If you're self-employed, freelancing, or running a side hustle, you're entitled to deduct ordinary and necessary business expenses from your taxable income. Unlike W-2 employees, you're responsible for tracking these deductions yourself—which means money left on the table if you don't know what qualifies.
For tax year 2026, the IRS allows you to deduct any expense that is:
The good news? The definition is broad. You don't need to prove an expense was essential—just that it was reasonable for your type of work.
Potential Savings: $1,500 - $8,000/year
If you use part of your home exclusively and regularly for business, you can deduct a portion of your rent/mortgage, utilities, insurance, and repairs.
Two calculation methods:
Home: 2,000 sq ft | Office: 200 sq ft (10%)
Annual expenses: $24,000 (mortgage, utilities, insurance, repairs)
Deduction: $2,400
Potential Savings: $800 - $6,000/year
For 2026, the IRS standard mileage rate is 67 cents per mile (up 1.5 cents from 2025). Track every business-related trip: client meetings, supply runs, job sites, networking events.
Recommended tracking apps:
Potential Savings: $4,000 - $15,000/year
Self-employed individuals can deduct 100% of health insurance premiums for yourself, spouse, and dependents—even if you don't itemize. This includes:
This is an "above-the-line" deduction, meaning it reduces your adjusted gross income on Form 1040, not Schedule C.
Automatically track deductible expenses, mileage, and generate Schedule C tax forms. Designed specifically for freelancers and gig workers. Includes quarterly tax estimate calculator.
View on AmazonPotential Savings: $2,000 - $60,000+/year
Self-employed retirement plans offer massive deductions AND tax-deferred growth.
| Plan Type | 2026 Max Contribution | Best For |
|---|---|---|
| SEP-IRA | $69,000 or 25% of net self-employment income | High earners with variable income |
| Solo 401(k) | $70,000 ($77,500 if 50+) | Maximizing contributions with moderate income |
| SIMPLE IRA | $16,500 ($20,000 if 50+) | Small businesses with employees |
| Traditional IRA | $7,000 ($8,000 if 50+) | Everyone (basic option) |
Potential Savings: $1,500 - $8,000/year
You can deduct 50% of your self-employment tax (the 15.3% you pay for Social Security and Medicare). This partially offsets the fact that self-employed people pay both the employer and employee portions.
Calculation: If you owe $10,000 in self-employment tax, you can deduct $5,000 from your taxable income.
Potential Savings: $500 - $5,000/year
Fully deductible business insurance includes:
Potential Savings: $300 - $3,000/year
Everything you need to run your business:
Potential Savings: $500 - $4,000/year
Deductible education and training expenses:
Requirement: The education must maintain or improve skills required in your current business. Training for an entirely new career doesn't qualify.
Potential Savings: $1,000 - $10,000+/year
100% deductible marketing expenses:
Potential Savings: $600 - $2,400/year
Deduct the business-use percentage of:
How to calculate: If you use your phone 60% for business, deduct 60% of the bill. Keep logs to justify your percentage if audited.
Potential Savings: $500 - $3,000/year
For 2026, business meals are 50% deductible if:
Potential Savings: $1,000 - $8,000/year
When traveling overnight for business, you can deduct:
Rule: Your trip must be primarily for business. If you extend a business trip for vacation, you can only deduct expenses during the business days.
Potential Savings: $200 - $1,000/year
Deductible financial costs:
Potential Savings: $500 - $5,000/year
Fees paid to professionals for business purposes:
Specifically designed for freelancers, contractors, and gig workers. Includes Schedule C, business expense tracking, and quarterly tax estimates. Maximizes deductions with industry-specific guidance.
View on AmazonPotential Savings: Variable
If you hire contractors, subcontractors, or freelancers, their fees are fully deductible. Remember to issue 1099-NEC forms if you pay any contractor $600+ in a calendar year.
Potential Savings: $3,000 - $30,000+/year
If you rent office space, a coworking membership, or storage units for business purposes, the full amount is deductible. This includes:
Potential Savings: $500 - $4,000/year
All business software is deductible:
Potential Savings: $2,000 - $15,000/year
If you use the actual expense method (instead of standard mileage), you can deduct:
Multiply total expenses by your business-use percentage.
Potential Savings: $1,000 - $20,000+/year
Large equipment and assets can be depreciated over their useful life:
Alternatively, use Section 179 or bonus depreciation to deduct the full cost immediately (up to limits).
Potential Savings: Up to $5,000 first year
If you launched a new business in 2026, you can deduct up to $5,000 in startup expenses in year one (and amortize the rest over 15 years). Qualifying startup costs include:
Potential Savings: $400 - $2,000/year
If you have a dedicated business location, deduct 100% of utilities. For home office, deduct the business-use percentage of:
Potential Savings: $200 - $2,000/year
Charitable donations are NOT business deductions—but they are itemized deductions on Schedule A. If your business sponsors events or donates with expectation of advertising, those costs can be marketing expenses.
