12 Essential Business Tax Deductions for Small Businesses (2026)

There are a lot of perks that come with running a business. (This includes you, freelancers!) Beyond a sense of freedom, one primary perk that comes with being self-employed is the ability to boost your tax refund and lower your taxable income. But, how? It’s not magic—it’s know-how.

Whether you’re a freelancer, consultant, or small business owner, every purchase you make that doubles as an investment for your business may be a tax-deductible business expense. The Internal Revenue Code allows you to write off all “ordinary and necessary” expenses required to operate your organization. But, before we get into maximizing your tax refund, let’s examine what tax write-offs are exactly.

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What are tax write-offs?

12 essential business tax write-offs and deductions

1. Standard deduction
2. Earned income credit (EIC)
3. Business operations
4. Finances
5. Health insurance, HSAs, and medical expenses
6. Equipment
7. Social Security payments
8. Charitable contributions
9. Home-office
10. Internet and phone used for business
11. Travel expenses
12. Qualified Business Income (QBI) deduction

What small business owners need to know for the 2026 filing season

Common tax write-off mistakes to avoid

Best practices to maximize your tax write-offs

Write-offs work pay off when you’re prepared

What are tax write-offs?

Technically, a write-off is something you write out of your taxes. But, tax write-off often refers to tax deductions or tax credits as well. The two are similar, so it’s easy to mix them up. (Both help a lot, though.)

A tax credit is a set amount that’s taken straight off your owed taxes. So, if you owe $5,000 and you have a credit for $2,000, now you only owe $3,000.

A tax deduction, on the other hand, reduces the amount you pay taxes on. So, in this case, let’s say you have a deduction worth $2,000, and you made $65,000 that tax year. The $2,000 deduction would reduce your income to $63,000 and benefit your state and federal tax. This doesn’t hold the same direct monetary value as the $2,000 credit, but it can move you into a lower tax bracket in some cases and still reduces how much federal income tax and state income tax you owe.

Now, let’s start looking at those sweet, sweet tax benefits available to you and get you the biggest tax refund possible

12 essential business tax write-offs and deductions

Business tax write-offs can lower your taxable income and keep more money in your pocket. The IRS allows deductions that are ordinary in your industry and necessary for running or growing your business. Rules can vary depending on your filing status or state, but many deductions apply broadly to consultants, freelancers, and small business owners alike.

Here are 12 essential self-employed tax write-offs and deductions to know for 2026.

1. Standard deduction

The standard deduction is an annual amount set by the IRS that lowers your taxable income automatically.

For 2025, it increases to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly. For freelancers and the self-employed, you subtract business expenses on Schedule C to get your net profit, then apply either the standard deduction or itemized deductions on your personal return. Since you can’t take both, it’s smart to compare which option lowers your tax bill the most.

A tax professional can help you choose the option that saves you the most.

2. Earned income credit (EIC)

While not a business deduction, the Earned Income Tax Credit (EITC) is a refundable credit that helps low- to moderate-income workers lower their tax bill—and in some cases, increase their refund.

For 2025, the maximum credit is $8,046 for families with three or more qualifying children, with income limits adjusted by filing status. Unlike the standard deduction, the EIC can usually be claimed in addition to business or self-employment write-offs, making it especially valuable for freelancers and small business owners who are just starting out or earning modest income.

3. Business operations

Everyday operational costs remain fully deductible as long as they’re ordinary, necessary, and directly tied to running your business. These include utilities, advertising, marketing (such as event sponsorships), office supplies, rent, travel, and internet charges. Building-related expenses like landscaping, repairs, and maintenance also qualify.

4. Finances

Financial costs tied to running your business are often deductible. These can include business-related property taxes (on an office, storefront, or other business property), bank charges (such as wire transfer fees or overdraft fees), and business insurance premiums.

For 2025, don’t forget that interest on business loans and credit cards remains deductible too, and you may also be able to deduct certain professional service fees (like bookkeeping or tax prep) as part of your financial expenses.

5. Health insurance, HSAs, and medical expenses

Business owners can often lower taxable income through deductions for health insurance, certain medical costs, and HSA contributions.

Premiums

If you’re self-employed and your business shows a profit, you may be able to deduct 100% of the health insurance premiums you pay for yourself, your spouse, and dependents. This applies whether your coverage comes from a private insurer, the ACA marketplace, or Medicare (Parts A, B, C, and D). Employers who provide coverage for staff can also usually deduct the cost of those premiums as a business expense. For details and limits, see the IRS website.

Medical expenses

Some out-of-pocket medical costs may also qualify, typically if you itemize deductions and they exceed the IRS threshold.

Health Savings Accounts (HSAs)

Contributions to Health Savings Accounts remain deductible, with 2025 limits set at $4,300 for self-only coverage and $8,550 for family coverage, plus a $1,000 catch-up contribution if you’re 55 or older. HSAs let business owners set aside pre-tax dollars to cover future healthcare costs.

6. Equipment

Office equipment, furniture, and business vehicles are deductible, whether through depreciation or immediate expensing.

