Self-Employed Tax Deductions That Lower Your Bill
Every dollar of legitimate business expense you deduct lowers both your income tax and your self-employment tax. Here are the deductions worth knowing for 2026.
Deductions reduce your net profit, which is the number your taxes are calculated on. Below are the ones that move the needle most for self-employed people. You don't need to itemize on your personal return to claim business expenses, they come off your business income directly.
1. Half of your self-employment tax
You automatically deduct one-half of the self-employment tax you pay. It's an above-the-line deduction, so you get it whether or not you itemize.
2. Home office
If you use part of your home regularly and exclusively for business, you can deduct it two ways. The simplified method is $5 per square foot up to 300 square feet, a maximum of $1,500. The actual-expense method deducts the business-use percentage of rent, utilities, insurance, and repairs, which can be larger if you have a real dedicated space.
3. Vehicle and mileage
Business driving is deductible. Using the standard mileage rate for 2026: 72.5 cents per mile for miles driven January 1–June 30, and 76 cents per mile for miles driven July 1–December 31 (the IRS raised it mid-year). Keep a mileage log; commuting from home to a regular workplace doesn't count.
4. Self-employed health insurance
If you pay your own health insurance premiums and aren't eligible for a spouse's employer plan, you can generally deduct them above the line, for you, your spouse, and dependents.
5. Retirement contributions
One of the biggest deductions available to the self-employed, you're funding your future and cutting taxes at once. For 2026:
- Solo 401(k): up to $24,500 as the "employee," plus up to 25% of compensation as the "employer," for a combined limit of $72,000 (under 50).
- SEP IRA: up to 25% of compensation, capped at $72,000.
- Traditional IRA: up to $7,500 ($8,600 if 50+).
6. The 20% QBI deduction
Most self-employed people can deduct 20% of their qualified business income, a significant break that comes off your taxable income. See our QBI deduction guide for the details and income limits.
7. Everyday business expenses
- Phone and internet (business-use portion)
- Software, subscriptions, and tools
- Supplies, equipment, and computers
- Business meals (generally 50%)
- Advertising and marketing
- Professional services (legal, accounting)
- Education that maintains or improves your skills
- Business travel
Rule of thumb: an expense is deductible if it's ordinary and necessary for your business. Keep receipts and records, and keep business and personal spending in separate accounts.