How long should I keep invoices for tax purposes in the US?

Why invoice retention matters for US taxes

Invoices are more than proof that money changed hands. For tax purposes in the United States, they function as evidence of business income, deductible expenses, sales activity, and the timing of transactions. If the IRS ever asks questions—whether through a routine notice, an audit, or a request to substantiate specific line items—your invoices can be the fastest way to demonstrate what happened, when it happened, and why it was reported the way it was.

Many people assume “keeping invoices” only matters for businesses, but that’s not quite right. Freelancers, side hustlers, landlords, and even individuals who claim certain deductions or credits may need invoice-like documentation (receipts, statements, confirmations) to support what they reported. Still, invoices are especially important for self-employed taxpayers and small businesses because they tie directly to revenue recognition, expense substantiation, and recordkeeping requirements.

At the same time, holding onto everything forever isn’t always practical. There’s storage, organization, privacy, and time to consider. The goal is to keep invoices long enough to protect yourself and comply with recordkeeping expectations—without turning your files into a chaotic archive.

The short answer: common timeframes most taxpayers use

In the US, there isn’t a single “one-size-fits-all” retention period that applies to every invoice. The right timeline depends on what the invoice supports and whether the transaction affects multiple years. That said, there are widely used record-retention rules of thumb that align with typical IRS audit windows and the types of issues that can arise.

Here are the retention windows many businesses use for invoices and supporting documents:

Keep most invoices for at least 3 years after you file the return they relate to. This is a common minimum because it aligns with typical audit windows for many situations.

Keep invoices for 6 years if there’s a possibility of substantial underreporting of income or if your situation is more complex (multiple income sources, cash-heavy operations, or frequent amended returns). Many businesses choose six years as a safer default.

Keep invoices for 7 years if they support deductions for bad debts, worthless securities, or similar items where later questions are more likely and documentation matters.

Keep invoices for as long as you own an asset plus several years if the invoice relates to property, equipment, or improvements that affect depreciation or capital gains. These invoices can matter long after the purchase because they help establish cost basis and allowable deductions.

Keep certain payroll and employment tax records longer (often at least 4 years, sometimes more depending on your state and specific circumstances).

In practice, many small businesses adopt a simple policy: keep all invoices and key supporting records for 6–7 years, and keep asset-related invoices until the asset is disposed of plus 7 years. This approach tends to cover most common scenarios without needing a complicated decision tree.

What the IRS generally expects you to be able to prove

To understand how long to keep invoices, it helps to understand what you might need to prove. In general, invoices support four major tax questions:

1) Did you earn the income you reported? Sales invoices, service invoices, and billing records show revenue amounts and dates, and help you tie deposits in your bank account to specific customers and jobs.

2) Are your expense deductions real and business-related? Vendor invoices and bills help show what you bought, from whom, and why it was a business expense. They’re especially important for categories like contractors, advertising, supplies, and professional services.

3) Did you report things in the right year? The timing of income and expenses matters. Invoices can support the “when” of a transaction, along with payment records and delivery completion dates.

4) Did you calculate depreciation, amortization, and cost basis correctly? Invoices for equipment, vehicles, computers, and property improvements help show purchase dates and costs. If you later sell an asset, those invoices can be essential for calculating gain or loss.

So, if you keep invoices long enough to answer those questions, you’re generally in a good position.

Different kinds of invoices and how long to keep each

Not all invoices have the same long-term value. Below are common invoice categories and practical retention guidance for each.

Sales invoices you send to customers

Sales invoices are among the most important documents for proving business income. They show your customer, what you sold, when you sold it, and for how much. They also help you reconcile income between your accounting records, your payment processor reports, and your bank deposits.

Recommended retention: Keep sales invoices for at least 3 years after filing the return for that year; many businesses keep them 6 years. If you operate in industries where disputes or chargebacks are common, or you take payments from multiple platforms, the longer retention can be helpful for reconciliation.

Vendor invoices and bills you receive

Vendor invoices support deductible expenses. If you claim you spent $8,000 on software, $2,500 on printing, or $12,000 on subcontractors, invoices are the paperwork that backs it up. If the IRS challenges a deduction, you’re often asked to provide documentation showing the amount, vendor, and business purpose.

Recommended retention: Keep vendor invoices for at least 3 years after filing; 6 years is a common, conservative default. Keep them longer if they relate to assets you are depreciating.

