The Full List Of 20 Tax Deductions For Self-Employed People

If you are self-employed in the United States, you may be able to deduct eligible business expenses from your business income, reducing the amount of income subject to tax. Common examples include home office costs, business travel, advertising, insurance, professional fees, and certain retirement contributions.

However, not every expense is tax-deductible, and some deductions have specific eligibility requirements, percentage limits, or reporting rules.

This guide explains 20 tax deductions that self-employed people, freelancers, independent contractors, and sole proprietors should review when preparing their federal tax returns for the 2025 tax year. The rules and limits can differ for other tax years and business structures.

Who Can Claim Self-Employed Tax Deductions?

Self-employed individuals generally report eligible business income and expenses on Schedule C (Form 1040), unless a different form or reporting method applies to their business.

You may qualify if you operate as a:

• Freelancer or independent contractor
• Sole proprietor
• Consultant or professional working for yourself
• Gig worker who carries on a trade or business
• Single-member LLC treated as a sole proprietorship for federal tax purposes

An LLC or corporation may follow different tax rules depending on its classification. In addition, an expense must generally be ordinary and necessary for the business, appropriately documented, and not a personal expense.

The Full List of 20 Tax Deductions for Self-Employed People

1. Home Office Deduction

If you use part of your home regularly and exclusively for qualifying business purposes, you may be able to claim a home office deduction.

You can generally choose between:

• Simplified method: $5 per square foot of qualifying business-use space, up to 300 square feet.
• Actual expense method: Calculate the eligible business portion of qualifying home expenses, such as rent, utilities, insurance, and depreciation, as applicable.

For example, a freelancer with 150 square feet of qualifying office space could potentially claim $750 using the simplified method. Eligibility rules apply, and employees generally cannot claim this deduction for employee work.

2. Business Rent

If you rent an office, studio, workshop, or other property for your business, the qualifying rent may be deductible.

The rented space should be used for business, and the expense must meet the applicable requirements. Personal rent is not deductible simply because you sometimes work from home.

If you pay rent in advance, the deduction generally follows the period to which the payment applies.

3. Business Utilities and Communication Costs

Utilities and communication services may be deductible to the extent they are used for business.

Examples include:

• Electricity and internet for a rented business office
• A separate business telephone line
• Eligible business-related mobile phone costs
• Water and other utilities for business premises

If a service is used for both business and personal purposes, deduct only the eligible business portion. The basic cost of the first telephone line in a personal residence generally cannot be deducted as a business expense.

4. Business Supplies and Materials

Office supplies and materials used in your business may qualify as deductions.

Examples include paper, pens, envelopes, printer ink, packaging materials, and small consumable supplies.

Inventory and materials used to produce goods may instead be included in the cost of goods sold. Equipment that has a useful life extending beyond one year may need to be capitalized, depreciated, or treated under an applicable expensing election rather than deducted as an ordinary supply.

5. Computers, Software, and Business Equipment

Eligible computers, monitors, printers, software, and other equipment used in your business may qualify for a deduction.

The treatment depends on the type of property, its cost, business-use percentage, and applicable tax rules. Certain assets may qualify for Section 179 expensing, bonus depreciation, or another permitted method.

For example, a freelance designer may be able to deduct eligible design software subscriptions and claim an allowable deduction for a computer used for client projects.

Do not automatically deduct the full cost of every large purchase. Review the applicable depreciation and expensing rules.

6. Business Vehicle Expenses

If you use a car, van, or truck for business, you may be able to deduct eligible vehicle expenses.

Depending on the applicable rules, you may choose between the standard mileage method and the actual expense method.

For the 2025 tax year, the standard business mileage rate is 70 cents per qualifying business mile. Qualifying parking fees and tolls may be deductible separately.

Under the actual expense method, eligible costs may include fuel, repairs, insurance, registration, and depreciation, allocated to business use. Commuting between home and a regular workplace is generally personal travel, not deductible business mileage.

Keep mileage records showing the date, destination, business purpose, and distance travelled.

7. Business Travel

Qualifying travel expenses incurred while travelling away from your tax home for business may be deductible.

