Deductions by trade
What an appliance repair business can deduct.
For sole proprietors, single-member LLCs and small service companies filing in the United States. Everything here assumes you are self-employed rather than an employee with a W-2 — if you receive a W-2 from a service company, the answer is different and much shorter.
Tax year 2026
Start here
A van stocked with parts is money spent and nothing deducted.
Parts are deducted the later of when you pay for them and when they go into a customer's machine. A van carrying nine thousand dollars of compressors, control boards and pumps on 31 December is nine thousand dollars of cash out and nothing off this year's profit. That is why a big December parts order does not fix a tax bill — and why the one job worth doing on 31 December is counting the van and the shelf. It is also the count that makes the parts line defensible a year later, when nobody remembers what was on board.
The $9,000 still on the van and the shelf at 31 December is deducted in the year it goes into a machine. An illustration, not your numbers.
Parts, and when they become a deduction
The section that decides the number at the bottom of the return, and the one most service businesses get wrong by a whole van load.
- Parts bought for customer work: boards, compressors, motors, pumps, valves, belts, seals, elementsDeducted the later of when you pay and when the part goes into a machine. What is still on the van at 31 December belongs to next year.
- A count of parts on hand at 31 December — van, shelf, garage, storage unitTax tip. One evening with a clipboard is what turns the parts line from a guess into a number. Photograph the shelves as you go: the count is the record, and the photographs are what make it believable.
- Freight, shipping and handling charged on parts ordersPart of the cost of the part, not a separate expense — so it follows the part into the year it is installed.
- Core charges, and the credit when the core goes backThe credit reduces the cost of the part. It is not income, and treating it as income inflates both sides of the return.
- Sales tax on partsWhere you pay it, it is part of the cost of the part.Tax tip. In most states a part you install for a customer is a resale, not a purchase. A resale certificate stops you paying the tax on the way in and charging it again on the way out — and it is worth registering for before the next distributor order, not after the next return.
- Parts written off: obsolete, damaged, or special-ordered for a job that was cancelledDeductible in the year you dispose of them, with a record of what went and why. A part quietly thrown in a skip is a deduction nobody can see.
- Consumables that are not parts: wire, terminals, tape, sealant, silicone, lubricant, cleanerThese are supplies and come off when used, which for most vans is effectively when bought.
Van and mileage
You are paid per call, and most of the working day is the driving between them. 2026 has two mileage rates, so the log needs a line drawn at the end of June.
- A mileage log with three totals: all miles driven, business miles, and commuting milesA tracker running in the background is worth more than good intentions. A log reconstructed in March convinces nobody.Tax tip. The standard rate for 2026 is 72.5 cents a mile from 1 January to 30 June and 76 cents from 1 July to 31 December. Split the log at 30 June, or the second half of the year is claimed three and a half cents short on every mile.
- Actual costs, if you use those instead of the rate: fuel, insurance, repairs, tyres, registration, lease payments or loan interestEvery receipt for the year, and the mileage split on top, because actual costs still have to be apportioned.Tax tip. The first year decides more than it looks. Start with the standard rate and you may switch later; start with actual costs and depreciation locks that van out of the rate for good.
- The van itself, if you bought it for the businessA cargo van with no seating behind the driver is not caught by the $32,000 cap that applies to SUVs between 6,000 and 14,000 pounds — the whole cost can go in year one under Section 179 or bonus depreciation.Tax tip. Writing the van off in full is not free money. Sell it in three years and the deduction comes back as ordinary income in the year of sale. Decide against how long you expect to keep it, not against this April.
- Shelving, bins, drawers and a racking system fitted to the vanAn improvement to the vehicle, depreciated with it, rather than a supply bought once.
- Parking and tolls on the way to callsDeductible on top of the mileage rate — the rate does not include them.
- Lettering, wraps and magnetic signs
Tools and instruments
- Multimeters, clamp meters, insulation testers, leak detectors, manifold gauges, vacuum pumps, recovery machines
- Appliance dollies, stair climbers, straps, blankets, floor protection and door jamb guards
- Hand tools: nut drivers, spanners, pliers, crimpers, torches, drills and their batteries
- Anything expected to last beyond the yearNormally depreciated. The de minimis safe harbor lets you expense an item costing $2,500 or less instead, if you make the election on the return — keep invoices with the per-item price visible.Tax tip. Adopt a written $2,500 de minimis policy before the year begins and a recovery machine or a set of gauges under that amount becomes an expense instead of a depreciation schedule. One page, signed once, settles it every year after.
- Calibration, repair and replacement of test equipment
- Subscriptions for wiring diagrams, service manuals and technical forumsManufacturer service portals, parts lookups and the technician boards you use to diagnose are all business subscriptions.
Techs and helpers
- Payments to subcontract techs, with a signed Form W-9 collected before the first paymentFor 2026 a Form 1099-NEC is required once you pay someone $2,000 or more in the year, up from $600.Tax tip. No taxpayer number means you are required to withhold 24 percent. Getting the W-9 first costs a minute; chasing it in January costs the deduction.
