Top Tax Deductions for Self-Employed Individuals

Being self-employed comes with unique tax challenges, but it also opens the door to valuable deductions that can significantly reduce your tax liability. Here are some of the most important deductions you shouldn’t miss.

Home Office Deduction

If you use part of your home exclusively and regularly for business, you can deduct related expenses. You have two options:

Simplified Method

Deduct $5 per square foot of home office space, up to 300 square feet (maximum $1,500 deduction).

Regular Method

Calculate the actual percentage of your home used for business and deduct that percentage of:

Mortgage interest or rent
Property taxes
Utilities
Insurance
Repairs and maintenance

Vehicle Expenses

For business use of your vehicle, you can choose between:

Standard Mileage Rate

For 2024, this is $0.67 per business mile. Keep a detailed mileage log!

Actual Expenses

Track actual costs like gas, insurance, repairs, and depreciation, then deduct the business-use percentage.

Health Insurance Premiums

Self-employed individuals can deduct 100% of health insurance premiums for themselves, their spouse, and dependents. This is an “above-the-line” deduction, meaning you can take it even if you don’t itemize.

Retirement Contributions

Contributions to a SEP-IRA, Solo 401(k), or SIMPLE IRA are deductible and help you save for retirement while reducing your current tax bill.

Business Supplies and Equipment

Deduct the cost of:

Office supplies
Software and subscriptions
Equipment purchases (or depreciate over time)
Section 179 allows immediate deduction of up to $1,220,000 (for 2024) in equipment purchases

Professional Services

Fees paid to accountants, lawyers, consultants, and other professionals are fully deductible business expenses.

Marketing and Advertising

All costs related to promoting your business are deductible:

Website hosting and development
Social media advertising
Business cards and promotional materials
Sponsorships

Internet and Phone

If you use your phone and internet for business, you can deduct the business-use percentage of these expenses.

Education and Training

Courses, workshops, conferences, and professional development directly related to your current business are deductible.

Don’t Forget Quarterly Estimates!

Remember, if you’re self-employed, you likely need to make quarterly estimated tax payments. We can help you calculate these to avoid penalties.