What Business Expenses Can I Deduct? (2026)
16 common small business tax deductions for 2026, including home office, mileage, equipment, Section 179, meals and the QBI deduction, plus what you can't deduct.
You can deduct ordinary and necessary business expenses, including a qualifying home office, business mileage (72.5 cents per mile for January to June 2026, 76 cents from July 1), equipment, software, phone and internet, advertising, travel, 50% of business meals, contractors, insurance, professional fees and retirement contributions. Personal expenses and commuting aren't deductible.
In this article
A business expense is deductible if it's ordinary (common and accepted in your industry) and necessary (helpful and appropriate for your business). Every legitimate deduction lowers your taxable profit, which reduces both income tax and, for the self-employed, self-employment tax. Here are the most common deductions for small businesses and the self-employed in 2026, and the ones people get wrong.
Common small business tax deductions
1. Home office
If part of your home is used regularly and exclusively for business (and it's your principal place of business or where you meet clients), you can deduct it. Two methods:
- Simplified: $5 per square foot, up to 300 square feet, for a maximum of $1,500.
- Regular: the business percentage of actual home costs such as rent or mortgage interest, utilities, insurance, repairs and depreciation.
A kitchen table you also eat at doesn't qualify. A spare room used only as an office does.
2. Vehicle expenses
Deduct business driving using either:
- Standard mileage rate: for 2026, 72.5 cents per mile for business miles driven January 1 to June 30, and 76 cents per mile from July 1 after the IRS's midyear increase.
- Actual expenses: the business share of gas, repairs, insurance, registration and depreciation.
Keep a mileage log with dates, destinations, business purpose and miles. Commuting from home to a regular workplace isn't deductible.
3. Equipment, computers and furniture
Laptops, phones, cameras, tools, machinery and office furniture can often be deducted in full in the year you buy them:
- De minimis safe harbor: many small businesses can expense items costing $2,500 or less each.
- Section 179: lets businesses expense qualifying equipment immediately, up to a limit of $2.5 million (indexed for inflation) under the One Big Beautiful Bill Act.
- Bonus depreciation: 100% bonus depreciation was restored permanently for qualifying property acquired after January 19, 2025.
4. Software and subscriptions
Accounting software, design tools, AI tools, website hosting, cloud storage and other subscriptions used for business.
5. Phone and internet
The business-use percentage of your cell phone and home internet bills.
6. Advertising and marketing
Ads, website costs, business cards, signage, promotional items and sponsorships.
7. Business travel
Airfare, lodging, rental cars and other costs when you travel away from your tax home overnight for business. Meals while traveling follow the meal rule below.
8. Business meals
Generally 50% deductible when you (or an employee) are present and the meal is with a client, customer, or business contact for a business purpose, and isn't lavish. Entertainment, such as sporting events and concerts, is generally not deductible.
9. Contract labor and wages
Payments to freelancers and contractors, and wages and benefits for employees. File Form 1099-NEC for contractors paid $2,000 or more in 2026. See 1099 vs W-2.
10. Professional services
Fees for accountants, lawyers, bookkeepers, consultants and tax preparers (business portion).
11. Insurance
General liability, professional liability, commercial property, business vehicle and cyber insurance.
12. Self-employed health insurance
If you're self-employed and not eligible for an employer-subsidized plan, you can generally deduct health, dental and qualifying long-term care premiums for yourself, your spouse and dependents.
13. Retirement contributions
Contributions to a SEP IRA, SIMPLE IRA or Solo 401(k) can reduce taxable income significantly.
14. Education and training
Courses, books, conferences and certifications that maintain or improve skills for your current business. Education that qualifies you for a new trade isn't deductible.
15. Startup and organizational costs
Up to $5,000 of startup costs and $5,000 of organizational costs can be deducted in your first year (reduced if total startup costs exceed $50,000), with the rest amortized over 15 years. See startup costs.
16. Other everyday expenses
Office supplies, postage, bank and payment processing fees, business loan interest, licenses and permits, rent for business space, utilities for business premises, professional memberships, and business gifts (deductible up to $25 per recipient per year).
Log deductible expenses as they happen, by category, and export them for your accountant.
Track your expensesThe qualified business income (QBI) deduction
Owners of pass-through businesses (sole proprietorships, partnerships, LLCs and S corporations) may be able to deduct up to 20% of qualified business income on their personal return. The One Big Beautiful Bill Act made this deduction permanent. Income limits and special rules for certain service businesses apply, so check with a tax professional if your income is high.
Example: how deductions lower your tax bill
Jordan, a freelance photographer, earned $80,000 in 2026 and has $20,000 of legitimate business expenses: equipment, software, mileage, insurance and a home office.
- Without tracking expenses, Jordan would pay tax on $80,000 of profit.
- With deductions, taxable profit drops to $60,000.
- Self-employment tax alone falls by about $2,826 ($20,000 × 92.35% × 15.3%).
- At a 22% federal income tax bracket, income tax falls by roughly another $4,000, before considering the QBI deduction and state tax.
That's close to $7,000 saved by keeping good records, which is far more than any bookkeeping tool costs.
Deductions reduce your tax, not your costs. Spending $1,000 on something you don't need to "get a deduction" still leaves you hundreds of dollars poorer. Buy what helps the business, then deduct it.
What you can't deduct
- Personal, living or family expenses.
- Commuting between home and a regular workplace.
- Everyday clothing, even if you wear it to work (uniforms and protective gear are different).
- Entertainment, like tickets to games and shows.
- Fines, penalties and political contributions.
- The value of your own time.
Keep records that hold up
Keep receipts, invoices, bank and card statements and a mileage log. Note the business purpose for meals, travel and gifts. The IRS generally expects you to keep records for at least three years after filing, and longer in some cases. Using a separate business bank account makes everything easier to prove. Read bookkeeping basics.
Record-keeping checklist by deduction
| Deduction | Keep |
|---|---|
| Vehicle | Mileage log (date, purpose, miles); receipts if using actual expenses |
| Home office | Square footage of office and home; utility, rent or mortgage, insurance records |
| Meals | Receipt, who attended, business purpose |
| Travel | Itinerary, lodging and transport receipts, business purpose |
| Equipment | Purchase receipts, date placed in service, business-use percentage |
| Contractors | Form W-9, invoices, payment records, 1099-NEC copies |
| Phone and internet | Bills and a reasonable business-use percentage |
Frequently asked questions
What business expenses are 100% deductible?
Most ordinary and necessary business expenses are fully deductible, including advertising, software, supplies, professional fees, business insurance, contract labor and the business share of phone and internet. Business meals are generally only 50% deductible.
What is the IRS mileage rate for 2026?
For business driving, 72.5 cents per mile from January 1 to June 30, 2026, and 76 cents per mile from July 1, 2026, after the IRS's midyear increase.
Can I deduct my home office if I rent?
Yes. Renters can deduct the business percentage of rent and related costs using the regular method, or use the simplified method of $5 per square foot up to 300 square feet, as long as the space is used regularly and exclusively for business.
Can I deduct a laptop or phone for my business?
Yes, the business-use portion. Many small businesses can expense items costing $2,500 or less each under the de minimis safe harbor, and larger equipment can often be deducted immediately under Section 179 or bonus depreciation.
This article is general information for US readers, not legal, tax or financial advice. Rules, prices and platform policies change, so confirm details with official sources or a qualified professional.