Cybersecurity Tax Deductions: Are You Leaving Money on the Table?

Why Cybersecurity Matters for Your Business

Imagine coming to work and finding your entire system locked by hackers. You can’t access customer data, financial records, or emails. Then, a message appears demanding $50,000 to unlock everything.

Unfortunately, cyberattacks like this happen to small businesses every day. Hackers know small businesses often have weak security, making them easy targets.

Cybercrime can be costly, but the good news is that many cybersecurity expenses are tax-deductible. That means you can protect your business while also reducing your tax bill.

Four Cybersecurity Deductions Your Business Should Use

1. Security Software

If you buy antivirus software, ransomware protection, or other security tools, you can usually deduct the full cost in the year you purchase them.

• Off-the-shelf software qualifies for a Section 179 deduction, meaning you can write off the cost immediately.
• Custom security software qualifies for bonus depreciation (60 percent in 2024 and 40 percent in 2025).
• Cloud-based security services (such as endpoint protection) are fully deductible as monthly business expenses.

2. Firewalls

A firewall blocks hackers from entering your business network. These are also tax-deductible, just like security software.

Example: If your business spends $2,500 on a firewall, you can usually deduct the full amount immediately under Section 179.

3. Ransom Payments (Uncertain Deduction)

If your business gets hit with ransomware and you pay to unlock your data, can you deduct that cost?

Right now, the IRS has not issued clear guidance. Some tax experts say it might qualify as a theft loss, but others warn it could be disallowed as an illegal payment (like bribes, which are non-deductible).

What’s the best move? Invest in strong security now so you never have to face this dilemma.

4. IT Staff & Cybersecurity Services

• If you have in-house IT employees, their salaries are fully deductible like any other wages.
• If you hire outside cybersecurity consultants, those costs are also fully deductible as business expenses.

Other Cybersecurity Costs You Can Deduct

In addition to the main categories above, many other cybersecurity-related expenses are deductible, including:

• Security training for employees
• Data encryption tools
• Incident response plans
• Cyber liability insurance premiums

Don’t Let Cyber Threats—or Missed Deductions—Cost You

Cyberattacks can shut down a business overnight. Investing in cybersecurity is critical, but it doesn’t have to hurt your bottom line. The IRS allows tax breaks to help offset these costs—but only if you claim them correctly.

Need help? At IRSProb, we specialize in helping small businesses stay compliant, reduce tax liability, and maximize deductions.

Let’s make sure you’re protected from cyber threats—and overpaying on taxes.

Call us today for expert guidance!