Tax write-offs, formally called deductions, reduce the amount of income your small business pays taxes on. If your business earns $100,000 and you claim $30,000 in deductions, you only owe taxes on $70,000. The IRS allows you to deduct any expense that is “ordinary and necessary” for your business, meaning it’s common in your industry and helpful for running your operation. An expense doesn’t have to be indispensable to qualify, just appropriate for what you do.
The list of eligible deductions is long, and many business owners leave money on the table by not tracking expenses throughout the year. Here’s a breakdown of the most valuable write-offs available to small businesses.
Equipment, Software, and Business Assets
When you buy equipment, computers, furniture, vehicles, or software for your business, you can often deduct the full cost in the year you start using it rather than spreading the deduction over several years. Two provisions make this possible: the Section 179 deduction and bonus depreciation.
Section 179 lets you deduct up to $2,560,000 worth of qualifying purchases in a single year. This applies to both new and used equipment. The deduction begins to phase out once your total equipment purchases exceed $4,090,000, and businesses spending more than $6,650,000 per year on equipment lose Section 179 eligibility entirely. Software counts as qualifying property, so even service-based businesses that don’t buy heavy equipment can benefit.
Bonus depreciation works alongside Section 179 and currently allows you to immediately deduct 100% of the cost of eligible new or used assets, including machinery, computers, and vehicles. The IRS requires you to apply Section 179 first, then use bonus depreciation on any remaining eligible costs. If your equipment spending exceeds Section 179 limits, bonus depreciation can still cover the rest.
For smaller purchases like office supplies, tools, or minor equipment, you simply deduct those costs as ordinary business expenses in the year you buy them.
Home Office Deduction
If you use part of your home regularly and exclusively for business, you can deduct a portion of your housing costs. “Exclusively” is the key word: a desk in a corner of your living room where the kids also do homework won’t qualify. You need a dedicated space used only for work.
The simplified method lets you deduct $5 per square foot of your home office, up to 300 square feet, for a maximum deduction of $1,500. The regular method requires more recordkeeping but can yield a larger deduction. You calculate the percentage of your home’s square footage used for business, then apply that percentage to actual expenses like rent or mortgage interest, utilities, insurance, and repairs.
Vehicle and Mileage Expenses
When you use your personal vehicle for business, you have two options for deducting the cost. The standard mileage rate for 2026 is 72.5 cents per mile driven for business purposes. If you drive 10,000 business miles in a year, that’s a $7,250 deduction. You track your mileage with a log or an app and multiply total business miles by the rate.
Alternatively, you can deduct actual vehicle expenses: gas, insurance, repairs, registration, and depreciation. You calculate the business-use percentage based on business miles versus total miles driven. Whichever method you choose for a vehicle, you generally need to stick with it in future years if you used the actual expense method in the first year. Commuting from home to a regular workplace doesn’t count as business mileage, but trips to client sites, secondary work locations, and business errands do.
Startup Costs
Money you spend before your business officially opens, like market research, training, advertising to launch, and travel to scout locations, qualifies as startup costs. You can deduct up to $5,000 of these expenses in your first year of business. That $5,000 allowance shrinks dollar-for-dollar once your total startup costs exceed $50,000, disappearing entirely at $55,000.
Any startup costs you can’t deduct in the first year get spread out over 180 months (15 years) using a process called amortization. So even if you spent $80,000 getting your business off the ground, every dollar eventually becomes deductible.
Health Insurance Premiums
Self-employed business owners can deduct 100% of health insurance premiums paid for themselves, their spouse, and their dependents. This is one of the most valuable deductions available because health insurance is expensive and the deduction is taken on your personal return as an adjustment to income, meaning you benefit from it even if you don’t itemize.
To qualify, you need net self-employment income (or wages from an S corporation where you own more than 2% of shares), and the insurance plan must be established under your business. The policy can be in either the business name or your personal name. One restriction: you can’t claim the deduction for any month you were eligible to participate in a subsidized health plan through a spouse’s employer or another job, even if you didn’t actually enroll in that plan.
