Self-Employed Tax Deductions: Complete List (2026)

Self-Employed Tax Deductions

One of the genuine advantages of self-employment is the extensive menu of tax deductions available to you. While employees are limited in what they can deduct on their personal returns (especially after the 2017 tax law changes eliminated most miscellaneous itemized deductions), self-employed workers report income and expenses on Schedule C -- which allows deduction of every legitimate business cost before calculating taxable profit.

Understanding and claiming every deduction you are entitled to is not tax avoidance -- it is complying with the tax code as Congress wrote it. This complete guide covers every major self-employed tax deduction for 2026.

Home Office Deduction

If you use a portion of your home regularly and exclusively for business -- a dedicated office, studio, or workspace -- you can deduct the home office expenses. There are two methods:

Simplified method -- Deduct $5 per square foot of dedicated workspace, up to 300 square feet, for a maximum deduction of $1,500 per year. No depreciation recapture when you sell.

Regular method -- Calculate the percentage of your home's square footage used for business (e.g., 200 sq ft of 2,000 total = 10%) and apply that percentage to home-related costs: mortgage interest or rent, utilities, homeowner's insurance, repairs, and depreciation. This method typically produces a larger deduction.

The exclusive use requirement is strictly enforced. A home office that doubles as a guest room does not qualify.

Vehicle Expenses

If you drive for business purposes, you can deduct:

Standard mileage rate -- 70 cents per business mile in 2026. Simple to use, requires only a mileage log showing dates, destinations, business purpose, and miles.

Actual expenses -- Deduct the business-use percentage of actual costs: fuel, insurance, repairs, depreciation, registration, and car loan interest. Requires more recordkeeping but can produce a larger deduction for fuel-efficient or expensive vehicles.

You cannot deduct commuting miles (driving from home to your regular work location). Business driving is miles to client sites, supply runs, business errands, and other work-related travel.

Health Insurance Premiums

Self-employed individuals who are not eligible for coverage through an employer (or a spouse's employer) can deduct 100% of health insurance premiums, including dental and qualifying long-term care coverage, as an above-the-line adjustment to gross income. This reduces your adjusted gross income and is available whether or not you itemize.

If your business had a net loss in the year, this deduction cannot exceed your net profit from self-employment.

Retirement Plan Contributions

Contributing to a retirement plan reduces your taxable income dollar for dollar. Options include:

• SEP-IRA: Up to 25% of net self-employment income, maximum $69,000 in 2026
• Solo 401(k): Up to $23,500 in employee deferrals plus employer contributions, combined maximum $69,000
• SIMPLE IRA: Up to $16,500 in employee contributions for 2026

These contributions are deductible on Form 1040 as above-the-line adjustments and are among the most powerful tax reduction tools available to self-employed workers.

Half of Self-Employment Tax

You pay 15.3% in self-employment tax on your net self-employment income (covering Social Security and Medicare for both employer and employee shares). The IRS allows you to deduct half of this amount -- the "employer equivalent" portion -- as an above-the-line deduction on Form 1040. This deduction reduces your income tax burden even though it does not reduce the self-employment tax itself.

Business Equipment and Depreciation

Equipment, computers, software, furniture, and other business property are deductible:

Section 179 expensing -- Deduct the full purchase price of qualifying equipment in the year of purchase rather than over multiple years of depreciation. In 2026, the Section 179 limit is $1,220,000.

Bonus depreciation -- Additional first-year depreciation deduction for qualifying new or used property. Check the current bonus depreciation percentage with the IRS, as it changes each year.

Regular depreciation -- For assets not expensed under Section 179, depreciate over the IRS-specified useful life (5 years for computers and equipment, 7 years for furniture).

Professional Development and Education

Courses, books, workshops, certifications, and professional subscriptions directly related to your current business are deductible. Note: education to qualify for a new career does not qualify, but education that maintains or improves skills for your current work does.

Business Insurance

Professional liability (errors and omissions) insurance, general business liability insurance, product liability, cyber liability, and other business-related insurance premiums are fully deductible business expenses.

Bank Fees and Software Subscriptions

Business checking account fees, payment processing fees (Stripe, PayPal, Square), invoicing software, accounting software, project management tools, and other business software subscriptions are deductible.

Eonebill's subscription as your invoicing tool is fully deductible as a business software expense.

Marketing, Advertising, and Website Costs

Website hosting, domain registration, online advertising (Google Ads, social media), printing, promotional materials, business cards, and all marketing costs are deductible as ordinary business expenses.

Travel, Meals, and Entertainment

Business travel expenses are deductible (see the business travel tax deductions guide). Business meals with clients are 50% deductible. Entertainment expenses (sporting events, concerts with clients) are generally not deductible under current law.

