20 Tax Deductions to Claim if You’re Self-Employed

1. Self-Employment Tax

Half of any self-employment tax you pay is deductible from your adjusted gross income. What's self-employment tax? Because self-employed people don't have an employer who covers Social Security and Medicare taxes for them, they pay these taxes on their own through a 15.3% self-employment tax. The tax breaks down this way:

• 12.4% of your net business income goes to Social Security
• 2.9% goes to Medicare

In 2025, only your first $176,100 of income is taxed for Social Security; all of your self-employment income is taxed for Medicare. You may owe an additional 0.9% Medicare tax if your income exceeds $200,000 (or $250,000 filing jointly and $125,000 if you're married filing separately). Anyone who makes $400 or more from self-employment in a year must pay self-employment tax.

2. Qualified Business Income

Self-employed taxpayers may be eligible to deduct up to 20% of their net business income using the qualified business income deduction (QBID). Qualified business income (QBI) refers to income from partnerships, limited liability corporations (LLCs), S corporations and sole proprietorships operating in the United States.

QBI includes the deductible part of self-employment tax, health insurance premiums, business interest expense and deductions for contributions to qualified retirement plans. It does not include investment gains and dividends, interest income, foreign income or wages. Keep the following in mind when determining whether you qualify for the QBID:

• Your total taxable income must be less than $197,300 for a single filer or $394,600 for joint filers to qualify for the full deduction (based on 2025 numbers). After that, the deduction begins phasing out.
• Limitations apply to certain service businesses, including attorneys, accountants, performing artists, actuaries and health care practices. However, these limitations only come into play when your income exceeds the thresholds shown above.
• Taxpayers whose income exceeds the thresholds must also comply with limitations on deducting any W-2 wages they've paid.

QBID is available whether you take the standard deduction or itemize.

Learn more: Does Being Self-Employed Affect Your Credit?

3. Start-Up Costs

You may deduct up to $5,000 in business start-up costs and $5,000 in organizational costs, including advertising, travel and training expenses you incur before you open your business. Your $5,000 deductions for start-up and organizational costs are reduced when your costs exceed $50,000.

Above the $50,000 threshold, your deductible costs may be amortized or spread out over multiple years.

4. Home Office Expenses

Employees working remotely can't deduct their home office expenses, but self-employed people can. This deduction applies only to space used regularly and exclusively for business that is also your principal place of business. You can't claim the sofa as your headquarters if you also use it as a place to watch TV with your family. Similarly, if you maintain a regular office and use your guest room as a home office occasionally, the deduction doesn't apply.

• Deductible expenses include mortgage interest or rent, utilities, insurance, depreciation, real estate taxes, maintenance and repairs.
• Direct expenses (for instance, re-flooring your office space) are 100% deductible.
• Indirect expenses are deductible based on the percentage of your home that is dedicated to business use. For example, if your home is 2,000 square feet and your office is 200 square feet, 10% of your home's indirect allowable expenses can be deducted. Be aware: Expenses associated with the parts of your home that are not used for business—landscaping, for example—are not deductible.

You may also choose a simplified option that allows you to deduct a straight $5 per square foot of dedicated business space as a home office expense. This option caps out at 300 square feet or $1,500.

Learn more: How to Qualify for the Home Office Tax Deduction

5. Rent

Of course, if you rent a dedicated space for your business, you can deduct the cost of rent—and save yourself the trouble of calculating a home office deduction. The IRS has rules for claiming a deduction for rent, however, including that you cannot own the property you're renting and you can't deduct rent you've paid in advance for future years.

Learn more: How to Get a Mortgage When You Are Self-Employed

6. Tips

A new "no tax on tips" deduction introduced as part of the 2025 One Big Beautiful Bill Act applies to self-employed people who receive tips as part of their business. Qualified tips must be reported on Form 1099 or Form W-2.

The deduction is worth up to $25,000 (not to exceed your net income) and may be claimed whether you itemize or use the standard deduction. It begins phasing out when your income exceeds $150,000, or $300,000 as a joint filer. This deduction is in effect from 2025 to 2028.

7. Health Insurance

You may be able to deduct medical, dental and qualified long-term care insurance premiums you've paid for you and your family. Self-employed people can deduct health insurance premiums as a business expense with two important caveats:

• You and your spouse cannot be eligible to participate in an employer-sponsored health plan.
• You must show a net business profit for the year.

8. Retirement Contributions

Contributions to certain retirement accounts may be deductible if you're self-employed, including contributions you make for your employees.

• If you open a SEP-IRA, you can contribute as much as 25% of your net earnings from self-employment, up to $70,000 for 2025 and $72,000 for 2026.
• Start a Savings Incentive Match Plan for Employees (SIMPLE IRA) to provide retirement plan contributions with employer matching funds for you and your employees. You can contribute up to $16,500 in 2025 and $17,000 in 2026. Individuals who qualify for a higher SIMPLE contribution under SECURE 2.0 can contribute up to $17,600 in 2025 and $18,100 in 2026.
• You can contribute to a Solo 401(k) as both an employee and employer. In 2025, the contribution limit for employees is $23,500; employers can contribute an additional 25% of earned income.

