Self-employed tax deductions: what small business owners can write off
A plain-English list of the most common and valuable tax deductions available to self-employed individuals and small business owners.
Last updated: October 9, 2026
Direct answer
Self-employed taxpayers may deduct ordinary and necessary expenses that qualify under current tax rules and can be substantiated. Common categories include business-use mileage, supplies, software, eligible home-office costs, and the deductible part of self-employment tax. Eligibility and limits depend on the facts.
Simple explanation
Most self-employed people overpay on taxes because they either don't know what's deductible or don't keep records that support the deduction. The IRS allows deductions for any expense that is 'ordinary and necessary' for your business. But you have to claim them, and you have to document them.
Common deductions to track
- 1
Home office deduction
If you use a dedicated space in your home exclusively and regularly for business, you can deduct either a simplified rate ($5 per square foot, up to 300 sq ft) or actual expenses (a proportional share of rent/mortgage, utilities, and insurance). The space must be used only for business.
- 2
Business mileage
Only qualified business-use miles are potentially deductible. The optional IRS standard mileage rate is 72.5 cents per mile from January 1 through June 30, 2026, and 76 cents per mile from July 1 through December 31, 2026. The actual-expense method may be available; keep a timely log and follow method-selection rules.
- 3
Health insurance premiums
Self-employed individuals can deduct 100% of health, dental, and vision insurance premiums paid for themselves and their families. As long as you're not eligible for coverage through an employer (or spouse's employer).
- 4
Equipment and technology
Computers, phones (business-use percentage), cameras, tools, office furniture, and software subscriptions used for business are deductible. Large equipment may be deducted all at once under Section 179 or depreciated over time.
- 5
Professional services
Accountant fees, legal fees, consulting fees paid for business purposes are fully deductible. So are bank fees, merchant processing fees (Stripe, Square), and professional memberships.
- 6
Half of self-employment tax
Self-employed individuals pay both the employee and employer portions of Social Security and Medicare taxes (15.3% total). The IRS lets you deduct half of that (the employer portion) from your taxable income.
Key takeaways
- Track all business expenses throughout the year. Deductions require documentation.
- The 2026 mileage rate is 72.5 cents/mile Jan. 1–June 30 and 76 cents/mile July 1–Dec. 31; eligibility and records matter.
- You can deduct half of your self-employment tax from your income.
- Consult a tax professional for situation-specific advice. The savings often outweigh the cost.
Frequently asked questions
Can I deduct my phone as a business expense?
Yes, but only the business-use percentage. If you use your phone 60% for business, you can deduct 60% of the monthly bill and 60% of the phone's cost. Keeping a reasonable estimate and being consistent year to year is the key.
What records do I need to support a deduction?
Keep documents that support the amount, date, payee, business purpose, and business-use percentage. For mileage, maintain a contemporaneous log with date, destination, purpose, and miles. The retention period depends on the item and applicable limitations period; employment-tax and asset-basis records may require longer.
Can I deduct meals as a business expense?
Business meals where a business topic is genuinely discussed are 50% deductible. The meal must have a clear business purpose, and you should note who attended and what was discussed. Personal meals are not deductible, even if you ate while working.
Do I need to be profitable to claim deductions?
No. You can claim deductions even in a loss year. However, if your business shows a loss in more than 3 of 5 consecutive years, the IRS may classify it as a hobby and disallow deductions. Maintaining a genuine profit motive (and documenting it) protects you.
Related guides
Official sources
- IRS: Standard mileage rates
Current business mileage rates.
- IRS: Self-employment tax
Self-employment tax and deductible portion rules.
- IRS: How long should I keep records?
Retention periods depend on the action, expense, or event; includes common limitations periods and employment-tax record rules.
- IRS: Recordkeeping
Business records should clearly support income, deductions, and credits.
Educational information only; not individualized legal, tax, accounting, or financial advice. Rules can change and results depend on your facts. Check current official guidance or consult a qualified professional.