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.
Direct answer
Self-employed individuals can deduct ordinary and necessary business expenses — things like home office space, business mileage, health insurance premiums, software, equipment, professional services, and half of self-employment tax. Keeping records throughout the year makes these deductions straightforward at tax time.
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
Every mile driven for business purposes is deductible. The IRS standard mileage rate changes annually (67 cents per mile in 2024). Track every business trip — client visits, supply runs, bank trips. A mileage log app is the easiest way.
- 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.
Summary
- •Track all business expenses throughout the year — deductions require documentation.
- •Home office, mileage, health insurance, and software are commonly missed.
- •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.