Business Security Cameras: Tax and Insurance Incentives

Surveillance systems and security cameras are an integral part of any business. They protect your property, employees, and customers from any threats or hazards and provide a safety blanket that allows you to solve employee disputes or provide evidence to authorities. While these benefits are welcomed by any small business owner, security cameras also have tax and insurance incentives. Every business should have a security system, but if you’re still unsure whether you should install one, these tax and insurance benefits should sway you in the right direction.

Tax Incentives for Business

Security Cameras

Among many of the revised policies and laws under President Trump’s 2018 tax overhaul, also known as the Tax Cuts and Jobs Act, is a new section that allows businesses to write off 100% of their security camera expenses. Prior to the change in tax laws, Section 179 of the tax code stated that security cameras and surveillance systems were depreciable assets. This meant that businesses could use them as a depreciable tax write-off, but they must first capitalize and depreciate the security cameras.

In 2018, that all changed. Section 179 of the IRS tax code changed security cameras and surveillance systems from depreciable assets to business expenses.

What’s Now Covered Under Section 179?

Thanks to these updates, a wide range of security and safety equipment now qualifies for immediate expensing. This includes not just security cameras and surveillance systems, but also:

• Fire-protection and alarm systems, such as sensing devices, computer controls, sprinkler heads, sprinkler mains, associated piping or plumbing, pumps, visual and audible alarms, alarm control panels, heat and smoke detection devices, fire escapes, fire doors, emergency exit lighting and signage, and fire-fighting equipment like extinguishers and hoses.
• Security systems for the protection of the building and its occupants—including window and door locks, security cameras, recorders, monitors, motion detectors, security lighting, alarm systems, entry and access systems, related junction boxes, and all the necessary wiring and conduit.

So, whether you’re looking to install basic cameras, a full alarm network, or even robust fire-safety features, these investments can now be written off in their entirety the year you make the purchase—making it a win-win for both your security and your bottom line. The amount that a business owner is allowed to
expense also increased from $500,000 per tax year to $1 million.

Understanding Bonus Depreciation for Security Cameras

Under the 2018 Tax Cuts and Jobs Act, “bonus depreciation” is a tax incentive that allows businesses to immediately deduct a large portion—or even 100%—of eligible asset costs, rather than spreading those deductions out over several years. This accelerated benefit isn’t just for big corporations; businesses of all sizes can take advantage of it.

When it comes to security cameras and life safety products, bonus depreciation can make a significant impact. If the equipment qualifies (typically, tangible property with a recovery period of 20 years or less), you can write off the entire purchase and installation costs in the year you place the system in service. For example, if you install a security system for $10,000, you could potentially deduct the full $10,000 on your taxes that same year—rather than only a fraction. At a 35% tax rate, that’s $3,500 in savings right off the bat, dramatically lowering your out-of-pocket investment.

It’s worth noting that these rates start to phase down after 2022—from 100% to 80% in 2023, then declining each year until reaching 20% by 2026. Still, even partial bonus depreciation offers solid savings.

Additionally, certain improvements to the inside of your business property, labeled as Qualified Improvement Property (QIP), may also become eligible for bonus depreciation thanks to ongoing clarifications in the tax code. So, the scope of what you can write off may become even broader as new guidance is released.

With this tax… With this tax
break, owners can expect to save somewhere between 20% and 30% depending on
their state of incorporation and geographic location.

Key Requirements and Considerations for Deductions

To qualify for the Section 179 deduction or bonus depreciation on your security and fire protection systems, there are a few important rules to keep in mind:

• Timing Matters: The equipment must be both purchased and placed into service during the tax year in which you want to claim the deduction. In other words, you can’t buy it in December, let it sit in a box until January, and still claim the write-off for the previous year.
• Electing the Deduction: Claiming Section 179 is completely optional—you’re not required to do it every year. If you would rather use regular depreciation or bonus depreciation, you can opt out, but make sure to follow the specific steps set by the IRS.
• Replacing Old Systems: If you upgrade your current system, any undepreciated value left on your old cameras or equipment can usually be written off in the year that you dispose of them—this is subject to the relevant accounting and fixed asset disposal guidelines.

Staying on top of these details ensures your business captures every available advantage, setting you up for significant savings come tax season.

Which Security and Life-Safety Products Qualify?

Typically, a range of business security and life-safety products can qualify for bonus depreciation. This includes items such as surveillance cameras, burglar alarms, fire alarm systems, and electronic access controls. The essential rule is that these products must be directly related to your primary commercial activity.

If the equipment serves a clear role in protecting your premises, property, or employees, and is vital to your main business operations, it often falls within the scope for bonus depreciation. Additionally, systems installed in areas central to your business’s day-to-day functions tend to meet the eligibility requirements more easily, given the shorter recovery periods often required by the IRS.

