If you're self-employed, you must take on many expenses that an employer would otherwise cover. However, there are many corresponding tax deductions available to help small business owners recover some of their costs. As of March 2025, here are 16 tax deductions that self-employed individuals can claim on their tax return.

Retirement Plan Contributions Deduction

Contributions to 澳洲幸运5官方开奖结果体彩网:self-employed retirement plans are deducted on Form 1040, Schedule 1. In 2025, you can contribute up to $23,500 in deferred salary to a solo 401(k), plus additional catch-up contributions of $7,500 if you're age 50 or older. You can also contribute an employer match for yourself, though the combined contributions can't exceed $70,000 (excluding catch-up contributions).

For 2025, the limit on SIMPLE retirement account contributions is $16,500; the allowed amount for catch-up contributions depends on your age and the type of SIMPLE plan you have and will be either $3,500, $3,850, or $5,250.

Self-Employment Tax Deduction

Self-employed individuals must pay 澳洲幸运5官方开奖结果体彩网:self-employment tax to cover their 澳洲幸运5官方开奖结果体彩网:Social Security and Medicare taxes. The rate for this tax is 12.4% for Social Security and 2.9% for Medicare, for a total of 15.3%. Employees cover 7.65% of these taxes out of their paychecks; self-employed individuals must cover both the employer and employee portion.

The employer portion of this tax is treated as a business expense, so self-employed taxpayers are allowed to deduct it from their net business income. Both the self-employment tax and the deduction are calculated on Schedule SE.

Home Office Deduction

If there is a workspace in your home that you use exclusively and regularly for your business, you can deduct it as a 澳洲幸运5官方开奖结果体彩网:home office expense. This is available whether you own or rent your home. The expenses that you can count toward a home office deduction include a percentage of your:

• Rent
• Deductible mortgage interest
• Utilities
• Homeowners insurance
• Repairs or maintenance

There 🧸are 𝓰two ways to calculate a home office deduction.

With the regular method, your deduction is calculated based on the percentage of your home that is occupied by your home office. With this method, direct business expenses can be deducted in full. You would divide your office square footage by the total home's square footage, then multiply allowable house expenses by this amount. Deductions calculated using this method must be reported on IRS Form 8829, Expenses for Business Use of Your Home.

The simplified option uses an IRS-determined rate multiplied by the square footage of your home office. With this method, the maximum amount you can claim is $1,500, and you cannot deduct depreciation or home-related 澳洲幸运5官方开奖结果体彩网:itemized deductions. With this method, the entire home office deduction is reported on Schedule C.

You do not have to use the same method every year.

Health Insurance Premiums Deduction

If you are self-employed and aren't eligible for a spouse's employer-sponsored health plan, you can deduct your premiums for health insurance, dental insurance, and qualified long-term care (LTC) insurance. This deduction is taken as an adjustment to income, so you can claim it even if you don't itemize your deductions. This deduction is reported on IRS Form 7206.

You can also deduct premiums paid for a spouse, dependents, and children under age 27, even if they aren't claimed as dependents.

Vehicle Use Deduction

You can deduct the cost of business use of your car but not any personal trips. To track this, keep careful records of the date, purpose, and mileage for each trip. You have two options for this deduction:

1. Use the 澳洲幸运5官方开奖结果体彩网:standard mileage rate that the IRS sets each year. In 2025, the rate is $0.70 per mile. So if, for example, your business trips totaled 1,500 miles, you could deduct $0.70 x 1,500 = $1,050. This amount is entered, along with any associated tolls and parking fees, on Schedule C.
2. Use the actual expense method. Calculate the percentage of your total driving for the year that was business use. Multiply this percentage by the total cost of operating your car for the year, including gas, oil changes, depreciation, repairs, insurance, and registration fees.

Qualified Business Income (QBI) Deduction

The qualified business income (QBI) deduction allows eligible self-employed taxpayers or small business owners to deduct up to 20% of their "pass-through" income (income reported on a personal tax return) from their taxes. This deduction is available whether you itemize or take the standard deduction.

Your total taxable income must be within income thresholds to deduct the full 20%. In 2024, total taxable income must be at or below $191,950 for single filers and $383,900 for joint filers. Above that level, you may still qualify for the deduction depending on the type of business you run. The QBI deduction is set to expire at the end of 2025 unless it is renewed by Congress.

Other Tax Deductions for the Self-Employed

There are many other deductions that self-employed taxpayers can take for business expenses.

• Internet/phone bills: You can deduct business-related internet use, such as the cost of running your website, or the percentage of your cell phone bill that relates to your business. The first landline in your home isn't deductible, even if you have a home office, but a second business line is.
• Meals: Meals can be deducted when you are traveling for business, entertaining a client, or at a business conference. You can choose to either deduct 50% of the meal's cost or 50% of the standard meal allowance. Meals cannot be deducted if they aren't separately identified on a receipt.
• Travel: Business travel that lasts longer than an ordinary workday, requires sleep or rest, and takes place away from your tax home is tax deductible. You must keep detailed records and engage in business activities while you are traveling.
• Interest: Interest on a business loan is tax deductible. Credit card interest on personal purchases isn't tax deductible, but credit card interest on business purchases is, even if it isn't on a separate business card.
• Education: Education expenses can be deducted only if they are related to maintaining or improving skills relating to your existing business. The cost of classes to prepare for a new career isn't deductible as a business expense.
• Business Insurance: Premiums for insurance related to your business are tax deductible. This can include fire insurance, car insurance on a business vehicle, group hospitalization and medical insurance for employees, or 澳洲幸运5官方开奖结果体彩网:business liability insurance.
• Startup costs: Generally, major expenses must be treated as capital expenses and deducted over time. However, up to $5,000 in business startup costs are tax deductible in your first active year of business. Eligible costs include market research, travel for starting your business, attorney fees, or advertising. You can also deduct up to $5,000 in organizational costs.
• Advertising: Advertising costs for your business are generally tax deductible. This can include ads on social media platforms, search engines, TV, radio, flyers, postcards, signs, or billboards.
• Office Supplies: Office supplies such as copy paper, postage, and printer ink are tax deductible. Books, equipment, and professional instruments are also deductible, but if their use extends beyond a year, you generally must recover the cost through depreciation.
  

The Bottom Line

Beyond the deductions listed here, you can generally also deduct things like credit card 🍰processing fees, attorney or accountant fees, and repairs or mainten☂ance for business equipment.

Some expenses may be depreciated or 澳洲幸运5官方开奖结果体彩网:amortized, rather than immediately deductible. However, if an expense is considered ordinary and necessary in your line of work, there♛ is often a way to recover that cost on your taxes. If you are unsure whether a business expense🌳 is deductible, consult a tax professional to ensure you don't run into trouble with the IRS.