By Brayden Callahan, Founder Updated
The 18 deductions self-employed people forget: home office, mileage, phone, health insurance, retirement, and more, with real dollar examples.
Before we list deductions, the rule the IRS uses to decide if anything is deductible: it must be "ordinary and necessary" for your trade or business. Ordinary means common in your industry. Necessary means helpful and appropriate (not "indispensable", the bar is lower than people think).
A graphic designer deducting Adobe Creative Cloud: ordinary (everyone uses it) and necessary (you literally can't do the work without it). Easy yes. A graphic designer deducting a $200 ergonomic chair: ordinary (everyone has a chair) and necessary (you sit in it to work). Easy yes.
A graphic designer deducting a $4,000 espresso machine because "I drink coffee while I work": no. The personal use is too dominant. The test isn't whether you can argue some business benefit. It's whether the expense is genuinely incurred for your business.
If you regularly and exclusively use part of your home for business, you can deduct a portion of your rent (or mortgage interest), utilities, internet, and home insurance. Most freelancers qualify and don't claim it.
Two methods. Simplified: $5/sqft, max 300 sqft, max $1,500. Easy, no documentation beyond the square footage. Actual: measure your office's percentage of total home square footage, multiply that percentage by your annual home costs. More work, often a bigger deduction.
Real example: a freelancer paying $2,400/month rent uses a 150 sqft room (~12% of a 1,250 sqft apartment) exclusively for work. Annual rent: $28,800. Deduction under actual method: $28,800 × 12% = $3,456. Add $400 for utilities and $720 for internet pro-rated: deduction is ~$4,576. At a 25% combined tax rate, that's ~$1,144 saved.
For 2026, the IRS standard mileage rate is 72.5¢ a mile for trips from January 1 to June 30 and 76¢ a mile for trips from July 1 to December 31. Every business mile you drive is a deduction at the rate for the day you drove it. Many freelancers undercount their business miles because they only remember the obvious trips.
What counts: client meetings, networking events, supply runs, post office trips, business meals (the drive to and from), visits to your CPA, banking trips. Does not count: commuting from home to a regular office (unless your home is your principal place of business, see Home Office).
Real example: a freelance consultant drives 4,000 business miles from January to June 2026 and 4,500 from July to December. Deduction: 4,000 × $0.725 + 4,500 × $0.76 = $2,900 + $3,420 = $6,320. At a 25% combined rate, about $1,580 saved. The catch: keep a log as you go. The IRS says to record each trip at or near the time, and you can't deduct miles you estimate (Publication 463). Clarity's mileage log works, or any mileage app.
If you use your personal cell phone for business, you can deduct the business-use percentage. The IRS doesn't require precise measurement, but a reasonable allocation (say, 60% business / 40% personal for a freelancer) is fine if you can justify it.
Same for internet: the percentage of your home internet you use for work. If you work from home full-time, 80–90% is reasonable.
Real example: $90/month phone bill × 60% business = $54/month deductible = $648/year. $80/month internet × 80% business = $64/month deductible = $768/year. Combined: ~$1,400 in deductions, ~$350 saved at a 25% rate. People skip this because the numbers seem small per-month, but compound across the year, it adds up.
If you're self-employed, you can deduct 100% of the premiums you pay for health insurance for yourself, your spouse, and your dependents, up to the amount of your business's net profit. This is an above-the-line deduction (it reduces your AGI), which is much more valuable than an itemized deduction.
The catch: you can't take this deduction if you (or your spouse) were eligible for an employer-subsidized health plan during any month of the year. The deduction is month-by-month, so if you went solo in June, you can deduct premiums for June–December.
Real example: a freelancer pays $750/month for health insurance for themselves and their spouse. Annual premiums: $9,000. At a 22% federal + 7.65% Medicare/Social Security saving (since this also reduces SE tax base in some cases) = ~$2,670 saved. This single deduction is often the largest one a freelancer takes.
Self-employed people have access to retirement accounts with much higher contribution limits than employees. Two main options.
Solo 401(k): contribute up to $24,500 as the "employee" plus about 20% of net self-employment earnings as the "employer," for a combined max of $72,000 in 2026. Best for high earners. Once the plan holds $250,000 or more, you file Form 5500-EZ each year.
SEP-IRA: contribute up to about 20% of your net self-employment earnings (after the deduction for half your self-employment tax), max $72,000 in 2026. Easier setup than a Solo 401(k), and no annual Form 5500 filing.
Real example: a freelancer with $100,000 net profit can put about $18,500 into a SEP-IRA. At a ~30% combined tax rate, that saves about $5,550 in current-year taxes, and the money grows tax-deferred. For many self-employed earners this is the single biggest deduction.
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