Buy inventory and the tax treatment is obvious: it's cost of goods sold, deducted when the item sells. Buy a postal scale, a laptop for listings, a label printer, or shelving for the garage, and it's less obvious — that's not inventory, it's equipment, and equipment technically belongs on a depreciation schedule, deducted in slices over several years instead of all at once. Almost no reseller actually does that, and almost none of them need to. Three separate mechanisms let most business equipment get written off in full the same year it's bought, and two of them got more generous under the 2025 tax law that's already reshaped several other things resellers deal with.
The default nobody wants: depreciate it over years
Tangible business property with a useful life beyond one year is normally capitalized and depreciated under MACRS — the IRS's standard recovery system — over a set number of years depending on the type of asset. Computers and similar equipment typically fall into 5-year property; furniture, fixtures, and shelving typically fall into 7-year property. Under that default, buying a $900 laptop this year gets you a deduction spread across parts of six calendar years (the recovery period plus a partial year on each end), not $900 off this year's taxable income. Nobody wants that for a $900 laptop, and for most reseller-scale purchases, nobody has to accept it.
Three ways around it
The de minimis safe harbor. Elect it, and any single item costing $2,500 or less (per invoice or per item, for a business without audited financial statements — $5,000 if you do have them) gets deducted outright as an ordinary business expense instead of depreciated. There's no cap on how many separate purchases qualify in a year — five different $2,000 items all get the full treatment, each on its own. It comes from IRS Notice 2015-82 and the Section 1.263(a)-1(f) regulations, and it's been at these dollar levels since 2016 — this piece isn't new, it's just widely unused by resellers who've never heard the term.
Section 179. For anything over the de minimis threshold, Section 179 lets a business elect to expense the full cost of qualifying equipment in the year it's placed in service, up to an annual limit — $2,560,000 for 2026, with the election starting to phase out only once total equipment purchases for the year exceed $4,090,000. No reseller reading this is anywhere near that ceiling; the number exists for context, not as a constraint. The real limit that matters: Section 179 can't be used to create or deepen a business loss. It's capped at your net business income for the year, and any amount you can't use carries forward to next year.
Bonus depreciation. The One Big Beautiful Bill Act (OBBBA), signed July 2025, made 100% first-year bonus depreciation permanent for qualifying property acquired and placed in service after January 19, 2025 — reversing a scheduled phase-down that would have dropped it to 40% for 2025 and zero after 2026. Unlike Section 179, bonus depreciation has no income limitation: it can create or widen a loss. For most resellers buying ordinary equipment, the practical result of 179 and bonus depreciation now sitting at the same 100% rate is that the choice between them rarely matters — except in the one case where a business is already showing a loss and needs the deduction to not be capped.
A worked example
Say in one year you buy: a postal scale ($140), a label printer ($190), a laptop for listings and bookkeeping ($950), a photography light kit and backdrop stand ($310), and shelving for the garage where inventory sits ($680). Every one of those five items is under $2,500 on its own invoice.
Elect the de minimis safe harbor and all five get deducted in full this year as ordinary business expenses — $140 + $190 + $950 + $310 + $680 = $2,270 — reported on Schedule C like any other expense, never touching a depreciation form at all.
Say the same year you also buy a single steel shelving and racking system for a small storage space, all one invoice, totaling $6,200. That's over the de minimis threshold, so it doesn't qualify there — but Section 179 or bonus depreciation still gets it to a full first-year deduction, filed on Form 4562 instead of taken as a plain expense.
Total first-year write-off across both mechanisms: $8,470, deducted the same year the cash went out. Under the old default — MACRS spread across 5 or 7 years — only a fraction of that would show up on this year's return, with the rest trickling out in shrinking amounts for years, exactly when a growing reseller can least afford to wait for the tax benefit.
The de minimis election isn't automatic
You have to actually claim it. The election is made annually, by attaching a statement to your timely filed return for that tax year — it doesn't apply itself just because your purchases happen to be small. If you don't have audited financial statements (true for essentially every individual reseller), the $2,500-per-item threshold doesn't legally require a written capitalization policy dated before the year starts, but tax preparers treat having one anyway as the practical standard for defending the position if it's ever questioned. If you've been using a tax software or preparer and have never seen this election, it's worth asking directly whether it's being filed — it's easy for equipment purchases to just get lumped into "supplies" instead, which usually lands in the same place dollar-for-dollar but skips the formal position that protects it.
What this doesn't cover
- Inventory itself. None of this touches items you buy to resell —
- that's cost of goods sold, an entirely separate mechanic tied to when the
- item actually sells, not when you bought it.
- Vehicles. Cars and trucks used for sourcing runs have their own
- separate depreciation limits (the "luxury auto" caps), distinct from
- ordinary equipment rules, and if you're deducting mileage at the standard
- rate instead, you're not depreciating the vehicle at all. That's [its own
- set of rules](/blog/irs-mileage-rate-change-2026-resellers), not this one.
- A loss-heavy pattern from stacking bonus depreciation. Because bonus
- depreciation has no income cap, it's possible to use it to push a
- legitimately profitable year into a paper loss. Do that repeatedly and
- you're building exactly the kind of loss history that [the hobby-vs-business
- test](/blog/hobby-vs-business-reseller-irs-test-2026) looks at — a real
- deduction doesn't stop being a fact the IRS can weigh.
What to actually do
- **Keep equipment purchases on separate line items from inventory cost
- basis.** They run through completely different tax mechanics, and
- lumping them together in your own records makes both harder to defend.
- Save the invoice for each item. The $2,500 de minimis threshold
- applies per invoice or per item, so how a purchase is itemized on the
- receipt is part of whether it qualifies.
- Confirm the de minimis election is actually being filed, not assumed.
- It's an annual statement attached to the return, not a standing policy
- that carries over on its own.
- **Don't assume big-ticket gear needs to wait years to pay off on your
- taxes.** Between Section 179 and permanent 100% bonus depreciation, very
- little a reseller buys in 2026 is actually stuck on a multi-year
- depreciation schedule anymore.
PalmFlow's Expenses ledger has an Equipment category alongside Mileage, Office, and the rest of what isn't inventory — log what you paid and it flows into your real net profit instead of sitting in a folder of receipts until tax season. Expenses is part of the paid plans; the free plan still covers per-item cost basis and fees on 50 items, no card.
Disclaimer: this is general information, not tax advice. Whether a specific purchase qualifies for the de minimis safe harbor, Section 179, or bonus depreciation depends on your full tax situation, and the elections involved have real paperwork requirements — confirm your own numbers and filing approach with a CPA or tax software before you rely on them.