Potential Savings: Variable
If a client never pays you for completed work, you can deduct the unpaid invoice as a bad debt—but ONLY if you use accrual accounting (not cash basis, which most small businesses use).
Potential Savings: $100 - $1,000/year
Business licenses, professional certifications, and permits are fully deductible:
Potential Savings: $300 - $3,000/year
Routine repairs to business equipment and property are deductible. This includes:
Potential Savings: $200 - $2,000/year
If you hire cleaning services for your business location or home office, those costs are deductible at the business-use percentage.
Potential Savings: $200 - $2,000/year
Professional organization memberships and dues are deductible:
NOT deductible: Country clubs, golf clubs, and social organizations—even if you discuss business there.
Claiming exactly $5,000 or $10,000 looks suspicious. Use actual amounts: $4,847.23 is believable.
Claiming your vehicle, phone, or internet is used 100% for business raises red flags. Be realistic: 80-90% is more credible.
If you report $30,000 in income and $28,000 in deductions, the IRS will question whether you're really running a business or just hobby expenses.
No receipts = no deduction. Use apps like Expensify or QuickBooks to photograph and categorize receipts immediately.
Your family vacation isn't a business trip. Your gym membership isn't professional development (unless you're a personal trainer). Keep personal and business expenses separate.
Self-employed individuals must pay estimated taxes quarterly if they expect to owe $1,000+ in taxes for the year.
| Tax Period | Payment Due Date |
|---|---|
| January 1 - March 31 | April 15, 2026 |
| April 1 - May 31 | June 16, 2026 |
| June 1 - August 31 | September 15, 2026 |
| September 1 - December 31 | January 15, 2027 |
How to calculate: Use our Quarterly Tax Calculator or the IRS Form 1040-ES worksheet.
If you're having a high-income year, consider:
SEP-IRA contributions can be made until your tax filing deadline (April 15, 2027 for 2026 taxes). This gives you extra time to boost deductions if needed.
If you have children, you can hire them for legitimate business work. Their wages are:
If you're earning $60,000+ in self-employment income, electing S-Corp status could save thousands in self-employment tax. Consult a CPA to see if this makes sense for you.
Consider hiring a CPA or Enrolled Agent if:
Standard deduction increased to $14,600 (single) and $29,200 (married), up from $14,600/$29,200 in 2025.
Standard mileage rate increased to 67 cents per mile (from 65.5 cents in 2025).
SEP-IRA limit increased to $69,000 (from $66,000 in 2025). Solo 401(k) limit increased to $70,000 ($77,500 if 50+).
Maximum Section 179 deduction increased to $1,220,000 for 2026.
Yes, as long as your home office is your principal place of business and meets the exclusive-use test. Working occasionally from coffee shops doesn't disqualify the deduction. However, you can't also deduct coffee shop expenses as "office rent"—those would fall under meals or general business expenses.
You can only deduct expenses incurred after your business officially started. Keep documentation of your business start date (LLC filing, first invoice, business license). Expenses before that date may qualify as startup costs (up to $5,000 deductible in year one).
No. Sole proprietors, single-member LLCs, partnerships, and corporations all file Schedule C (or equivalent) and claim the same business deductions. Your business structure doesn't affect what's deductible—only how you file and your liability protection.
Only if it's required for your work AND not suitable for everyday wear. Uniforms with company logos qualify. Scrubs for medical professionals qualify. A nice suit for client meetings does NOT qualify (you could wear it to dinner). Stage costumes for performers qualify.
The IRS recommends 3 years for most records, 6 years if you underreported income by 25%+, and 7 years for bad debt deductions. For property and depreciation records, keep them for 3 years after the asset is disposed of. When in doubt, keep longer—digital storage is cheap.
A deduction reduces your taxable income (saving you your marginal tax rate). A credit reduces your tax bill dollar-for-dollar (much more valuable). Example: A $1,000 deduction saves you $220 if you're in the 22% tax bracket. A $1,000 credit saves you the full $1,000.
Yes! The self-employed health insurance deduction covers premiums for yourself, your spouse, and dependents—regardless of whether they work in your business. However, you can't claim this deduction if you (or your spouse) are eligible for employer-sponsored health insurance through another job.
The average self-employed person pays $6,000-$12,000 more in taxes than necessary by missing legitimate deductions. You earned that money through hard work—don't give it away to the IRS out of ignorance or laziness.
Action steps for 2026:
Remember: Deductions aren't cheating or "gaming the system." They're your legal right as a business owner. The tax code is written to incentivize entrepreneurship—take advantage of it.
Disclaimer: This article is for informational purposes only and should not be considered tax advice. Tax laws are complex and change frequently. Consult a qualified tax professional for advice specific to your situation.
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