For 2025, the One Big Beautiful Bill Act restores 100% bonus depreciation for most qualified property placed in service after January 19, 2025, allowing many purchases to be written off right away. In addition, Section 179 expensing limits rise to $2.5 million annually with a $4.0 million phase-out threshold, giving small businesses more flexibility than ever. Always confirm with a tax advisor which assets qualify for these deductions.

7. Social Security payments

Everyone pays into Social Security and Medicare, but how it’s handled—and what you can deduct—depends on whether you’re self-employed, working for an employer, or a business owner.

• Self-employed freelancers and solopreneurs: You’re responsible for the full 15.3% self-employment tax (12.4% for Social Security and 2.9% for Medicare) on earnings up to $176,100 in 2025. To ease the burden, the IRS lets you deduct half of this tax when figuring your adjusted gross income, which lowers your taxable income.
• Business owners with employees: You pay the employer share (7.65%) of Social Security and Medicare on your employees’ wages, while also withholding 7.65% from their paychecks for their share. Your employer portion is deductible as a business expense, reducing your company’s taxable income.
• Employees: If you work for an employer, the cost is split—you pay 7.65% through payroll, and your employer covers the other half. Since you’re not paying the full amount, there’s no additional deduction at tax time.

8. Charitable contributions

The U.S. Small Business Administration (SBA) estimates that approximately 75% of small businesses donate to charities annually. Beyond strengthening your community and building goodwill, qualifying donations to IRS-recognized nonprofits may also be deductible. Freelancers and sole proprietors typically claim these gifts on their personal return, while incorporated businesses can deduct contributions as a business expense. Be sure to keep receipts and confirm that the organization is tax-exempt before claiming the deduction.

9. Home-office deduction

When you’re self-employed, you can claim a portion of your home for work use with the home-office deduction.

You can calculate the home office deduction in two ways. The simplified method allows you to deduct $5 per square foot of business space, up to 300 square feet ($1,500 maximum). The regular method looks at the percentage of your home used for business—for example, 10%—and lets you apply that percentage to eligible expenses such as mortgage interest or rent, utilities, property taxes, and homeowners insurance.

10. Internet and phone used for business

Like the home office deduction, you can claim the portion of your internet and phone service that you use for business purposes. The IRS requires you to allocate costs between personal and business use—for example, if 40% of your phone calls are work-related, you can deduct 40% of that bill. A tax professional can help you calculate and document this correctly.

11. Travel expenses

Work-related travel is deductible, whether it’s flying out for a client meeting, driving to a conference, or booking a hotel for a business trip. Eligible expenses include airfare, car rentals, mileage, lodging, and 50% of meal costs while you’re away from your tax home for business purposes. Just remember: commuting from home to your regular workplace doesn’t count.

12. Qualified Business Income (QBI) deduction

If you operate as a sole proprietor, partnership, LLC, or S-corp, you may be eligible for the QBI deduction, which lets you deduct up to 20% of your qualified business income right off the top of your taxable income. This can be one of the biggest tax breaks for freelancers and small business owners, though it phases out at higher income levels and has special rules for certain service industries.

Medicare costs

If you’re currently using any medicare plan and are self-employed, you could qualify for a deduction. With this, you can deduct any medicare premiums, which can be a sizeable chunk over the course of a year.

Other deductions your business may qualify for include expenses related to business education, moving, and losses from theft and fraud.

What Small Business Owners Need to Know for the 2026 Filing Season

Running a business means keeping an eye on tax rules that affect your bottom line. For the 2026 filing year, several IRS updates and One Big Beautiful Bill Act (OBBBA) provisions could change how you approach write-offs, deductions, and overall planning. 

Higher standard deduction

The standard deduction rises to $15,750 (single), $23,625 (head of household), and $31,500 (married filing jointly). If you don’t itemize, this larger deduction reduces your taxable income right out of the gate. For those age 65 or older (and for spouses if both qualify), there is an additional deduction of $6,000 per person.

Self-employment tax adjustments

The self-employment tax rate stays at 15.3%, but the Social Security wage base increases to $176,100. That means business owners with higher earnings will see more of their income subject to Social Security tax.

Expanded business deductions under OBBBA

• 100% bonus depreciation is back for most qualified property placed in service after January 19, 2025. Equipment, tech, or software investments may be fully written off in the year you buy them.
• Section 179 expensing increases to a $2.5M annual limit with a $4.0M phase-out threshold. While these limits are most relevant to larger operations, they give all small businesses more flexibility to deduct costs upfront.

Qualified Business Income (QBI) deduction

Many freelancers, solopreneurs, and small business owners qualify for the QBI deduction, which allows you to deduct up to 20% of your qualified business income. QBI is generally your net profit from a qualified U.S. business you own—after excluding investment income, wages, and guaranteed payments for services. This deduction can be claimed if you are a sole proprietor, partner in a partnership, S-corp shareholder, or LLC member (but not if you operate as a C-corp).

Earned Income Credit (EIC) updates

The maximum credit increases to $8,046 for families with three or more children. Adjusted income thresholds may expand eligibility for some self-employed filers and family-run businesses.

