost in year one |
The de minimis safe harbor is an annual election, not an automatic $2,500 write-off. A business without an applicable financial statement generally uses the $2,500 threshold; the threshold can be $5,000 with an applicable financial statement.
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.
Section 179 for equipment in 2026
Section 179 lets a business elect to deduct the business-use cost of qualifying equipment in the year the equipment is placed in service instead of recovering the cost over several years.
- Maximum deduction: $2,560,000 for most qualifying Section 179 property
- Phase-out starts: When total Section 179 property placed in service exceeds $4,090,000
- Business use: More than 50% business use is required
- Placed in service: The equipment must be ready and available for business use during the tax year
- Business-income limit: Section 179 is limited by taxable income from active trades or businesses; unused amounts can carry forward
These limits are much higher than most freelancers and small businesses will reach. The more common issues are whether the equipment qualifies, whether business use is above 50%, and whether another method is a better fit.
Mixed business and personal use: How to calculate your deduction
When equipment is used for both business and personal purposes, only the business-use portion is deductible. Use a reasonable percentage you can explain from your actual use.
Mixed-use calculation examples
- Laptop: $1,500 cost × 80% business use = $1,200 business-use cost
- Camera: $2,000 cost × 90% business use = $1,800 business-use cost
- Smartphone: $900 cost × 60% business use = $540 business-use cost
Section 179 requires more than 50% business use. Other rules depend on the type of equipment. Listed property, including some photographic/video equipment and vehicles, has extra restrictions when business use is 50% or less. Computers have not been listed property since 2018, but the Section 179 >50% rule still applies.
Where does equipment go on Schedule C?
| Deduction method | Where it goes | Extra form or statement |
|---|---|---|
| Section 179 | Schedule C, Line 13 (Depreciation) | Form 4562 |
| Bonus depreciation | Schedule C, Line 13 (Depreciation) | Form 4562 |
| Regular depreciation | Schedule C, Line 13 (Depreciation) | Form 4562 |
| De minimis safe harbor | Part V, Other Expenses | Annual de minimis election statement |
The final 2026 Schedule C should be checked when filing because line numbers can change. The important distinction is that depreciation and Section 179 flow through Form 4562, while qualifying de minimis safe-harbor amounts are reported as other expenses and require the annual election statement.
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, assuming the business-use and other requirements are met
- Lens kit: $1,400 × 100% business use = $1,400 → De minimis safe harbor, if the annual election applies
- Lighting equipment: $900 × 100% business use → De minimis safe harbor
- Laptop: $1,600 × 75% business use = $1,200 → De minimis safe harbor
- External hard drives (2 × $120): $240 → De minimis safe harbor
- Total business-use deductions in this example: $6,400
The example assumes the business uses the de minimis safe harbor for qualifying smaller items and meets the requirements for Section 179 on the camera. Actual tax savings depend on your tax situation; a $6,400 deduction does not mean $6,400 less tax.
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
- For mixed-use equipment: a reasonable business-use percentage and how you calculated it
- For Section 179 or depreciation: the date the equipment was ready and available for business use
- For the de minimis safe harbor: records showing the qualifying item cost and your annual election statement
- Form 4562 and depreciation records for items deducted through Section 179, bonus depreciation, or regular depreciation
TurboTax — Report business equipment and depreciation
Tax software can guide you through Form 4562, Section 179, depreciation, and Schedule C reporting when you enter business equipment.
IRS sources used for this page
For the rules and 2026 amounts on this page, we checked the IRS sources below. Tax rules can change, so use the current IRS instructions when you file.
FAQ
Is equipment tax deductible for business?
Yes, business equipment is generally tax deductible based on the business-use portion. Depending on the item and your tax situation, you may use the de minimis safe harbor, Section 179, 100% bonus depreciation, or regular depreciation.
What is Section 179 for equipment?
Section 179 lets a business elect to deduct qualifying equipment in the year it is placed in service instead of depreciating it over several years. For 2026, the maximum Section 179 deduction is $2,560,000 and the phase-out begins when qualifying property placed in service exceeds $4,090,000. Business use must be more than 50%.
Can I deduct equipment used for both business and personal use?
Yes, but only the business-use portion is deductible. For example, equipment used 80% for business generally has an 80% business-use cost. Section 179 requires more than 50% business use. Listed property can have additional restrictions.
What is the difference between expensing and depreciating equipment?
Immediate expensing can deduct qualifying equipment in the current year through rules such as the de minimis safe harbor, Section 179, or bonus depreciation. Regular depreciation spreads the deduction over the property's IRS recovery period.
Where does equipment go on Schedule C?
Section 179, bonus depreciation, and regular depreciation generally flow through Form 4562 to Schedule C, Line 13. Qualifying de minimis safe-harbor amounts are reported as other expenses and require an annual election statement. Check the final 2026 Schedule C instructions when filing.
Do small equipment purchases have to be depreciated?
Not always. If you make the de minimis safe harbor election, a business without an applicable financial statement can generally expense qualifying items costing $2,500 or less per item or invoice. The threshold can be $5,000 when the business has an applicable financial statement.
Can I deduct equipment bought with a personal credit card?
Yes. Paying with a personal credit card does not by itself prevent a business deduction. Keep the receipt, proof of payment, business purpose, and records supporting the business-use percentage.
Looking for other deductible expenses? See the full Expense Deductibility Guide.
Last reviewed: August 18, 2026