16 Self-Employment Tax Deductions You Should Not Miss
A deduction does not mean the IRS pays you back for something. A deduction reduces the income you owe tax on. If you are in the 22 percent federal bracket plus 15.3 percent self-employment tax, every dollar of legitimate business deduction saves you roughly 37 cents in tax. That is significant money over a year.
This list covers 16 deductions most self-employed people underuse, either because they do not know they qualify or because they do not track the expenses carefully enough to claim them.
Not tax advice. Talk to a pro if your situation is complicated. But if you are leaving any of these on the table, you are paying tax on money you could have kept.
1. Home Office
If you have a space in your home used regularly and exclusively for business, you can claim a deduction for it. Two methods: simplified ($5 per square foot up to 300 sq ft, max $1,500) or actual (percentage of home used × actual home expenses).
Actual usually wins for anyone with meaningful housing costs. Full breakdown: The Home Office Deduction for Self-Employed.
2. Self-Employment Tax (Half of It)
You pay 15.3 percent self-employment tax on your net earnings. You can deduct half of that on your federal return as an adjustment to income. This is automatic on your Form 1040, Schedule SE calculation. You do not have to do anything special to claim it, but it is a real deduction that lowers your federal income tax bill.
3. Health Insurance Premiums
If you pay for your own health insurance (not a spouse's employer plan), you can deduct the premiums as an adjustment to income on your 1040. This includes medical, dental, and qualifying long-term care insurance.
For families, premiums for your spouse and dependents are also deductible. For most self-employed people paying Marketplace premiums, this is one of the larger deductions available.
It is limited to your net self-employment income, so if your business had a loss, you cannot claim it this year.
4. Retirement Contributions
Contributions to a SEP IRA, Solo 401(k), or SIMPLE IRA reduce your taxable income dollar for dollar. For 2024, a Solo 401(k) allows up to $23,000 in employee elective contributions plus employer contributions up to 25 percent of net self-employment income, with a total cap around $69,000.
This is one of the biggest levers self-employed people have for lowering their tax bill while simultaneously building retirement.
See our calculator: SEP IRA vs Solo 401(k).
5. Business Mileage
If you drive for business, you can deduct either actual vehicle expenses (gas, maintenance, insurance, depreciation) or a standard mileage rate (67 cents per mile for 2024, adjusts annually).
The standard mileage rate covers all vehicle operating costs in one lump. You cannot also deduct gas, oil, maintenance, insurance, or depreciation on top of it.
You must keep a mileage log. Apps like MileIQ, Stride, or Gridwise make this easy. The log should show date, purpose, and miles for each business trip.
For rideshare and delivery drivers, this is by far the biggest single deduction. Most drivers miss 20 to 40 percent of their business miles because they do not track consistently.
6. Software Subscriptions
Every subscription you use to run your business is deductible. Adobe Creative Cloud, Notion, Figma, Canva Pro, Slack, QuickBooks, Zoom, Calendly, Dropbox, Microsoft 365, Google Workspace, project management tools, hosting and domain fees, email platforms, social media schedulers.
These add up. Most freelancers and small business owners spend $50 to $500 per month on software. That is $600 to $6,000 per year in deductions, all of which are easy to substantiate with receipts.
7. Business Phone and Internet
If you use your phone and internet for business, you can deduct the business-use portion. If you have a dedicated business phone line, 100 percent. If you share a personal line, deduct the percentage used for business (30, 50, 70 percent, whatever is honest).
Same for internet at home. If you use your home internet for both personal and business, deduct the business-use percentage. Many freelancers use 25 to 50 percent, depending on how much of their work is online.
8. Education and Training
Courses, books, conferences, certifications, continuing education, and coaching that maintain or improve your skills in your existing line of work are deductible.
Deductible: - A developer taking a course in a framework they use. - A therapist attending continuing education required for licensure. - A coach taking a certification in their existing coaching niche. - Industry conferences. - Trade publications and books.
Not deductible: - Education that qualifies you for a new trade or profession (e.g., a developer paying for nursing school). - Degrees required to meet minimum qualifications for your current work.
This rule eliminates a lot of people's "I'll deduct my MBA" hopes. Most MBA tuition is not deductible because the MBA qualifies you for new management roles.
9. Professional Services
Lawyers, accountants, bookkeepers, business coaches, consultants, tax preparers. If you pay them for services tied to your business, their fees are deductible.
This includes the cost of preparing your business taxes. A $500 Schedule C prep fee is a $500 deduction.
10. Business Insurance
Professional liability, errors and omissions, general liability, workers compensation (if you have employees), commercial auto, business property insurance. All deductible as business expenses.