Higher IRS standard mileage rate

The IRS standard mileage rate for 2025 rises to 70¢ per business mile, up from 67¢ in 2024. This means freelancers and small business owners who drive frequently for client meetings, deliveries, or other business purposes can deduct more for every mile driven.

State-specific updates

On top of federal write-offs, many states offer their own incentives for small businesses. Depending on where you operate, you may qualify for credits tied to clean energy upgrades, research and development, technology investments, workforce training, or hiring in certain industries or regions. These opportunities vary widely, so it’s worth checking with your state’s Department of Revenue or a local tax professional to see which programs you can tap into.

Common tax write-off mistakes to avoid

Besides claiming too few deductions, some small business owners get overzealous and claim too many. While you should take advantage of the deductions you’re legally entitled to, lying or stretching the truth on your business returns can result in an IRS audit, heavy fines, and even jail time for tax evasion.

Meet with your accountant regularly to make sure your tax write-offs don’t end up creating an even bigger tax liability. Here are some of the common tax write-off mistakes to avoid.

Mislabeling personal expenses as business expenses in deductions

You can only deduct services related to your business. For example, home-care services like gardening won’t count, even though you work from home. If you’re unsure about something, double-check with an accountant.

Claiming mixed-use personal space as a home-office deduction

Home-office deductions qualify if a portion of your house is used solely for business. You cannot use this space for other home tasks or you may run into trouble. Hire a contractor to measure the square footage of the space and have them provide you with a letter proving your claim to the IRS.

Deducting your personal cell phone or internet bill as a business expense

If you claim phone, internet, or electronics expenses, the IRS requires detailed records showing how much was for business use. You can only deduct the documented business portion. A device used exclusively for business is fully deductible, but the cleanest approach is to keep separate devices for personal and business use.

Work uniforms or costumes

To qualify as a deduction, work clothing must be required for your job and not suitable for everyday wear. A business suit doesn’t count, but items like a clown costume for a party business, safety gear, or a logo-branded uniform can. Keep records, proof of necessity, and employer policies to back up the deduction.

Other tax write-offs that are usually flagged

If you do any of the following on your tax return, it could land you in hot water with the IRS:

• Misclassifying workers. Calling an employee a contractor (or the other way around) can lead to penalties, back taxes, and required repayment of employment taxes. The IRS has strict tests for worker classification.
• Claiming personal travel as business. A family vacation disguised as a “business trip” won’t hold up under audit. Only travel that’s directly tied to your business purpose (like client meetings or industry conferences) is deductible, and you’ll need documentation.
• Taking excessive or inflated deductions. Writing off more than what’s reasonable compared to your income can raise IRS suspicions. For example, reporting $100,000 of income but $95,000 in “business expenses” without strong proof is likely to trigger questions.

Best practices to maximize your tax write-offs

Nobody ever said the freedom of self-employment would come free. Along with the flexibility comes paperwork, business expenses, small business taxes, and your own personal taxes, too. The upside? Being a freelancer or business owner also gives you access to valuable tax write-offs. With the right approach, you can turn everyday business costs into savings that reduce your taxable income and ease the financial load of running your business.

Keep business and personal expenses separate.

Open a dedicated business bank account or credit card so your deductible expenses don’t get mixed in with grocery runs or gym memberships. For example, paying for software subscriptions from your business card makes them easier to track at tax time.

Save every receipt.

Whether it’s a digital PDF or a paper slip, receipts provide proof of your expenses, so it’s important to keep receipts organized. A client lunch or a last-minute Uber to a meeting can only count as a deduction if you have that record. With QuickBooks, you can snap a photo of receipts on your phone, and they’re stored digitally, matched to the right expense, and ready for tax time.

Track mileage and travel.

Business trips add up quickly. If you drive to a client site, keep a log of miles traveled; if you attend a conference out of town, note your airfare, hotel, and meal costs. Apps and mileage trackers, like the QuickBooks mobile app, can help simplify this.

Log your home office space.

If you work from home, measure the square footage of the area used exclusively for your business. For instance, a 200 sq. ft. office in a 2,000 sq. ft. home equals 10%, so you can deduct 10% of costs like mortgage interest or utilities.

Review expenses regularly.

Don’t wait until tax season. At least once a month, categorize costs like advertising, utilities, or professional memberships. Catching these early makes it less likely you’ll miss deductions later. Consider bookkeeping software like QuickBooks that generates expense reports with categories and totals, giving you a clear picture of where your money is going and what’s deductible.

Work with a pro when needed.

Since tax rules can change from year to year and can differ by state it’s important to stay compliant. Find an accountant early and check in with them throughout the year as needed. A good accountant can flag state-specific requirements, identify opportunities like the Qualified Business Income (QBI) deduction, and help you avoid costly mistakes while making sure you’re not leaving money on the table.

Write-offs work pay off when you’re prepared

The best tax strategy isn’t last-minute—it’s year-round. Meet with your tax advisor ahead of time to gather the paperwork you’ll need to identify and back up your deduction claims. Even if your business is brand new, asking early sets you up for success in your first year. Staying organized—and honest about which expenses are truly business-related—means fewer headaches, more accurate returns, and greater peace of mind when tax season rolls around.