Invoices related to assets, equipment, or improvements

This is where retention rules can extend far beyond 3–7 years. If you buy a laptop, a vehicle, machinery, furniture, or you pay for improvements to a property you own, the invoice can affect tax deductions over multiple years through depreciation or capitalization. When you sell the asset, the invoice may help determine cost basis and whether any gain is taxable.

Recommended retention: Keep these invoices for as long as you own the asset, then keep them for at least 7 years after you dispose of it. This covers the period where questions about depreciation, basis, and sale calculations are most likely to arise.

Examples:

• A $2,000 computer you depreciate or expense: keep the invoice while you own it and for years afterward in case depreciation or expensing is questioned.

• A rental property renovation: keep invoices and contracts permanently until the property is sold, then keep them afterward to support cost basis and improvements.

Invoices for contractors and freelancers you pay

If you hire independent contractors, you may need to support not only the expense deduction but also your compliance with contractor payment reporting obligations. Invoices help show the nature of the work and the amounts paid. They also support resolving discrepancies if a contractor later disputes what they were paid.

Recommended retention: Keep contractor invoices for at least 6 years, and keep related payment records and contractor information together. If you issue contractor tax forms, align your retention with your payroll and reporting recordkeeping policy.

Invoices involving sales tax

Sales tax is primarily a state and local issue, and retention requirements can differ by state. If you collect and remit sales tax, invoices are key because they show taxable vs. non-taxable sales and the amount of tax collected. Many states can audit sales tax records and may have different lookback periods than the IRS.

Recommended retention: Keep sales tax-related invoices and supporting reports for at least 4–7 years, and consider using the longer end if your state is known for aggressive sales tax audits or if you sell across multiple states.

How your business type changes the “right” retention period

While the general timelines above are widely used, your business structure and filing situation can influence what’s smartest.

Sole proprietors and single-member LLCs

If you report business activity on Schedule C, invoices directly support both income and deductions. Because many sole proprietors mix personal and business payments across accounts, clean invoice retention becomes even more valuable. Strong documentation helps separate business expenses from personal spending and reduces stress if questions arise.

Practical approach: Keep invoices 6 years, plus longer for assets. This is typically simple to manage and reduces risk for solo operators.

Partnerships and multi-member LLCs

Partnership returns can be more complex due to allocations, capital accounts, and partner basis considerations. Invoices supporting significant expenses, reimbursements, and capital expenditures are especially important.

Practical approach: Keep invoices at least 6 years; keep capital expenditure and asset invoices longer as described above.

S corporations and C corporations

Corporate filings and payroll requirements can increase the number of records you need to manage. Invoices also tie into corporate deductions, reimbursements, and potentially employee benefit arrangements.

Practical approach: Keep invoices 6–7 years and maintain a clear, consistent filing system. Keep payroll and employment-related records at least 4 years, and longer if required by state or if you want a more conservative policy.

Landlords and rental property owners

Rental activity often includes repairs, improvements, and capital expenditures that affect depreciation and basis. If you improve a property and later sell, those invoices can significantly affect taxable gain.

Practical approach: Keep all property purchase documents and improvement invoices until the property is sold, then keep them at least 7 years after sale. Keep routine repair invoices at least 6 years.

What counts as an “invoice” for recordkeeping?

In real life, “invoice” can mean more than a formal PDF labeled “Invoice #1007.” For tax support, you want a record that shows:

• Who the transaction was with (customer or vendor name)

• The date (invoice date and/or service date)

• What was sold or purchased (description)

• The amount and currency

• Payment terms and whether it was paid

• Any taxes collected or paid (sales tax, VAT-like taxes for international transactions, etc.)

This means acceptable invoice-like documents often include vendor bills, emailed confirmations, detailed receipts, order confirmations, statements that include line-item details, and sometimes contracts plus payment proof.

If you want your records to stand up to scrutiny, the best practice is to keep the invoice and the proof of payment together (or at least link them). An invoice alone shows you were charged; payment proof shows you actually paid. For income, your invoice shows you billed; a deposit record shows you received payment. Together, they’re much stronger.

Paper vs. digital: can you keep invoices electronically?

Yes—most businesses keep invoices digitally. The important part is that your electronic records are readable, accurate, and retrievable. A well-organized digital record can be easier to search and far less likely to be lost than paper stored in a box.

