Self-Employed? Here's What You Can Actually Deduct

One of the genuine advantages of being self-employed is the ability to deduct legitimate business expenses from your taxable income. The IRS allows you to deduct any expense that is "ordinary and necessary" for your trade or business — meaning it's common in your industry and helpful for running your business.

Home Office Deduction

If you use part of your home exclusively and regularly for business, you may be able to deduct a portion of your housing costs — rent, utilities, internet, homeowner's insurance, and more. There are two methods: the simplified method ($5 per square foot, up to 300 sq ft) or the regular method based on the actual percentage of your home used for work.

Vehicle and Mileage

If you use your car for business — driving to client meetings, picking up supplies, traveling between job sites — those miles are deductible. In 2024 the standard mileage rate was 67 cents per mile. Keep a mileage log that records the date, destination, and purpose of each trip. Personal commuting miles do not count.

Health Insurance Premiums

If you're self-employed and pay for your own health insurance (not through a spouse's employer plan), you can deduct 100% of those premiums for yourself and your family. This is one of the more significant deductions available and one many self-employed individuals don't know about.

Business Equipment and Supplies

Computers, phones, printers, office furniture, and supplies used for business are generally deductible. If an item is used for both personal and business purposes, you can only deduct the business-use percentage.

Software and Subscriptions

Accounting software, project management tools, design subscriptions, cloud storage, and similar business tools are deductible. Even your website hosting and domain registration qualify.

Professional Services

Fees paid to accountants, bookkeepers, lawyers, and other professionals for business-related services are deductible. Yes — the cost of hiring a tax preparer to do your Schedule C return is itself a deductible business expense.

Marketing and Advertising

Business cards, website costs, social media advertising, and any other costs related to promoting your services are deductible.

Retirement Contributions

Self-employed individuals can contribute to a SEP-IRA, SIMPLE IRA, or Solo 401(k) and deduct those contributions. This is one of the best ways to reduce your taxable income while building long-term financial security.

A Note on Record-Keeping

Every deduction you claim should be supported by documentation — receipts, invoices, bank statements, or mileage logs. The IRS doesn't require you to submit these with your return, but you'll need them if you're ever audited.