Potentially eligible costs include:

• Airfare, train tickets, and other qualifying transportation
• Hotel or lodging expenses
• Taxis and rideshare services for business travel
• Baggage fees
• Eligible laundry and communication costs during business travel

The trip must meet the relevant business-travel requirements. Personal holidays and expenses for accompanying family members are generally not deductible unless specific rules apply.

8. Business Meals

Certain business meals may be deductible when they satisfy IRS requirements.

For most eligible business meal expenses, the deduction is generally limited to 50% of the qualifying cost. The meal should have a valid business purpose, should not be lavish or extravagant under the circumstances, and must meet the applicable attendance and documentation requirements.

Entertainment expenses are generally not deductible as business expenses, even when business discussions occur during the event. Keep itemized receipts and record the business purpose and attendees.

9. Business Insurance

Premiums for qualifying business insurance may be deductible.

Examples include:

• General liability insurance
• Professional liability or malpractice insurance
• Business property insurance
• Workers' compensation insurance
• Business vehicle insurance, allocated to business use
• Certain business interruption and other qualifying policies

The policy must relate to the business, and special rules can apply to particular types of insurance. Personal life insurance premiums generally cannot be deducted as a business expense when the taxpayer is directly or indirectly the beneficiary.

10. Self-Employed Health Insurance

Eligible self-employed individuals may be able to deduct qualifying medical, dental, and certain long-term care insurance premiums for themselves, their spouse, and eligible dependents.

This is generally an above-the-line deduction claimed on Schedule 1, rather than an ordinary Schedule C expense. The deduction is subject to eligibility and earned-income limitations.

You generally cannot claim the deduction for months when you were eligible to participate in a subsidized health plan maintained by your employer or your spouse's employer. Additional restrictions can apply if you receive the Premium Tax Credit.

Do not use a generic age-based dollar cap. The rules and limits depend on the coverage and applicable circumstances.

11. Retirement Plan Contributions

Self-employed people may qualify for deductions for contributions to eligible retirement plans, such as:

• Simplified Employee Pension (SEP) IRA
• Savings Incentive Match Plan for Employees (SIMPLE IRA)
• Individual or solo 401(k), where eligible
• Other qualifying self-employed retirement arrangements

Contribution limits, deadlines, and deduction calculations depend on the plan, income, and business structure. Contributions made for the owner's retirement are generally claimed differently from contributions made for employees.

Review the applicable plan rules before calculating the deduction.

12. Deductible Portion of Self-Employment Tax

Self-employed individuals generally pay Social Security and Medicare taxes on qualifying net earnings from self-employment.

Eligible taxpayers can generally deduct one-half of their self-employment tax as an adjustment to income. This deduction does not reduce the self-employment tax itself; it reduces adjusted gross income for federal income tax purposes.

Use Schedule SE and the applicable Form 1040 instructions to calculate the amount. Special rules may apply to nonresident aliens and individuals covered by an international Social Security agreement.

13. Qualified Business Income (QBI) Deduction

Eligible business owners may qualify for the deduction for qualified business income under Section 199A.

The deduction can generally be up to 20% of qualified business income, subject to taxable-income limitations and other requirements. Wage, property, and specified service trade or business rules can affect the calculation.

The QBI deduction is separate from ordinary business expenses. It is generally claimed on the individual tax return rather than as a Schedule C business expense.

For the 2025 tax year, check the applicable IRS instructions and income thresholds before estimating the deduction.

14. Advertising and Marketing

Ordinary and necessary advertising expenses may be deductible when incurred to promote your business.

Examples include:

• Online advertisements
• Website advertising
• Business cards and promotional materials
• Eligible marketing services
• Certain promotional campaigns and business listings

Keep invoices and records showing the business purpose. Costs to acquire certain long-term assets or create certain intangible assets may require different treatment.

15. Legal and Professional Fees

Fees paid for eligible business-related professional services may be deductible.

These can include:

• Accountant and tax-preparation fees attributable to the business
• Legal advice about business operations
• Bookkeeping services
• Business consulting
• Certain compliance and professional services

If a professional invoice includes both personal and business services, only the eligible business portion should be deducted. Fees paid to acquire a business asset may need to be added to the asset's cost instead of deducted immediately.