For digital invoices, make sure:

• The file is legible and complete (no missing pages or cut-off totals)

• You preserve key details (vendor name, date, amount, description)

• Files can be produced quickly if needed

• Backups exist (so one lost laptop doesn’t erase years of records)

Digital storage also supports consistent naming, tagging, and categorization, which can dramatically reduce time spent during tax season.

A simple retention policy you can actually follow

Most people fail at record retention not because they chose the wrong number of years, but because their system is too complicated. A workable policy is better than a perfect one you won’t maintain.

Here’s a simple, conservative approach that works for many US small businesses:

1) Keep all invoices (sent and received) for 7 years. This covers most typical issues and keeps the rule easy.

2) Keep asset and improvement invoices until you dispose of the asset, then keep them 7 additional years. This covers depreciation and basis questions.

3) Keep payroll and employment tax records at least 4 years (and longer if your state requires it).

4) Keep permanent “foundational” business documents indefinitely. These include formation documents, operating agreements, major contracts, and property purchase records.

This policy is intentionally simple. It may exceed what you strictly need in some cases, but it’s easy to apply consistently—which is often the biggest win.

How to organize invoices so retention is effortless

Keeping invoices for the right length of time is only half the battle. The other half is being able to find them when it matters. The best retention strategy is a system where invoices are automatically captured, categorized, and searchable.

Here are practical organization methods that scale from solo freelancers to growing teams:

Use consistent categories

Every invoice should have a category that matches how you report it on your books and taxes. Examples include Office Supplies, Software, Advertising, Contractor Payments, Travel, Meals, Rent, Utilities, and Repairs. When categories match your accounting, reconciling and substantiating deductions becomes much easier.

Use a clear naming convention

Even if you store invoices inside an app, exported backups and downloads are easier to manage when filenames are consistent. A simple pattern is:

YYYY-MM-DD_vendor_amount_description.pdf

For sales invoices you send, a good pattern is:

YYYY-MM-DD_customer_invoiceNumber_amount.pdf

Consistency is more important than perfection. Pick a format and stick to it.

Store invoices by year, then by month

If you prefer folders, a predictable structure prevents clutter:

• 2026 → 01, 02, 03…

• 2026 → Sales Invoices / Vendor Invoices / Assets

Choose the structure you will actually maintain. Many businesses find a year-month approach easiest for retrieval.

Link invoices to payments

An invoice that can’t be tied to a payment is weaker evidence. Ideally, each invoice record includes:

• Payment date

• Payment method (bank transfer, card, cash, ACH, check, payment processor)

• Transaction ID or reference

• Remaining balance (if partially paid)

This helps you reconcile books quickly and prove the reality of the transaction.

Digitize incoming paper immediately

If you still receive paper invoices or receipts, scan them right away. The longer paper sits around, the more likely it is to be misplaced. A quick scan and upload reduces long-term risk.

Build an audit-ready workflow with invoice24

Because this article is for the website of invoice24, it helps to think of retention as a workflow rather than an annual scramble. A modern invoice system should make it easy to:

• Create and send professional invoices with clear numbering

• Track invoice status (sent, viewed, paid, overdue)

• Record partial payments and payment methods

• Attach files (like purchase invoices, contracts, and receipts) to transactions

• Search invoices by customer, vendor, date range, amount, and status

• Export invoice data and reports for your accountant or tax filing

• Keep a secure archive with backups

When your invoice app acts as a structured vault, “keeping invoices for 6–7 years” becomes a background process instead of a headache.

What happens if you can’t produce an invoice?

If you can’t produce invoices (or equivalent proof) for income and deductions, you may face more than inconvenience. The outcome can depend on what is missing and how material it is.

If a deduction is challenged, you may lose the deduction if you can’t substantiate it. That can increase taxable income and trigger additional tax, interest, and possibly penalties.

If income records are incomplete, the IRS may reconstruct income using bank deposits, payment processor reports, and other methods. In that case, missing invoices can make it harder to show that certain deposits were non-taxable, refunds, transfers, loans, or other non-income items.

If timing is questioned, invoices help demonstrate when work was performed and billed. Without them, it’s harder to defend why income or expenses were included in a particular year.

The good news: if you’ve been using a consistent invoicing process and keeping digital copies, producing documents is usually straightforward.