Long-term care insurance premiums are also partially deductible, with the amount you can include capped based on your age.
Retirement Plan Contributions
Contributions you make to a retirement plan for yourself and your employees are deductible. Solo 401(k) plans and SEP-IRAs are popular with small business owners because they allow high contribution limits. With a SEP-IRA, you can contribute up to 25% of your net self-employment earnings. A solo 401(k) lets you contribute both as an employee and as the employer, which can result in even larger total contributions.
These deductions do double duty: they reduce your current tax bill while building your retirement savings in a tax-advantaged account.
Rent, Utilities, and Operating Costs
If you lease office space, a warehouse, a storefront, or equipment, those lease payments are fully deductible. The same goes for utilities like electricity, internet, phone service, and water at your business location. Business insurance premiums, including general liability, professional liability, and property insurance, are all deductible.
Other routine operating costs that qualify include bank fees on your business account, postage and shipping, office supplies, cleaning services, and software subscriptions you use to run the business (accounting tools, project management apps, cloud storage).
Marketing and Advertising
Nearly all marketing expenses are deductible: website hosting and design, online advertising, print ads, business cards, promotional materials, social media management tools, and email marketing platforms. Sponsoring a local event or community organization for business exposure also counts. The key is that the expense must be related to promoting your business, not a personal hobby or political cause.
Professional Services and Education
Fees paid to accountants, lawyers, bookkeepers, consultants, and freelancers who perform work for your business are deductible. If you hire a web developer, graphic designer, or virtual assistant, those payments count too. When you pay a non-employee $600 or more during the year, you’ll need to issue them a 1099 form, but the expense itself is fully deductible.
Education and training expenses are deductible when they maintain or improve skills required in your current business. A marketing consultant taking an advanced digital advertising course qualifies. A dentist attending a dental conference qualifies. An accountant going to law school generally does not, because that prepares you for a new profession rather than improving skills in your existing one.
Employee Wages and Benefits
If you have employees, their wages, salaries, and bonuses are deductible. So are your contributions to their health insurance, retirement plans, and other benefits. The employer’s share of payroll taxes (Social Security and Medicare) is deductible as well. If you pay for workers’ compensation insurance, that’s another write-off.
Contract labor is deductible on the same basis. Whether you pay a part-time employee or a freelancer, the cost of their work reduces your taxable income.
Interest and Loan Costs
Interest paid on business loans, lines of credit, and business credit cards is deductible as long as the borrowed money was used for business purposes. If you use a personal credit card for a mix of business and personal purchases, only the interest attributable to business charges qualifies. Keeping business and personal finances in separate accounts makes this much easier to track and defend if the IRS ever asks questions.
Travel and Meals
Business travel expenses are deductible when you travel away from your “tax home” (your primary place of business) and the trip has a clear business purpose. Airfare, hotels, rental cars, taxis, and tips all qualify. If you combine business and personal activities on the same trip, only the business portion is deductible.
Business meals are 50% deductible when you eat with a client, customer, or business associate and discuss business. Meals while traveling for business also qualify at 50%. You need to keep records showing who you ate with, the business relationship, and the business topic discussed. Lavish or extravagant meals may be scrutinized, but the IRS hasn’t set a specific dollar cap per meal.
Keeping Records That Hold Up
Every deduction you claim needs documentation. Receipts, bank statements, mileage logs, and invoices are your proof. The IRS can disallow deductions you can’t substantiate, even if the expense was legitimate. A good habit is to photograph or scan receipts immediately and use accounting software that categorizes expenses as they occur. For vehicle deductions, a contemporaneous mileage log (recorded at or near the time of each trip) carries far more weight than a reconstruction done at tax time.
The general rule for how long to keep records is three years from the date you file the return, though some situations call for holding records longer. If you claim a loss from worthless securities or bad debt, the IRS window extends to seven years.