Tax savings can make a big difference for any business, and office furniture depreciation is one way to maximize deductions. Knowing how long you depreciate office furniture is essential for reducing taxable income while staying compliant with IRS regulations. Understanding the depreciation schedule for office furniture helps business owners plan purchases strategically and take full advantage of tax benefits. Keep in mind that tax laws and limits can change, so it’s always a good idea to verify the latest guidelines with the IRS or a tax professional.
Depreciation Schedule for Office Furniture
The IRS considers office furniture a tangible business asset with a set depreciation period. According to IRS Publication 946, office furniture falls under the seven-year depreciation schedule under the Modified Accelerated Cost Recovery System (MACRS). This applies to items such as:
- Desks and chairs
- Filing cabinets
- Bookcases
- Conference tables
Depreciation allows businesses to spread the cost of furniture over multiple years instead of deducting the full amount in the year of purchase. However, some options may accelerate deductions.
Section 179 Deduction: Accelerate Your Tax Benefits
Instead of waiting seven years to claim the full cost of office furniture, Section 179 allows businesses to deduct the entire expense in the year of purchase, up to a limit. For the 2024 tax year, the Section 179 deduction limit is $1,220,000, with a phase-out threshold of $3,050,000. This is a great option for businesses investing in high-quality furniture upfront and wanting to recover the cost immediately. To qualify:
- The furniture must be used for business purposes at least 50% of the time.
- The furniture must be placed in service during the tax year you claim the deduction.
Bonus Depreciation: Another Way to Speed Up Deductions
For 2024, businesses can write off 60% of eligible furniture costs in the first year through bonus depreciation. This percentage is lower than in previous years due to phase-outs but still provides an opportunity for faster tax benefits. Unlike Section 179, bonus depreciation applies automatically to eligible purchases unless a business opts out. It also does not have an income limit, making it useful for companies exceeding the Section 179 threshold.
Depreciating Office Furniture for a Home Office
The depreciation rules differ slightly for those who work from home. Home office furniture is only deductible if used exclusively for business. If the furniture is also used for personal activities, it does not qualify for depreciation or other tax deductions.
For those who qualify:
- Home-based businesses can depreciate furniture over seven years using MACRS.
- Section 179 applies, but only if the furniture is exclusively for business use.
- Bonus depreciation may be used if the furniture meets IRS guidelines.
Those claiming the simplified home office deduction cannot depreciate furniture separately since the deduction includes all business-related expenses.
When to Depreciate and When to Deduct
Choosing between depreciation, Section 179, or bonus depreciation depends on cash flow, tax strategy, and expected profits. Consider these scenarios:
- If immediate tax relief is a priority: Use Section 179 for an upfront deduction.
- If planning long-term tax savings: Use standard seven-year depreciation.
- If purchasing before bonus depreciation phases out: Take advantage of the 60% first-year deduction in 2024.
Consulting a tax professional ensures businesses make the best choice based on their financial situation.
Upgrade Your Office Furniture and Maximize Your Tax Savings
Investing in office furniture isn’t just about improving the workplace—it’s also a smart tax strategy. Whether choosing seven-year depreciation, Section 179, or bonus depreciation, understanding how long you depreciate office furniture can lead to significant savings.If you’re looking for high-quality office furniture that enhances productivity and meets tax deduction requirements, schedule a consultation with a Solutioneer. Let’s find the perfect furniture to support your business while optimizing tax benefits.