Legal and Professional Fees

Fees paid to accountants, CPAs, attorneys, consultants, and other professionals for your business are deductible, including the cost of preparing your Schedule C and business tax returns.

Interest on Business Loans

If you take out a loan or use a credit card for business expenses, the interest attributable to business use is deductible.

Start-Up Costs

If you are in your first year of business, you can deduct up to $5,000 in start-up costs (expenses incurred before your business began -- market research, legal fees, equipment research). Additional start-up costs above $5,000 are amortized over 180 months.

Track all these deductions throughout the year using Eonebill's expense tracker. See also the complete freelancer tax guide and use our 1099 tax calculator to estimate your tax liability after deductions.

Maximizing Deductions: Documentation Best Practices

The difference between claiming every legitimate deduction and leaving money on the table comes down entirely to documentation. Here is how to build a documentation habit that captures every deduction:

The 72-hour rule: Log every business expense within 72 hours of incurring it. After three days, context is lost. After a week, many expenses are forgotten entirely. A brief note in an expense app takes ten seconds but protects the deduction.

Receipt photos: The IRS accepts digital photos of receipts. Photograph every receipt immediately and attach it to the corresponding expense entry. Use an app with OCR that can auto-extract the amount, date, and vendor.

Mileage logs: Start tracking mileage from day one of business operation. The IRS requires date, starting point, destination, business purpose, and miles for each trip. An automated mileage app reduces this to zero effort.

Annual expense review: In January each year, review your expense categories for completeness. Common missed deductions include: bank fees on business accounts, professional association memberships, subscriptions to trade publications, safety training costs, business gifts, and the business-use portion of your home utilities if you have a home office.

The QBI Deduction: A 20% Tax Break Many Miss

The Qualified Business Income (QBI) deduction under Section 199A allows eligible self-employed workers to deduct up to 20% of their qualified business income from their federal taxable income. For 2026:

Eligibility: The deduction is available to most pass-through business owners. It phases out at higher income levels and is more limited for "specified service trades or businesses" (SSTBs -- fields like law, accounting, consulting, financial services, and athletics).

Income thresholds: For 2026, the full 20% deduction is available to single filers with taxable income below approximately $191,950 and married filers below $383,900. The deduction phases out above these thresholds for SSTBs.

Example: A freelance web developer (not an SSTB) with $100,000 net QBI and taxable income below the threshold can deduct $20,000 -- reducing their taxable income to $80,000. At a 24% marginal rate, this saves $4,800 in federal income tax.

If you have not been claiming the QBI deduction, review your prior year returns. For the complete picture of your deductions, use Eonebill's expense tracker and consult the freelancer tax guide. Estimate your total tax position with the 1099 tax calculator.

Deduction Planning Throughout the Year

Most freelancers think about deductions in April. The ones who save the most money think about them in January. Here is a month-by-month deduction planning approach:

January-March: Confirm your home office square footage and total home square footage for the home office deduction. Recalculate mileage rates for the new year (IRS announces updated rates in January). Set up your expense tracking system and retirement account contribution plan.

April-June: Review Q1 expenses for missed deductions. Make your first SEP-IRA contribution based on Q1 income. If you have purchased new equipment, verify depreciation method selected (Section 179 or standard). Pay your Q1 estimated taxes by April 15.

July-September: Mid-year review: are you on track for your income projection? Adjust Q3 estimated payment if income has changed significantly. If you are considering a large equipment purchase, model the Section 179 deduction impact.

October-December: Tax-loss harvest any investment positions. Make final retirement contributions before year-end. Consider accelerating deductible expenses into this year if income is high (prepay subscriptions, buy needed equipment). Complete any planned charitable contributions before December 31.

The Most Overlooked Self-Employment Deductions

Beyond the well-known deductions (home office, mileage, equipment), these are the most commonly missed:

Business insurance premiums: General liability, professional liability (E&O), and business owner's policy premiums are fully deductible.

Professional association memberships: Dues for industry organizations, chambers of commerce, and professional licensing renewals are deductible.

Continuing education: Courses, workshops, books, and subscriptions to industry publications that maintain or improve your professional skills are deductible. Note: costs to enter a new career are not deductible -- only skills in your existing business.

Half of self-employment tax: As discussed in the OASDI guide, 50% of your SE tax is deductible above the line.

Accounting and tax preparation fees: What you pay your CPA or tax software for business-related tax work is itself deductible.

Track all of these with Eonebill's expense tracker and use the 1099 tax calculator to model the impact of each deduction category on your tax bill.