Section 179, de minimis safe harbor, or depreciation: writing off daycare equipment

Pub. 587 and the Form 4562 instructions cited here are 2025 editions; verify for 2026 when the new editions post. The 2026 Section 179 limits below are from Pub. 946.

Three ways to deduct equipment

When you buy something for your daycare that lasts more than a year, you generally have three paths: expense it under the de minimis safe harbor, elect a Section 179 deduction, or depreciate it over several years. Pub. 587 notes you can also combine the last two: take part of the cost under Section 179 and depreciate the rest.

De minimis safe harbor: up to $2,500 per item or invoice

According to the IRS tangible property regulations FAQ, if you don't have an applicable financial statement (AFS), such as an audited statement, you can use the de minimis safe harbor to deduct amounts up to $2,500 per invoice or item (as substantiated by invoice). Most home daycares do not have an AFS. Taxpayers with an AFS can use $5,000.

• It is an annual election. The IRS says to attach a statement titled "Section 1.263(a)-1(f) de minimis safe harbor election" to your timely filed original return, including extensions.
• You generally need to treat these amounts the same way in your books.
• Items above the limit aren't disqualified from other options. They follow the normal rules (Section 179 or depreciation).
• The $2,500 figure was set by IRS Notice 2015-82 (raised from $500 for tax years beginning in 2016) and is not adjusted for inflation. The IRS has not announced a different amount for 2026.

For most daycare purchases, such as a $180 crib, a $600 table set, or a $900 laptop, this is the simplest path.

Section 179

Section 179 lets you deduct the cost of depreciable tangible personal property bought for your business in the year you place it in service. You elect it in Part I of Form 4562. Per Pub. 946:

• 2025: maximum deduction $2,500,000, reduced once Section 179 property placed in service exceeds $4,000,000.
• 2026: maximum deduction $2,560,000, reduced once Section 179 property exceeds $4,090,000.

Those limits rarely matter for a home daycare. The rules that do matter:

• Business income limit: the deduction generally can't exceed your taxable income from active business (Pub. 946 explains the details and carryover).
• Not for your home: Pub. 587 says you can't take a Section 179 deduction for the business part of your home.
• Not for converted personal items: Pub. 587 says property you previously used personally and then move into business use can't get Section 179. You may still depreciate it.
• Listed property (for example, cars) must be used more than 50% for business to qualify.

Regular (MACRS) depreciation

Depreciation spreads the cost over the property's recovery period using Parts II and III of Form 4562. Pub. 587 says most business property used in a home is 5-year or 7-year property under MACRS: 5-year for computers and peripheral equipment, and 7-year for office furniture and fixtures. Pub. 587's half-year table shows first-year rates of 20.00% (5-year) and 14.29% (7-year). Your home itself is depreciated on Form 8829, not here.

Special (bonus) depreciation

Pub. 946 explains that P.L. 119-21 (the One Big Beautiful Bill Act) reinstated the 100% special depreciation allowance for certain qualified property acquired and placed in service after January 19, 2025. It applies automatically unless you elect out, and it is figured before regular depreciation. Rules on qualified property and acquisition dates are detailed, so check Pub. 946 chapter 3 for your purchase.

Items your family also uses

Many daycare items are shared: the dining table, the couch, the TV. For those you deduct only the business-use share. Pub. 946 says you can deduct only the business-use part of property used for both business and personal purposes, and Pub. 587 says you must allocate the use of listed property used for more than one purpose.

For items in your daycare space, many providers use their time-space percentage as the business-use share. Items used only for the daycare, such as cribs, are generally 100% business. Use the free time-space calculator to get your percentage, and confirm the allocation method for shared items with your tax preparer.

Records to keep

• Receipts or invoices for each item, with the date placed in service.
• Which method you used for each item, and your de minimis election statement each year you use it.
• Your time-space or business-use percentage calculation for shared items.

See our 2026 deductions checklist and audit records guide.

Frequently asked questions

What is the de minimis safe harbor for home daycare?

An annual election that lets taxpayers without an applicable financial statement deduct tangible property costing up to $2,500 per invoice or item instead of depreciating it. You attach an election statement to your timely filed return.

What is the Section 179 limit for 2026?

IRS Publication 946 lists a maximum Section 179 deduction of $2,560,000 for tax years beginning in 2026, reduced once Section 179 property placed in service exceeds $4,090,000. For 2025 the figures are $2,500,000 and $4,000,000.

Can I take Section 179 on furniture I already owned?

No. Pub. 587 says property previously used for personal purposes and then converted to business use can’t get a Section 179 deduction, but you may be able to depreciate it.

How do I deduct items my family also uses?

Deduct only the business-use portion. Many home daycare providers use their time-space percentage for shared items in the daycare area; confirm the method with your tax preparer.