Is office furniture tax-deductible? A guide

Can you deduct office furniture on taxes?

What exactly qualifies as tax-deductible office furniture per the IRS? While the guidelines don’t dive into the nitty gritty of everything you might find in an office, the IRS provides some general instructions:

• You must own the property and use it in your business or to generate income
• It must be tangible – meaning in the simplest terms it must be real so you can literally point to it or “put your hands on the item” in the workspace

But are there other, under-the-radar items that could be eligible? To learn more about approaching office furniture deductions in a practical way, we spoke with Peggy James, a certified public accountant with over a decade of experience helping small businesses.

Key tax codes related to office furniture

The IRS gives you two options you can use to claim an office furniture deduction. Both yield the same results — savings on your tax bill. The difference lies in their timing.

Section 179 deduction

A Section 179 deduction allows you to claim the entire amount of your office furniture purchases on this year’s tax return. It’s a one-time deduction, so you can’t claim additional savings in future tax years.

The IRS puts limits on Section 179 deductions. In 2025, the maximum deduction is $1,250,000. It usually goes up each year to account for inflation.

The nice thing about Section 179 is that you don’t have to worry about calculating depreciation each year for tax purposes. That means less recordkeeping. However, you should still keep a copy of the purchase receipt and any other supporting documents in case the IRS decides to audit your business.

Depreciation methods

Alternatively, the IRS requires businesses to depreciate tangible business property under the Modified Accelerated Cost Recovery System (MACRS). MACRS offers two different depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS).

Here’s a frequently asked questions document the IRS makes available as well.

Most companies use GDS to depreciate office furniture. It provides a seven-year recovery period. You’ll deduct a portion of the furniture’s cost each year until you fully recover its cost at the end of the seven years.

The general rule is to use the 200 percent declining balance method for seven-year property like office furniture. Under this method, you’ll realize a higher deduction in the first few years. But you can elect to use the 150 percent declining balance or straight-line methods on your tax return if they make better sense for your business.

Once more we tapped Peggy for her insights on a common question that employers ask around this topic.

Eligibility criteria for claiming deductions

Office expenses can reduce your total tax liability for the year. Here are a few guidelines to help you decide what’s deductible (and what’s not).

Criteria for businesses

Your eligibility for a furniture-related office tax deductions depends on whether you plan to claim Section 179 or depreciate the property. If you opt for depreciation, the office furniture must:

• Be owned by you and used for business purposes
• Have a determinable useful life
• Last longer than one year

Office furniture qualifies for Section 179 treatment if it’s purchased for use in your business. There are no rules concerning its useful life.

Considerations for home-based workers

Many small business owners work out of their homes. If this is you, there may be furniture you use for both business and personal purposes. But is home office furniture tax-deductible?

Under Section 179 rules, you can claim office furniture with dual home/business use so long as you use it more than 50 percent of the time in your company. Your office deduction is the property’s cost multiplied by its business use. You may opt to depreciate the property rather than take the one-time Section 179 deduction.

If you transfer personal office furniture to your business, a Section 179 deduction isn’t an option. You’ll need to depreciate it using MACRS. The cost basis for the furniture is its fair market value or adjusted basis, whichever’s less.

Specific rules for real estate agents

Real estate agents generally follow the same rules as other businesses when it comes to office furniture. You can claim a Section 179 deduction or depreciate any office furniture used in your home or business office for your real estate activities.

To avoid common pitfalls, we asked Peggy if there’s anything owners tend to misunderstand when it comes to being eligible for the credit.

How to calculate office furniture deductions

Let’s take a look at a hypothetical scenario so you can see how the deduction works.

One-time deductions vs. depreciation

Assume you buy $50,000 worth of office furniture for your business. When it comes time to file your annual income tax return, you could take a Section 179 deduction for the entire $50,000 or depreciate the property over seven years.

Your income for the year may figure into your tax planning process. For instance, if you have $1,000,000 in taxable income, it’s more than enough to cover the one-time $50,000 deduction. But if your taxable income is $5,000, then you might be better off with depreciation. That way, you could stagger the cost of the furniture across future tax years when your income might be higher.

This can be especially beneficial for business owners who are just starting out. “They may have lower income or even a loss in the early years but expect the business to grow over the next few years,” explains Peggy. “ Being able to depreciate office furniture over several years can provide built-in tax savings in those future years.”

Keep in mind that you can carry over unused Section 179 deductions caused by business income limitations to future tax years. So, if you take the Section 179 deduction with just $5,000 in taxable income, you don’t lose the remaining $45,000. It’s still available to you in the future.

Limits on deductions

The IRS limits Section 179 deductions to $1,250,000 for 2025. That means you can’t take a deduction for more than that on any eligible Section 179 purchases. There’s also a limit on purchases. If your Section 179 property placed in service during 2025 exceeds $3,130,000, the IRS reduces your available deduction by the corresponding amount after you exceed the phase-out limit.

Note that Section 179 and depreciation aren’t tax credits. They can only reduce your taxable income, but they’re not refundable.