16. Employee Wages and Contract Labor

If your business hires employees, eligible wages, salaries, bonuses, and certain employee benefits may be deductible.

Payments to independent contractors may also qualify as business expenses when the services are ordinary and necessary for the business.

You generally cannot deduct your own sole proprietor's draw as employee wages. Worker classification and applicable payroll reporting requirements must also be followed.

17. Business Interest Expenses

Interest paid on qualifying business debt may be deductible.

For example, a self-employed consultant who borrows money to purchase business equipment may be able to deduct the eligible interest associated with the business borrowing.

The taxpayer must generally be legally liable for the debt, and the borrowing must have a genuine debtor-creditor relationship. Personal loan interest is not a business deduction merely because the borrower is self-employed. Business interest limitations may also apply.

18. Business Licences, Permits, and Certain Taxes

Certain state, local, and other taxes directly related to operating your business may be deductible.

Examples include eligible business licence fees, regulatory fees, business property taxes, and certain employment taxes paid by the employer.

Federal income tax is not deductible as a Schedule C business expense. Taxes connected to acquiring property may need to be included in the property's cost, and certain licence or registration costs may need to be capitalized or amortized.

Check the rules applicable to your state, business, and type of tax.

19. Startup and Organizational Costs

Costs incurred before a business begins operating may qualify as startup costs. Certain costs associated with creating a corporation or partnership may qualify as organizational costs.

For qualifying startup costs, the general federal rule allows an immediate deduction of up to $5,000, reduced by the amount by which total startup costs exceed $50,000. Remaining eligible costs are generally amortized over 180 months beginning with the month the active business starts.

Organizational costs have separate requirements. Not every cost incurred before opening a business qualifies, and equipment purchases or other capital costs may be treated differently.

20. Education and Professional Development

Training and education expenses may be deductible when they maintain or improve skills required in your current trade or business, or satisfy another applicable business-expense rule.

Examples may include eligible professional courses, industry conferences, reference materials, and certain training costs.

Education that qualifies you for a new trade or business, or that meets minimum educational requirements for your existing work, generally does not qualify under the ordinary business education rules. Personal education expenses are not deductible merely because the knowledge may be useful.

Which Self-Employed Expenses Are Not Deductible?

Not every expense paid by a business owner qualifies for a tax deduction. Common examples of expenses that are generally not deductible as business expenses include:

• Personal groceries, clothing, and household expenses
• Personal commuting costs
• Personal vacations
• Federal income tax payments
• Political contributions
• Most entertainment expenses
• Fines and penalties paid to a government for violating the law
• The owner's personal withdrawals from a sole proprietorship

Some expenses have mixed personal and business purposes. In those cases, only the qualifying business portion may be deductible, if the relevant requirements are met.

How to Claim Self-Employed Tax Deductions

Follow these steps to prepare your tax return:

1. Collect business records. Gather receipts, invoices, bank statements, mileage logs, insurance documents, and other supporting records.
2. Separate business and personal expenses. Identify any mixed-use expenses and calculate the qualifying business portion.
3. Categorize expenses correctly. Determine whether each expense is an ordinary business expense, an asset subject to depreciation, an adjustment to income, or a separate deduction.
4. Prepare the applicable forms. Many sole proprietors report business income and expenses on Schedule C, but certain deductions are reported elsewhere on the individual return.
5. Review special limitations. Check eligibility rules for the home office deduction, meals, health insurance, retirement contributions, vehicle expenses, and QBI.
6. Retain supporting documentation. Keep records that substantiate the amount, date, business purpose, and business-use percentage of the expenses claimed.

Tax deductions can reduce taxable income, but they do not usually reduce tax dollar for dollar. Your actual tax savings depend on your tax situation and applicable rules.

Need Help With Your Self-Employed Tax Return?

SaveTaxs helps U.S. taxpayers understand business deductions, federal filing requirements, and tax compliance. If you are self-employed, a freelancer, or a small business owner, professional guidance can help you determine which deductions apply to your circumstances and how to report them correctly.