Cabinet Installation Business Deductions and Equipment Write-Offs

By Yarik Yarosh, CPA ·September 5, 2026 ·3 min read

Written by Yarik Yarosh, CPA (US & Canada) September 5, 2026 · FL CPA license AC61704 · CPA Ontario

Cabinet businesses fall into two models with very different deduction profiles. Installation-only businesses buy pre-manufactured cabinets from suppliers and install them, with the cabinet cost as a pass-through (30-50% of job price). Fabrication shops build custom cabinets in-house, requiring significant equipment (CNC routers, table saws, edge banders, spray booths) and raw materials (plywood, hardwood, hardware). Both models are NOT specified service trades or businesses (SSTBs) under IRC 199A, so the full QBI deduction applies at all income levels. Workers’ compensation rates for cabinet work are among the lowest in the trades (4-7% of payroll) because the injury risk is lower than heavy construction.

✓Key takeaway

Major deduction categories for cabinet businesses:

Fabrication equipment (custom cabinet shops):

CNC router: $30,000-$80,000 (the defining asset for custom shops)
Table saw (cabinet grade): $2,000-$10,000
Edge bander: $5,000-$30,000
Panel saw (vertical or sliding): $3,000-$15,000
Planer/jointer: $2,000-$8,000
Drill press/boring machine: $1,000-$5,000
Spray booth and HVAC for finishing: $5,000-$20,000
Dust collection system: $2,000-$10,000
Clamp racks and assembly tables: $1,000-$5,000
Pneumatic nailers and staples: $500-$2,000
Router table: $500-$3,000
Sanding equipment: $500-$3,000

Installation tools (both models):

Laser measuring tools: $200-$1,000
Level systems (digital and spirit): $100-$500
Scribing tools: $50-$200
Power drill/driver sets: $300-$1,000
Circular saws and jig saws: $200-$800
Countertop cutting tools: $200-$500
Cabinet jacks/lifts: $200-$1,000
Shims, fasteners, adhesives: $500-$1,500/year

Vehicles:

Cargo van or enclosed trailer: $30,000-$60,000
Pickup truck: $30,000-$55,000
Box truck (larger operations): $40,000-$70,000

Materials (fabrication shops, cost of goods sold):

Plywood (cabinet grade): $50-$150/sheet
Hardwood lumber: $5-$20/board foot
MDF and melamine: $25-$60/sheet
Hardware (hinges, slides, pulls): $50-$300 per cabinet set
Finishing materials (stain, lacquer, paint): $200-$1,000/month
Countertop materials (if offering): varies widely

Materials (installation-only, cost of goods sold):

Pre-manufactured cabinets (purchased from supplier): 30-50% of job price
Countertop orders: subcontracted or purchased
Installation hardware and supplies: $200-$500/job

Insurance:

General liability: $1,500-$4,000/year
Workers’ compensation (4-7% of payroll)
Commercial auto: $2,000-$5,000/year
Inland marine (tools on jobsite): $500-$1,500/year

Shop overhead (fabrication):

Shop lease: $2,000-$6,000/month (need space for CNC, assembly, finishing)
Utilities: $500-$1,500/month (dust collection and spray booth use significant power)
Shop insurance: included in GL or separate property policy

How does fabrication vs. installation affect taxes?

Hypothetical example

Round numbers. Two cabinet business owners, both at $300,000 annual revenue.

Owner A: installation-only model.

Revenue: $300,000
Cabinet purchases (pass-through): $120,000 (40%)
Countertops (subcontracted): $30,000
Labor (2 installers): $90,000
Vehicle and tools: $8,000
Insurance: $6,000
Overhead: $12,000
Net profit: $34,000
Year 1 equipment (van + tools): $45,000 (bonus depreciation)
Taxable profit after depreciation: ($11,000) loss

Year 2 (no major purchases): net profit $34,000, tax approximately $8,000.

Owner B: custom fabrication shop.

Revenue: $300,000
Raw materials: $60,000 (20%, higher margin because labor adds more value)
Hardware and finishing: $15,000
Labor (2 shop workers): $90,000
Shop lease: $36,000
Utilities: $12,000
Insurance: $8,000
Marketing: $6,000
Net profit before depreciation: $73,000
Year 1 equipment (CNC $50,000, table saw $5,000, edge bander $15,000, spray booth $10,000, dust collection $5,000, van $40,000, tools $5,000): $130,000
Taxable profit after depreciation: ($57,000) loss

Year 2 (no major purchases): net profit $73,000, tax approximately $17,400.

Key difference: the fabrication model has higher profit per dollar of revenue ($73K vs. $34K on identical revenue) because the owner captures the manufacturing margin. But it requires more capital ($130K vs. $45K in equipment) and carries more overhead (shop lease, utilities, dust collection compliance).

Tax planning implication: the fabrication model produces more taxable income in steady state (Year 2+), making entity structure (S-Corp) more important. At $73,000 net profit, S-Corp saves approximately $5,000/year vs. sole proprietorship. At $34,000, the S-Corp overhead (payroll, separate return) may not be worth the savings.

Illustrative numbers only, not a real client and not advice for your facts.

Related guides:

Want this checked against your own situation?

Start with a Diagnostic: a CPA licensed in the US and Canada reads your file and tells you in writing what's wrong and how to fix it, three to four business days after you finish the questions. The report is $250. If you hire us for any work after that, you get the $250 back as a discount on that work. Or send us your return or your letter and get a fixed price, free.

Start a Diagnostic →See prices

Get a fixed price, free

Get the next cross-border guide by email

One or two plain-English guides a week on US-Canada tax. No spam, unsubscribe anytime.

Cite this page

Yarik Yarosh, CPA. "Cabinet Installation Business Deductions and Equipment Write-Offs." Blue Cloud CPA, September 5, 2026. https://bluecloudcpa.com/guides/cabinet-installation-deductions-equipment

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.