Electricians, plumbers, HVAC techs, carpenters, and other independent contractors in the trades often buy thousands of dollars in tools, equipment, and vehicle expenses every year. If you’re self-employed rather than a W-2 employee of a contracting company, nearly all of that spending is deductible.
Are You Self-Employed or a W-2 Employee?
If you work as a subcontractor, run your own contracting business, or receive 1099 income instead of a W-2, you’re self-employed and file Schedule C, which opens up the deductions below. W-2 tradespeople generally can’t deduct unreimbursed tools and equipment under current federal rules.
Hand Tools and Power Tools
Drills, saws, wrenches, and other hand and power tools used for your trade are deductible, either as an immediate expense for smaller purchases or depreciated over time for larger equipment.
Heavy Equipment and Machinery
Larger equipment like generators, compressors, ladders, and scaffolding can often be deducted in full in the year purchased under Section 179, up to annual limits, rather than depreciated over several years.
Work Vehicle and Mileage
A truck or van used for hauling tools and materials to job sites is deductible using either the standard mileage rate or actual expenses, and if the vehicle is used exclusively for business, you may be able to deduct a larger share of its costs.
Work Clothing and Safety Gear
Steel-toed boots, hard hats, safety glasses, high-visibility vests, and branded uniforms required for the job are deductible, though ordinary work clothes that could be worn outside the job generally are not.
Licenses, Permits, and Insurance
Contractor license fees, trade certifications, continuing education required to maintain your license, and general liability or tools insurance are all deductible.
Materials and Supplies
Materials you purchase and install for clients, along with consumable supplies like fasteners, tape, and sealants, are deductible as cost of doing business, separate from any materials the client reimburses you for directly.
Home Office and Shop Space
If you have a dedicated home office for bookkeeping and scheduling, or a workshop or garage used exclusively for the business, you can deduct a portion of related home costs.
Subcontractor Payments
If you hire helpers or other subcontractors and pay them $600 or more in a year, those payments are deductible, but you’ll need to issue them a 1099-NEC.
Frequently Asked Questions
Can I deduct tools I already owned before starting my business? Generally you can only deduct the business-use portion going forward, and larger existing equipment may need to be depreciated based on its value when you started using it for business.
What if my tools are also used for personal projects? Deduct only the business-use percentage, and keep records showing how the tool is primarily used.
Do I need a separate business vehicle? No, but tracking mileage or expenses separately for business versus personal use of the same vehicle is essential for claiming an accurate deduction.
A tax professional can help you decide whether to expense equipment immediately under Section 179 or spread the deduction out through depreciation, since the right choice depends on your income and future plans for the business.