Take advantage of these incentives by making sure your new or upgraded systems are being used to safeguard your business’s core activities.

Handling Depreciation When Upgrading Your Security System

If your business decides to upgrade or replace an existing security or fire protection system, you’re not out of luck when it comes to prior investments. The remaining, undepreciated value of your old system can typically be claimed as a deduction in the same tax year the replacement occurs, as long as you follow proper disposal accounting procedures. Be sure to keep accurate records and consult with your tax advisor to ensure you’re maximizing your allowable deductions when swapping out old equipment for new, more advanced systems. This can provide a helpful boost to your bottom line at tax time.

Understanding Qualified Improvement Property (QIP) and Bonus Depreciation

Another important consideration for business owners is how Qualified Improvement Property (QIP) comes into play when upgrading their facilities. QIP generally refers to certain improvements made to the interior of a commercial building—think of additions like new lighting, HVAC systems, or modernizing your surveillance setup. While security systems installed as part of these upgrades may be covered, the eligibility for bonus depreciation hinges on how the law defines QIP.

As of the 2018 tax overhaul, some clarifications were still needed, but the general expectation was that QIP would soon become eligible for 100% bonus depreciation under the revised rules. This means that, once finalized, businesses could immediately deduct the full cost of security cameras and other qualifying improvements placed in service, rather than spreading deductions out over several years.

If you’re considering upgrades beyond just cameras—such as a complete security and safety overhaul in your office interior—keep an eye on developments in QIP regulations. These changes could make your investment even more lucrative at tax time by stacking up the available deductions.

Real-World Example: Fire Alarm System Savings

To illustrate just how significant these new tax rules can be, let’s look at a practical scenario involving a fire alarm system. Suppose a sole proprietor decides to outfit their 100,000-square-foot office building with a fire alarm system, and the total cost for materials and installation comes to $60,000.

Before the 2018 changes:
Businesses had to depreciate the investment over nearly four decades. That meant only about $1,500 could be deducted in the first year. If you’re in a 35% tax bracket, this only put about $530 back in your pocket initially.

After the Tax Cuts and Jobs Act:
Now, that entire $60,000 can be written off in the first year as a business expense. Using the same tax rate, that’s $21,000 in immediate tax savings. The upfront cost for that fire alarm system suddenly drops from $59,500 to just $39,000.

This example makes it easy to see why upgrading your security infrastructure is not just safer for your business—it’s also smarter for your bottom line.

Bonus Depreciation Rates by Year

Under the new tax law, businesses benefit from increased bonus depreciation for qualifying property—including security cameras and surveillance equipment. Here’s how the bonus depreciation rates roll out over the years:

• 2018–2022: 100% bonus depreciation
• 2023: 80% bonus depreciation
• 2024: 60% bonus depreciation
• 2025: 40% bonus depreciation
• 2026: 20% bonus depreciation

This means that if you made any qualified purchases between 2018 and 2022, you could immediately expense the entire cost in those tax years. However, starting in 2023, the percentage you can depreciate upfront begins to decrease each year, eventually phasing out after 2026.

Timing your investment in security systems with these declining bonus depreciation rates could help you maximize savings, so it’s worth planning ahead.

Insurance Incentives for Business

Security Cameras

Insurance companies want to see mitigated risks when it comes to your business. By doing so, you can effectively lower your insurance premium. Therefore, any security cameras that you install will lower your insurance premium. An insurance assessor or actuary will determine the lessened risk based on the security camera system that you purchase.

The key to lowering your risk as much as possible is to place your security system in high-traffic or high-risk areas, as well as potential blind spots where crime could be committed. The definition of the camera and how you choose to store your footage (hard drive or cloud) may also have an impact on the deduction amount of your insurance premium.

In addition, business owners should also
maintain a strong cybersecurity presence in order to lower their insurance
costs. As threats such as phishing and ransomware remain rampant and a true
threat to businesses, insurance carriers will want to see proper cybersecurity
infrastructure, surveillance, and training programs to raise employee
awareness. Coupled with security cameras, a strong cybersecurity infrastructure
will allow your business to maximize its insurance savings and lead to a
stronger business overall.

Whether you choose wireless cameras, wired analog cameras, CCTV, or another type of surveillance system catered to your needs, the advantages go far beyond safety and security. With the money you save on insurance premiums and tax savings, you’ll have a nice nest egg for improvements, updates, new hires, and other upgrades for your business.

Contact us to get a comprehensively detailed quote for all your business security and surveillance needs. We serve the Texas area and specialize in mobile surveillance and security trailers if your application requires it.

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