The $2,500 De Minimis Safe Harbor: Deduct Small Equipment Purchases Right Away
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How we wrote this: A summary of the IRS "Tangible property final regulations" FAQ page (linked below), checked October 29, 2026. It is general information, not tax advice.
You buy a $1,200 laptop, a $400 office chair and a $900 printer for your business. Do you deduct them this year, or depreciate them over several years? Normally the tax rules say property that lasts must be "capitalized." The de minimis safe harbor election is the IRS's shortcut that lets many small businesses simply deduct low-cost items.
The limits: $2,500 or $5,000
According to the IRS page on the tangible property regulations:
- Most small businesses (those without an "applicable financial statement," or AFS): up to $2,500 per invoice or per item, as shown on the invoice.
- Businesses with an AFS: up to $5,000 per invoice or item. An AFS is, for example, a financial statement filed with the SEC or a certified audited statement with a CPA report.
The $2,500 limit has applied since tax years starting January 1, 2016, when IRS Notice 2015-82 raised it from $500.
There's one more condition: you have to treat these purchases as expenses in your own books and records too. Without an AFS, the IRS says you don't need a written policy, but you must expense these amounts under a consistent accounting procedure or policy that was already in place at the beginning of the tax year.
What it covers and what it doesn't
Covered: amounts paid to buy or produce tangible property, such as computers, furniture, tools and small equipment, that come in under the limit.
Not covered, per the IRS:
- Inventory (things you buy to resell) and land.
- Certain spare parts that you choose to capitalize and depreciate.
Amounts over the limit don't automatically have to be capitalized. The IRS says they simply aren't covered by the safe harbor, so you apply the normal rules, which may still let you deduct some costs as materials, supplies or repairs.
How to make the election
The election is made each year, by attaching a statement to your timely filed original return, including extensions, for the year you paid for the items. The IRS says the statement should:
- Be titled "Section 1.263(a)-1(f) de minimis safe harbor election".
- Include your name, address and taxpayer identification number (SSN or EIN).
- Say that you are making the de minimis safe harbor election.
Other details from the IRS page:
- It's an annual election, not a change in accounting method, so you don't file Form 3115 to start or stop using it.
- If you elect it, you must apply it to all qualifying expenditures that year. You can't pick and choose.
- Items that qualify under the safe harbor are treated as de minimis costs rather than as materials and supplies.
If someone prepares your return, ask them to include the statement.
A worked example
You make the election for 2026, and your books expense small purchases:
| Purchase | Invoice | Under the safe harbor? |
|---|---|---|
| Laptop | $1,200 | Yes, deduct in 2026 |
| Office chair | $400 | Yes |
| Printer | $900 | Yes |
| Camera system | $3,100 | No, use the normal rules |
The three items under $2,500 are deducted in 2026. The $3,100 camera system goes through the normal rules, which may mean depreciation or another option your tax professional suggests.
Keep the invoices
The limit is applied "as substantiated by invoice," so keep itemized receipts and invoices. Our guide on how long to keep business records covers retention.
Related guides
- Home office deduction basics
- Self-employment tax explained: deductions like this lower the profit SE tax is figured on.