Supplies Deductions
From cleaning products to iPads. If you use it for work and it is not inventory, it likely belongs here — including equipment under $2,500 that you can write off immediately instead of depreciating.
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Line 22, "Supplies," is a catch-all category for the tangible items your business consumes to operate. Unlike expensive equipment (Assets) that lasts for years, or products you sell (Inventory), Supplies are generally items that are used up within one year. However, the definition has expanded significantly — smart business owners can now deduct much larger purchases (like laptops and furniture) on this line instead of depreciating them slowly.
The Big Confusion: Supplies vs. COGS
Getting this distinction wrong is the #1 mistake on Line 22. The defining question: Does the customer walk away with it? If yes, it is COGS. If no, it is a Supply.
| Item | Category | Reasoning |
|---|---|---|
| Wood (furniture maker) | COGS | Becomes part of the product sold |
| Sandpaper & glue (furniture maker) | Supplies | Used in production, not sold |
| T-shirts (screen printer) | COGS | Sold with the design on them |
| Emulsion & screens (screen printer) | Supplies | Used to create the print, not sold |
| Coffee beans (cafe) | COGS | Sold to the customer in the cup |
| Filters and napkins (cafe) | Supplies | Consumed in operations, not sold |
The De Minimis Safe Harbor ($2,500 Rule)
This is one of the most powerful tax strategies for small business owners. It allows you to ignore depreciation for small assets and deduct them immediately as Supplies.
The Rule: Under $2,500 Per Item
You can elect to deduct any tangible property you purchase as a "Supply" (expense) in the current year if the invoice cost is $2,500 or less per item. This avoids the depreciation schedule entirely.
You buy a $2,000 laptop. You must depreciate it over 5 years. You get approximately a $400 deduction this year.
You buy a $2,000 laptop. You classify it as "Supplies." You get a $2,000 deduction today — zero depreciation schedule needed.
*Requirement: You must attach a statement titled "Section 1.263(a)-1(f) De Minimis Safe Harbor Election" to your return. Most tax software handles this automatically when you check the applicable box.
Checklist: Common Supply Expenses
Office Supplies
Paper, ink, toner, staplers, pens, folders, shredders
Shipping Supplies
Cardboard boxes, packing tape, bubble wrap, labels
Tech Accessories
Cables, chargers, keyboards, mice, webcams (under $2,500)
Books & Reference Materials: Line 22 is also the traditional home for "Reference Materials." Books, trade journals, and industry reports are deductible supplies. This includes audiobooks and online courses — IF they are directly related to maintaining or improving skills in your current business. Learning a new career is not deductible.
Audit Defense: Supplies
Frequently Asked Questions
Sources & Citations
- • IRS Regulation 1.162-3 (Materials and Supplies)
- • IRS Regulation 1.263(a)-1(f) (De Minimis Safe Harbor)
- • IRS Publication 535 (Business Expenses)
Make Sure You're Not Leaving Deductions Behind
Between the de minimis election, COGS vs. supplies classification, and receipt documentation, Line 22 has more complexity than it looks. Book a free 30-minute review.
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