Quick answer
As a freelancer, you can deduct any business cost that is ordinary and necessary for your work. Deductions lower your profit on Schedule C, and that cuts both your income tax and your 15.3% self-employment tax. A $1,000 deduction typically saves a freelancer in the 22% bracket about $350.
The biggest ones for 2026: the home office, your car (72.5¢ a mile January to June and 76¢ a mile July to December), equipment (100% bonus depreciation is back), health insurance premiums, retirement contributions and the 20% QBI deduction.
The rule behind every deduction
The IRS allows a deduction when an expense is:
- Ordinary: common and accepted in your line of work.
- Necessary: helpful and appropriate for your business (it doesn’t have to be indispensable).
- Business, not personal: if something is used for both, you deduct only the business-use percentage.
Keep proof for everything. See Receipts and Records: What the IRS Requires You to Keep for what counts.
The complete list of self-employed deductions
Workspace
| Deduction | 2026 rule or limit |
|---|---|
| Home office | Simplified: $5 per sq ft, up to 300 sq ft ($1,500). Regular: actual share of rent, utilities, insurance, repairs and depreciation |
| Coworking or office rent | 100% deductible |
| Utilities for a separate office | 100% deductible |
| Storage units for business inventory or gear | 100% deductible |
Full guide: Home Office Deduction: Simplified vs Regular Method.
Vehicle and travel
| Deduction | 2026 rule or limit |
|---|---|
| Standard mileage | 72.5¢/mile Jan 1 to Jun 30; 76¢/mile Jul 1 to Dec 31 |
| Actual car expenses | Business % of gas, insurance, repairs, lease payments and depreciation |
| Parking and tolls | Deductible on top of either method |
| Business travel | Airfare, lodging, 100% of transport; meals at 50% |
| Per diem for meals | Self-employed can use GSA meal rates (standard $68/day in FY2026) instead of receipts |
Commuting from home to a regular workplace is never deductible. Full guide: Car Expenses for Self-Employed: Mileage vs Actual Expenses.
Equipment, technology and software
| Deduction | 2026 rule or limit |
|---|---|
| Computers, cameras, tools, furniture | Deduct in full the year you buy them with 100% bonus depreciation or Section 179 (limit $2,560,000) |
| Items up to $2,500 each | De minimis safe harbor: expense them directly, no depreciation schedule |
| Software and subscriptions | 100% deductible (Adobe, Microsoft 365, Canva, accounting software) |
| Phone and internet | Business-use percentage |
| Website, hosting, domains | 100% deductible |
Health and retirement
| Deduction | 2026 rule or limit |
|---|---|
| Self-employed health insurance | Medical, dental and qualifying long-term care premiums for you, your spouse and dependents |
| HSA contributions | $4,400 self-only, $8,750 family (+$1,000 if 55+); bronze plans now qualify |
| SEP IRA | Up to 25% of net SE earnings (about 20% of net profit) |
| Solo 401(k) | Employee deferral plus employer contribution |
| Half of self-employment tax | Deducted automatically on Schedule 1 |
Full guide: Self-Employed Health Insurance Deduction Explained.
Running the business
- Advertising and marketing: ads, business cards, sponsored posts, portfolio sites.
- Professional fees: CPA, bookkeeper, lawyer, tax software.
- Contract labor: payments to other freelancers. From 2026 you only issue a 1099-NEC once you pay someone $2,000 or more in the year (up from $600).
- Bank and payment fees: PayPal, Stripe and Upwork service fees.
- Business insurance: general liability, professional liability (E&O), equipment insurance.
- Licenses, permits and dues: state licenses, professional memberships.
- Education: courses, books, conferences that maintain or improve skills in your current business.
- Office supplies and postage.
- Business meals: 50% when you discuss business with a client or prospect. Entertainment (concerts, golf) is 0%.
- Gifts to clients: up to $25 per person per year.
- Startup costs: up to $5,000 in your first year, the rest over 15 years.
- Interest on business loans and business credit cards.
- Bad debts: only for accrual-basis businesses. If you’re on the cash basis, an unpaid invoice was never income, so there’s nothing to deduct.
Deductions that aren’t on Schedule C
These reduce your income tax but not your self-employment tax:
- QBI deduction: up to 20% of qualified business income.
- Self-employed health insurance.
- Retirement contributions (SEP, Solo 401(k), SIMPLE).
- Deductible half of SE tax.
- Qualified tips deduction (2025 to 2028): up to $25,000 if you work in a tipped occupation, such as a hair stylist.
Worked example
Maya is a freelance designer with $90,000 in revenue. Her deductions:
| Expense | Amount |
|---|---|
| Home office (regular method) | $3,600 |
| New laptop and monitor | $3,200 |
| Software subscriptions | $1,400 |
| Phone and internet (60% business) | $1,100 |
| Business miles: 2,000 (1,000 before July, 1,000 after) | $1,485 |
| Courses and conferences | $900 |
| Health insurance premiums | $6,000 (Schedule 1) |
Her Schedule C expenses of $11,685 save about $1,650 in SE tax and $2,570 in income tax at 22%. The health insurance deduction saves another $1,320. Total: about $5,500 less tax.
Common mistakes
- Deducting personal costs: your regular clothes, haircuts, gym and family meals don’t qualify.
- Claiming 100% of a mixed-use item: a phone you also use personally is partly personal.
- Forgetting small recurring costs: $15 a month subscriptions add up.
- No records: a bank statement alone doesn’t prove the business purpose.
- Deducting commuting miles.
Frequently asked questions
Can I take the standard deduction and still deduct business expenses?
Yes. Business expenses go on Schedule C, separate from the standard deduction. You get both.
What can I deduct if I have no income yet?
Startup costs before you open for business: up to $5,000 in the first year. Once you’re operating, regular expenses are deductible even if you have a loss.
Is there a limit on total deductions?
No overall cap, but each deduction has its own rules. If your expenses exceed income, you have a loss that can offset other income.
Do deductions reduce self-employment tax?
Schedule C deductions do. Health insurance, retirement contributions and the QBI deduction only reduce income tax.
This article is general information, not tax advice. Consult a CPA or Enrolled Agent for your situation.
Sources
IRS Publication 334, Tax Guide for Small Business; IRS 2026 standard mileage rate and the July 2026 increase to 76¢; Simplified option for home office deduction; IRS guidance on 100% bonus depreciation; GSA Per Diem Bulletin FTR 26-01; IRS: the no tax on tips deduction. Example figures are FreelancerTaxHQ illustrations.