Special situations where longer retention is smart

Even if you follow a basic 6–7 year policy, certain scenarios deserve extra caution and longer storage.

Amended returns

If you amend a return, keep invoices supporting the changes at least as long as you keep the amended return itself and any related correspondence. Practically, many people extend retention for that year to 7 years from the date the amended return was filed.

Net operating losses and carryforwards

If a loss or credit carries into future years, invoices supporting the original year may matter later, because the effect appears across multiple returns. Keep the supporting invoices at least until the carryforward has been fully used, and then keep them for several more years.

Large or unusual deductions

If you have a year with unusually high expenses—major marketing spend, significant contractor costs, large travel expenses, or a big equipment purchase—keep invoices and supporting records longer. Unusual spikes often attract questions.

Cash-heavy businesses

If your business receives a lot of cash payments, invoices help demonstrate that income was recorded completely and accurately. In cash-heavy environments, clean invoice retention is a powerful protection.

Multi-state sales tax complexity

If you sell across multiple states and collect sales tax, your state-level retention needs may effectively set your policy. Keep sales invoices and tax reports longer if you operate in a complex sales tax environment.

How to decide between 3 years vs. 6 years vs. 7 years

If you’re unsure what policy to adopt, here’s a practical way to decide:

Choose 3 years only if your situation is simple, you have clean bookkeeping, you don’t take unusual deductions, and you have minimal risk of needing older records. This is the bare-minimum mindset and may not be comfortable for many business owners.

Choose 6 years if you want a balanced policy that’s still manageable. Many small businesses pick this because it provides a larger safety margin while keeping storage reasonable.

Choose 7 years if you want a simple “set it and forget it” rule that is easy to apply and tends to cover more edge cases. With digital storage, the difference between 6 and 7 years is often negligible.

For most invoice24 users—freelancers, small businesses, and growing teams—the simplest safe approach is 7 years for general invoices, plus asset invoices kept longer as described earlier.

When is it safe to delete old invoices?

Before you purge old invoices, do a quick check:

• Is the invoice tied to an asset you still own or recently sold?

• Is the year connected to a loss carryforward, credit carryforward, or any unresolved tax matter?

• Did you amend that return or receive notices for that year?

• Is the invoice needed for legal, contractual, warranty, or insurance purposes?

If none of those apply and your retention window has passed (for example, 7 years after filing), you’re usually in a comfortable zone to delete. If you’re uncertain, it’s often safer to keep digital records longer since storage is relatively inexpensive compared to the cost of reconstructing documentation later.

Security and privacy: retention should include protection

Invoices often contain sensitive data: addresses, emails, phone numbers, bank details, payment links, and sometimes partial account numbers. Retention isn’t just about duration—it’s also about keeping records secure during that time.

Good security practices include:

• Strong, unique passwords and multi-factor authentication

• Role-based access if multiple team members use your invoicing system

• Regular backups and secure export options

• Encryption where available

• A clear offboarding process when staff or contractors no longer need access

If you keep invoices longer (which many businesses do), security becomes even more important because the volume of stored data grows over time.

A practical invoice retention checklist

Use this checklist to set a policy you can follow without overthinking it:

• Keep sales invoices and vendor invoices: 7 years

• Keep invoices for equipment, vehicles, property, and improvements: until disposal + 7 years

• Keep payroll and employment-related tax records: at least 4 years (and align with your state requirements)

• Keep foundational business documents (formation, ownership, major contracts): indefinitely

• Keep sales tax documentation: 4–7 years (use longer if multi-state or high audit risk)

• Store invoices digitally in a searchable system and back them up

Final thoughts for invoice24 users

The best invoice retention plan is the one you’ll stick to. In the US, a conservative, easy-to-apply policy—keeping most invoices for seven years and keeping asset-related invoices until the asset is gone plus seven more years—works well for many businesses and reduces stress if questions ever arise.

With invoice24, the aim is to make retention feel automatic: invoices are created consistently, stored securely, searchable in seconds, and easy to export when tax time comes around. When your invoices, payments, and attachments live together in one organized system, “how long should I keep invoices?” becomes a simple policy—not a recurring problem.

If you want maximum peace of mind, set your retention rule once, keep everything neatly categorized, and let your invoice workflow do the heavy lifting year after year.