Can You Write Off a Laptop for Work?

Deducting the cost of a laptop used for work is a common question. The answer is not always straightforward, as it depends on an individual’s employment status and how the laptop is used. This topic involves specific tax rules and considerations that determine eligibility for a deduction.

Who Can Deduct a Laptop

The ability to deduct a laptop for work depends significantly on whether an individual is a W-2 employee or a self-employed individual, such as a sole proprietor or independent contractor. These two categories have distinct tax treatments for business expenses.

W-2 employees generally cannot deduct unreimbursed employee business expenses, including the cost of a laptop, on their federal tax returns. This change resulted from the Tax Cuts and Jobs Act of 2017, which suspended these deductions for tax years 2018 through 2025. While some exceptions may exist for specific professions or at the state level, the federal rule restricts these deductions for most employees. If an employer provides a reimbursement plan, employees typically account for expenses and receive repayment, which is not a deduction.

In contrast, self-employed individuals can usually deduct ordinary and necessary business expenses incurred for their trade or business. A laptop used for business operations falls under this category of deductible expenses.

How Self-Employed Individuals Deduct Laptops

Self-employed individuals have several methods for deducting the cost of a laptop used for business. These methods allow for recovering the expense over time or in the year the asset is placed in service.

One common approach is through depreciation, which spreads the cost of an asset over its useful life. Laptops are generally considered five-year property for tax purposes under the Modified Accelerated Cost Recovery System (MACRS). MACRS allows for accelerated depreciation, meaning larger deductions can be taken in the earlier years of the asset’s life.

Another method is the Section 179 deduction, which permits businesses to deduct the full purchase price of qualifying equipment in the year it is placed in service, rather than depreciating it over several years. For tax years beginning in 2025, the maximum Section 179 expense deduction is $1,250,000. This deduction begins to phase out when the cost of Section 179 property placed in service during the tax year exceeds $3,130,000.

Bonus depreciation offers another way to immediately expense a percentage of the cost of qualifying property. For 2025, the bonus depreciation rate is 40% for eligible property placed in service. This method can be used in conjunction with or instead of the Section 179 deduction. Businesses can often combine both Section 179 and bonus depreciation for greater tax benefits, especially if equipment purchases exceed the Section 179 phase-out threshold.

Important Considerations for Deduction

Several factors are important when claiming a laptop deduction to ensure compliance with tax regulations.

Only the portion of the laptop used for business purposes is deductible. If a laptop is used for both business and personal activities, the cost must be allocated based on its business use percentage. For example, if a laptop is used 70% for business and 30% for personal use, only 70% of its cost can be deducted.

For an expense to be deductible, it must be considered “ordinary and necessary” for the business. An ordinary expense is one that is common and accepted in the industry, while a necessary expense is helpful and appropriate for the trade or business. The expense does not need to be indispensable to be considered necessary.

The deduction is taken in the year the laptop is “placed in service,” which means it is ready and available for its intended business function. This date may not always coincide with the purchase date, particularly if the laptop requires setup or configuration before it can be used for business. For instance, if a laptop is purchased in December but not set up and ready for use until January of the following year, the deduction would typically apply to the later tax year.

While Section 179 and bonus depreciation allow for immediate expensing, certain limits apply. The Section 179 deduction has an overall investment limit that, if exceeded, begins to reduce the maximum deductible amount. Additionally, the total deduction cannot exceed the business’s taxable income.

Record Keeping for Deductions

Meticulous record keeping is fundamental for substantiating any business expense deduction, including the purchase and use of a laptop. Maintaining proper documentation is crucial for tax compliance and in the event of an audit.

Records should include purchase receipts, invoices, and proof of payment for the laptop. It is also important to maintain a log or other documentation that supports the percentage of business use versus personal use, especially for assets used for both purposes. Documentation supporting the business purpose of the laptop is also necessary.

These records are important because the burden of proof rests with the taxpayer to substantiate all claimed deductions. In the event of an Internal Revenue Service (IRS) audit, adequate records demonstrate the legitimacy of the expenses. Without proper documentation, a deduction may be disallowed.

Taxpayers should generally keep records for at least three years from the date they filed their original return or two years from the date the tax was paid, whichever is later. For assets like a laptop that are depreciated, records should be retained for three years after the asset is fully depreciated or sold.