How to Depreciate a Computer: Section 179, Bonus, and MACRS

To depreciate a computer you bought for business, you have four options: deduct the full cost in year one under the de minimis safe harbor if the computer cost $2,500 or less, elect Section 179 to expense it in year one, claim 100% bonus depreciation, or spread the cost across five years under the Modified Accelerated Cost Recovery System (MACRS). Computers are five-year property by default, but nothing forces you to wait five years to recover the money.

Which path fits depends on the price, your business income for the year, and how much paperwork you want to deal with. For most self-employed people buying a single laptop, the safe harbor is the shortest route.

What Has to Be True Before You Can Depreciate It

Four conditions all have to be met. You must own the computer, use it in a business or income-producing activity, and the computer must have a useful life longer than one year. Anything you use up in a single tax year is an ordinary business expense, not a depreciable asset.¹

Ownership means you carry the risk of the asset losing value. Buying outright qualifies. So does financing with a loan. Leased equipment generally does not, because the leasing company still owns it, though you can depreciate capital improvements you make to leased property.¹

If the computer does double duty for personal tasks, you only depreciate the business-use portion. A machine used 70% for freelance work and 30% for personal browsing has a depreciable basis equal to 70% of the cost.¹

One boundary worth knowing: computers placed in service after 2017 are no longer “listed property,” so the old rule requiring business use above 50% to claim accelerated depreciation or Section 179 no longer applies to a modern purchase.² You still depreciate only the business-use share, but there is no cliff where dropping below 50% forces you onto a slower method.

What Counts as the Computer

The IRS treats “computer or peripheral equipment” as five-year property. Peripherals are auxiliary devices that operate under the control of a computer’s central processing unit: monitors, external hard drives, connected printers, and similar hardware. Typewriters, standalone calculators, copiers, and duplicating equipment are specifically excluded.³ Software bundled with the computer and not separately priced on the invoice is depreciated as part of the hardware over the same five years. Software bought separately follows different rules depending on whether it is off-the-shelf or custom.

The De Minimis Safe Harbor: The Simplest Path

If the computer costs $2,500 or less per invoice, you can deduct the full price as an ordinary business expense in the year you buy it and skip depreciation entirely. Taxpayers with an applicable financial statement (typically an audited one) get a higher $5,000 threshold.⁴

You claim it by attaching an annual election statement to your return. The statement references Section 1.263(a)-1(f), includes your name and taxpayer identification number, identifies the tax year, and affirms the election. It has to be made every year you want to use the safe harbor.

Section 179: Full Deduction in Year One

Section 179 lets you expense the entire cost of the computer in the year you place it in service instead of spreading it over five years. For 2026, the maximum total Section 179 deduction across all qualifying property is $2,560,000, and this ceiling begins phasing out dollar-for-dollar once your total qualifying property purchases exceed $4,090,000.⁵ Those figures are adjusted annually for inflation.

For anyone buying one computer, those spending caps do not matter. The constraint that does matter is the income limit: your Section 179 deduction cannot exceed your taxable business income for the year. If your business shows a $3,000 profit and you bought a $4,000 computer, you can only deduct $3,000 under Section 179 this year. The remaining $1,000 carries forward.⁶

You make the election on your original return, or on an amended return filed within the time allowed, including extensions.⁷ That flexibility helps if you already filed without claiming it.

100% Bonus Depreciation

Bonus depreciation under Section 168(k) is a second way to write off the full cost in year one. The One, Big, Beautiful Bill restored the first-year rate to 100% for qualified property acquired after January 19, 2025, so it is fully available for computers purchased in 2026 and beyond.⁸

The practical difference from Section 179: bonus depreciation is not capped by your taxable business income. If your income is too low to absorb a full Section 179 deduction, bonus depreciation can create or increase a net operating loss.⁹

MACRS: The Default Five-Year Schedule

If you do not elect Section 179 or bonus depreciation, MACRS is the default. Computers sit in the five-year property class, and the standard calculation uses the 200% declining balance method under the General Depreciation System. That front-loads your deductions, with bigger write-offs in the first two years. The method automatically switches to straight-line in the year that produces an equal or larger deduction, using the tables in Publication 946.¹

MACRS assumes you placed the computer in service at the midpoint of the year, no matter when you actually did. This half-year convention gives you half a year’s depreciation in both the first and last year of the recovery period. If more than 40% of all personal property you place in service during the year lands in the last three months, you instead use the mid-quarter convention, which reduces the first-year deduction for property placed in service late in the year.¹⁰

Straight-Line if You Want Even Deductions

You can instead elect the straight-line method. Subtract any salvage value from the cost basis and spread the balance evenly over the five-year recovery period. Each full year in service produces the same deduction; the first and last years are reduced by the applicable convention.¹ This is useful when you expect your income to rise and want to save deductions for higher-bracket years, or when you just want predictable numbers.