Learn more: Ways to Save for Retirement When You're Self-Employed

9. Computer

You may be able to deduct the full cost of a computer you purchase for your business using a Section 179 deduction, which allows you to deduct the full cost of qualifying tangible personal property, including computer equipment and off-the-shelf computer software.

Alternatively, you can make multiyear deductions for depreciation on computer equipment and other tangible property you own, such as buildings, machinery, furniture and equipment.

10. Employee Pay and Benefits

If you have employees, reasonable compensation and benefits are deductible from your net business income. Eligible employee pay includes:

• Salary and wages
• Awards and bonuses
• Education expenses
• Fringe benefits, including health insurance
• Loans or advances you don't expect the employee to repay
• Property transferred in lieu of payment
• Reimbursement for employee business expenses
• Sick pay and vacation pay

11. Meals

You can deduct 50% of meals for you or your employees, but under limited circumstances.

Deductible meals do not include entertainment. The expense can't be "lavish or extravagant," according to the IRS. You or an employee must be present, though you can include meals for clients, consultants or similar business contacts. Finally, meals should be part of the ordinary course of conducting business; for example, having lunch while traveling for business or attending an out-of-town meeting with a client.

12. Travel

Deduct the cost of airfare, taxis, lodging, non-entertainment meals, dry cleaning and tips for any business travel you do. The IRS offers specific guidelines for qualified business travel, and warns against deducting expenses that are "lavish, extravagant or for personal purposes."

Keep detailed records, including receipts, credit card statements and notes on your travels and any meetings you take.

13. Vehicle Expenses or Mileage

In 2025, the standard mileage deduction for self-employed people is 70 cents per mile. You can track your mileage by keeping a log of your business-related trips, including where you went, miles traveled and your reason for traveling. Multiply your business miles by 0.7 to get your mileage deduction. The standard mileage deduction adjusts annually for inflation.

Alternatively, you can deduct a percentage of your actual car expenses when you drive your personal car for business. Divide your total miles by your business miles to get the percentage of business use. If, for example, you use your car for business 20% of the time, you can deduct 20% of your lease payments, car registration fees, insurance, gas, repairs and maintenance.

Learn more: How to Deduct Mileage for Taxes

14. Interest on Business Loans and Credit Cards

Interest on loans or credit cards you've used to cover business expenses is deductible. Only the portion of interest that applies to business expenses qualifies, however: If 40% of the balance on your credit card was used for personal expenses, you may only deduct the 60% of your total interest that relates to business expenses.

Learn more: Is Credit Card Interest Tax Deductible?

15. Bad Debts

If you have uncollectable debts that have become worthless, you may be able to deduct the debt as a business expense. Bad business debts are often the result of extending credit to clients or customers, or to employees, distributors or suppliers. To be deductible, a bad debt (or partial debt) must have been included in your gross income in the current year or a previous year.

16. Professional Memberships

Memberships in business organizations may be deductible, but they must be business-related (not entertainment-related). Joining a country club won't qualify for a deduction, but membership fees for your local chamber of commerce or a professional organization related to your industry generally will.

17. Education

Training and education may be deductible if it maintains or improves required business skills, or if it's required by law or regulation. Examples include continuing education needed to maintain a license or classes to update your technical skills. Education that trains you for a new trade or business isn't eligible.

Learn more: What Does It Mean to Invest In Yourself?

18. Business insurance

In addition to health insurance premiums, several types of business insurance coverage are deductible. Here's a quick list of some of the insurance coverages you can deduct:

• Fire, theft and flood insurance
• Credit insurance, covering losses from bad debts
• Liability insurance
• Malpractice insurance
• Workers' compensation insurance
• State unemployment insurance
• Overhead insurance
• Business auto insurance
• Life insurance for employees
• Business interruption insurance

19. Cost of Goods

You can deduct the cost of producing or purchasing goods for resale. Use IRS Form 1125-A to calculate your costs for labor, materials, storage, packaging (or repackaging), handling, transportation and administration.

20. Supplies and Other Expenses

The list of qualifying deductions is long—too long to list here comprehensively. Overall, most expenses you incur as a normal part of running your business are potentially deductible. Be sure to keep receipts in case you're audited. If in doubt, consult a tax pro for advice.

Here's a quick list of commonly deductible expenses:

• Supplies
• Advertising
• Contractor pay
• Legal and professional services (accounting, marketing and payroll services, for instance)
• Fees and commissions
• Telephone and internet bills
• Utilities
• Business licenses
• Software and software subscriptions

Frequently Asked Questions

The Bottom Line

Being self-employed often means wrangling a more complex tax return. If you want help, consider working with a tax professional. Not only may you find additional deductions you weren't aware of, but you can also deduct the cost of preparing the business portion of your tax return as a business expense.