Disability insurance that replaces your business income if you cannot work: premiums are not deductible on your business, but benefits received are also not taxable. The two sides of this trade-off usually cancel out.
11. Marketing and Advertising
Google Ads, Facebook Ads, LinkedIn Ads, Etsy Ads, sponsored posts, influencer collaborations, booth fees at trade shows, business cards, branded swag, your website design and maintenance, SEO services.
Some freelancers underclaim here because small ad spends feel "personal." A $50 Instagram boost is a business expense. Track it.
12. Office Supplies and Small Equipment
Pens, paper, printer ink, printers, monitors, keyboards, desks, chairs, bookshelves, filing cabinets. Anything used for the business, regardless of whether it lives in a "home office" or not.
Items under around $2,500 are deductible in the year purchased (called Section 179 or de minimis safe harbor). Larger equipment may need to be depreciated over several years, but most self-employed equipment falls under the immediate-deduction threshold.
13. Contractor Payments
If you paid other contractors (editors, designers, virtual assistants, accountants as contractors, etc.) for business services, those payments are deductible.
If you paid a single contractor more than $600 in the year, you are required to issue them a 1099-NEC by January 31 of the following year. Some bookkeeping platforms (Gusto, QuickBooks) handle this automatically.
14. Travel and Meals
Business travel is fully deductible. Flights, hotels, rental cars, Uber, baggage fees, tips. If the trip is primarily for business, the whole trip qualifies. If it is primarily personal with some business activity, only the business portion is deductible.
Meals are 50 percent deductible for meals directly tied to business (client meetings, meals while traveling for business). Fully deductible meals include company-wide events and some promotional events.
Entertainment (concerts, sports tickets, golf outings) is no longer deductible even when tied to business. That changed in 2018.
Track these carefully. Keep receipts, note the business purpose and attendees for meals.
15. Bank and Credit Card Fees
Monthly fees on your business checking account. Credit card processing fees (Stripe, PayPal, Square). Wire transfer fees. Late fees on business credit cards (real, but really just a signal to fix your cash flow).
These are often 1 to 4 percent of revenue for payment-processor-dependent businesses. Easy to deduct, easy to miss.
16. Qualified Business Income Deduction (QBI)
If your taxable income is below the QBI threshold (around $191,950 single, $383,900 married filing jointly for 2024), you can deduct 20 percent of your qualified business income from your taxable income.
This is a big one. On a $60,000 net self-employment income, the QBI deduction can save roughly $2,640 in federal tax.
It applies automatically on your 1040 if you qualify. Specified service trades (health, law, consulting, financial services, performing arts, athletics) have additional restrictions above the thresholds.
Record-Keeping for All of This
Every deduction you claim needs evidence.
Minimum per deduction: - Receipt or statement with date, amount, vendor. - Business purpose noted somewhere (in a bookkeeping tool, on the receipt, in a spreadsheet).
Better: - Digital photos or scans of receipts (use an app like Dext, Shoeboxed, or just your phone). - Monthly reconciliation against bank and credit card statements. - Separate business credit card and checking account so transactions are easy to separate.
If audited, the IRS asks for evidence. If you have good records, an audit is tedious but manageable. If you do not, you lose deductions and potentially owe back tax plus interest and penalties.
Deductions That Are Often Misunderstood
Clothing. Only deductible if it is required for work and cannot reasonably be worn as personal clothing. A bartender's branded apron yes, a nice suit for client meetings no.
Gym memberships. Not deductible for most people. Some very narrow cases (personal trainer whose gym membership is required for their job) might qualify.
Haircuts and personal grooming. Not deductible.
Vacations with some business mixed in. Only the business portion is deductible, proportional to business-to-personal time, and only if the trip was primarily for business.
Dating apps, entertainment. Not deductible even if you network while using them.
Your regular commute. Commuting from home to a regular workplace is not deductible. Travel from your home office to a client site often is.
The Simpler System
Track every legitimate business expense as it happens, in the same categories you will eventually use on Schedule C. Most self-employed people do not need complex bookkeeping; they need disciplined categorization.
At tax time, your deductions are the sum of tracked expenses, and your taxable income is revenue minus deductions. No scramble, no missed categories.
The Able Connection
Able does not file your taxes. What Able does is make sure a tax percentage gets set aside from every deposit, so regardless of what your deductions end up being, the money for what you owe is already in a separate account.
You are able to pay down debt, even on slow months.
You are able to save without second-guessing.
You are able to predict what is coming.
You are able to budget inconsistent income.