- Wages, payroll taxes and workers compensation, if they are employeesWhat decides employee or contractor is control — over the schedule, the route, the van, the parts they carry — not what the agreement is called.
- Ride-along and training time you pay a new tech for
- Uniforms, shoe covers and protective gear you buy for the crew
- A helper for two-person installs and heavy removals
Shop, storage and the home office
Where the parts live between calls, and the room that decides whether the first drive of the day is a deduction.
- The space used regularly and only for the business: dispatch, invoicing, parts ordering, recordsExclusive use is the hard part. A desk in the corner of a spare room can qualify; the kitchen table cannot.Tax tip. A qualifying home office makes your home the principal place of business — and that turns the drive to the first call and home from the last from commuting into business miles. On a route of six or eight calls a day that one change is worth several times the office deduction itself.
- Square footage of that space and of the whole home
- The year's rent or mortgage interest, property tax, utilities, insurance and repairsOr the simplified method: $5 per square foot up to 300 square feet, with no receipts to keep.
- Rent on a unit, container or warehouse bay for parts and used machines
- Shelving, bins and racking for the parts store
Insurance, licenses and authorizations
- General liability insurance
- Commercial auto, and cover for tools and stock carried in the vanA personal policy does not cover the parts and instruments inside. A van broken into overnight is the most common loss in this trade.
- EPA Section 608 certification and renewal, where the work touches sealed refrigerant systems
- Manufacturer service-authorization fees and annual dues
- Workers compensation premiums, including the audit adjustment
- Business license, state registration and the annual report fee
- A bond, where a state or a property manager requires one
Running the business
- Dispatch, scheduling and invoicing software: Housecall Pro, Jobber, ServiceTitan and the like
- Phone and internet, at the business-use share, and an answering or booking serviceThe whole bill is not deductible when the phone is also personal. A defensible percentage, applied consistently, is.
- Payment processing fees from Stripe, Square or a card readerThe fee is an expense; the gross invoice is income. Both belong in the books.
- Advertising: website and hosting, Google Local Services, Yelp, Angi and Thumbtack leads, van signage, fridge magnets and door hangers
- Bank charges, and interest on a business loan, line of credit or business card
- Bookkeeping, tax preparation and legal fees
- Uniforms with the company name, shoe covers, floor mats and the cost of laundering them
Your own taxes and benefits
- Health insurance premiums you pay for yourself and your family
- Contributions to a SEP IRA, SIMPLE or solo 401(k)Tax tip. The one deduction you can still create after the year has ended: a SEP can be funded up to the filing deadline, extensions included. Everything else on this page had to happen by 31 December.
- Estimated tax payments made during the year, with dates and amounts
- The qualified business income deductionTwenty percent of the profit, now permanent, and from 2026 a minimum deduction of $400 for anyone with at least $1,000 of income from a business they actively run.
- Startup costs, if this was the first yearUp to $5,000 may be deductible in the first year, with the remainder amortized. The first tools and parts order may qualify even if purchased before the first service call.
Training and certification
- Manufacturer factory training on the brands you service
- EPA 608 renewal and any state or local trade certification
- Technical courses, sealed-system and inverter training, and the materials that come with them
- Trade publications and conference attendanceTraining that keeps or improves the skills of the business you already run is deductible. Training that qualifies you for a different trade is not.
What you cannot deduct
The list nobody publishes, and the reason most letters from the IRS get written. None of these become deductible because the business paid for them.
- Parts still on the van, the shelf or in the garage at 31 DecemberPaid for, yes. Deducted this year, no — they go in the year they go into a machine.
- Your own time on a warranty callbackThe part you fit again is a deduction. The afternoon you spent fitting it is not.
- Labor you waived to keep a customer happyYou cannot deduct an amount you chose not to bill. Only an actual expense can create a deduction.
- The drive from home to the first call and home from the last oneUnless a qualifying home office makes your home the principal place of business.
- Ordinary clothes — jeans, t-shirts, trainers — even if you only wear them on calls
- Tools or parts used on your own appliances, or a relative's, at no charge
- Lunch on your own between callsA meal needs a business guest and a business reason, and even then only half of it.
- The full phone bill, when the phone is also your personal one
- Money you pay yourselfAn owner's draw is not an expense. It does not reduce the profit you are taxed on.
- Traffic tickets, parking fines and penalties
- A no-show or a job the customer refused to pay forThere is nothing to deduct, because the income was never recorded. What you are out is the drive, and that is already in the mileage.
- Training that qualifies you to enter a different trade
Before you file
Three records decide this page: a count of the parts on the van at 31 December, a mileage log split at the end of June, and invoices that show which parts went into which job. The rest is receipts, and receipts can be rebuilt. Those three cannot.
Open the business checklistNot sure which of these apply to you?
A list is a starting point, not an answer. Bring your own numbers to a free intro call and we will work out which of these belong on your return and what is missing from your records.
This page is general information for the 2026 tax year, not advice about your business. A deduction has to be ordinary and necessary for your own trade, and your records have to support it. Amounts and rules are current as of the date of publication and can change.