Figuring the Cost Basis

Cost basis is the purchase price plus sales tax, shipping, and any setup or installation charges. Professional configuration and specialized hardware installed before you started using it are part of the basis.¹ For mixed use, multiply the total by your business-use percentage. A $2,000 computer used 80% for business gives a $1,600 depreciable basis.

The placed-in-service date is the day the computer was ready and available for business use, not the day it arrived. That date fixes your first-year convention and starts the recovery period. Keep the invoice, receipts for accessories and setup, and something documenting your business-use percentage: usage logs, calendar records, or time-tracking software all work.

Filing: Form 4562 and Where the Numbers Go

You report computer depreciation on Form 4562. Because computers placed in service after 2017 are not listed property, do not use Part V. Use these sections instead:

Part I for Section 179 deductions. Enter the computer’s description, cost, and elected deduction.
Part II for the special depreciation allowance (bonus depreciation), if you are claiming the 100% first-year deduction.
Part III, Section B for MACRS under GDS. A five-year computer using the standard method goes on Lines 19a through 19j with the appropriate recovery period and convention.

Computers placed in service before 2018 remain listed property and are reported in Part V.¹¹

The final depreciation figure flows to your main return. Sole proprietors and independent contractors enter it on Line 13 of Schedule C (Form 1040).¹² Attach Form 4562 when you are claiming depreciation on property placed in service during the current year or making a Section 179 election.

Selling, Scrapping, or Switching to Personal Use

When you sell or trade in a computer you have been depreciating, you may owe tax on part of the proceeds. Computers are Section 1245 property, so any gain is taxed as ordinary income up to the total depreciation you previously claimed. If you took a $2,000 Section 179 deduction and later sell the computer for $800, that $800 is ordinary income, not capital gain.¹

Report the sale on Form 4797. Property held more than one year and sold at a gain runs through Parts II and III for the recapture calculation. Property held one year or less is reported in Part II.¹³

If you throw the computer away or donate it, stop claiming depreciation as of the date it leaves service. Any remaining undepreciated basis becomes a loss you can deduct in the year of disposal, subject to normal loss-limitation rules.

Switching a computer from business to purely personal use does not trigger immediate recapture, but it ends your depreciation deductions. You stop as of the conversion date and adjust your basis. If you later sell it, the gain or loss calculation uses that adjusted basis reflecting the depreciation you took as a business asset.

What to Keep and for How Long

Hold onto every record tied to the computer until the statute of limitations expires for the tax year you dispose of it. The records let you calculate depreciation during the recovery period and figure gain or loss at disposal.¹⁴

In practice, keep the purchase invoice, business-use documentation, and every Form 4562 you filed for that computer for at least three years after filing the return that reports the final depreciation deduction or the sale. If you took a Section 179 deduction or bonus depreciation in year one and sold the computer in year four, that runs roughly seven years from the original purchase. Without those records, the IRS can disallow the deductions if you are audited.

1
Internal Revenue Service. Publication 946 (2025), How To Depreciate Property
2
Internal Revenue Service. TCJA Depreciation Provisions
3
Office of the Law Revision Counsel. 26 USC 168 – Accelerated Cost Recovery System
4
Internal Revenue Service. Tangible Property Regulations – Frequently Asked Questions
5
Internal Revenue Service. Revenue Procedure 2025-32
6
Office of the Law Revision Counsel. 26 USC 179 – Election to Expense Certain Depreciable Business Assets
7
eCFR. 26 CFR 1.179-5 – Time and Manner of Making Election
8
Internal Revenue Service. One, Big, Beautiful Bill Provisions
9
Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One, Big, Beautiful Bill
10
eCFR. 26 CFR 1.168(d)-1 – Half-Year and Mid-Quarter Conventions
11
Internal Revenue Service. Instructions for Form 4562 (2025)
12
Internal Revenue Service. 2025 Instructions for Schedule C (Form 1040)
13
Internal Revenue Service. 2025 Instructions for Form 4797 – Sales of Business Property
14
Internal Revenue Service. How Long Should I Keep Records?