Quick answer
Most real estate agents are self-employed for tax purposes, even when they work under a broker. The IRS treats licensed agents paid by commission as «statutory nonemployees», so you pay self-employment tax and deduct your business costs on Schedule C.
The biggest deductions for agents are usually car expenses (72.5¢ a mile to June, 76¢ from July 2026), broker fees and desk fees, MLS and association dues, marketing and licensing and education.
Car and travel
Agents drive constantly, so this is usually the largest deduction.
- Standard mileage: 72.5¢ per business mile January to June 2026, 76¢ July to December. Or deduct actual expenses at your business-use percentage. See Car Expenses for Self-Employed: Mileage vs Actual Expenses.
- Deductible trips: showings, listing appointments, open houses, inspections, closings, previewing properties and trips to the title company.
- Commuting from home to your brokerage office isn’t deductible, unless your home office is your principal place of business.
- Parking and tolls for business trips, on top of mileage.
- Travel to conferences (NAR, state association events): airfare, hotel and 50% of meals.
Keep a mileage log with the date, address and purpose of each trip. Your showing calendar and CRM history help back it up.
Brokerage and professional costs
| Expense | Deductible? |
|---|---|
| Desk fees, monthly broker fees, franchise and tech fees | Yes |
| Transaction and E&O fees charged by your broker | Yes |
| Commission splits paid to your broker | Only if the full commission was reported to you as income |
| Referral fees paid to other agents | Yes |
| MLS dues, lockbox and Supra key fees | Yes |
| NAR, state and local association dues | Yes |
| License renewal and continuing education | Yes |
| Errors and omissions insurance | Yes |
| Pre-licensing course for your first license | No, it qualifies you for a new trade |
Watch your 1099: if your 1099-NEC shows your gross commission before the split, report the gross and deduct the broker’s share. If it shows only your net share, don’t deduct the split again.
Marketing
- Listing photos, video, drone footage and 3D tours.
- Signs, riders, lockboxes and open house supplies.
- Online ads (Zillow Premier Agent, Realtor.com, Facebook, Google).
- Website, IDX feed, CRM (Follow Up Boss, kvCORE).
- Postcards, mailers, business cards and branded items.
- Staging a listing when you pay for it.
Client gifts and meals
- Closing gifts: only $25 per client per year is deductible. A $300 gift basket counts as $25. Branded promotional items costing $4 or less each (pens, magnets, keychains) don’t count toward the limit.
- Business meals with clients or other agents: 50%, with the business purpose noted.
- Client appreciation events open to your whole database: often 100% as a marketing or promotional event.
Office and technology
- Home office if you use it regularly and exclusively for business.
- Phone and internet at the business-use percentage.
- Laptop, tablet, printer and camera: in full the year you buy them under the $2,500 de minimis rule or bonus depreciation.
- Transaction management software (Dotloop, SkySlope), e-signature and cloud storage.
- Assistant or transaction coordinator costs. From 2026, file a 1099-NEC once you pay a contractor $2,000 or more.
Worked example
Taylor earned $120,000 in gross commissions in 2026.
| Deduction | Amount |
|---|---|
| Broker splits and fees (gross reported on 1099) | $24,000 |
| 14,000 business miles (7,000 before July, 7,000 after) | $10,395 |
| MLS, board and NAR dues | $1,600 |
| Marketing, photos and ads | $6,500 |
| E&O insurance and license renewal | $1,300 |
| Phone and CRM | $2,100 |
| Closing gifts (40 clients × $25) | $1,000 |
| Total | $46,895 |
Taylor’s taxable profit drops to about $73,100, saving roughly $17,000 in income and self-employment tax.
Retirement and health
- Solo 401(k) or SEP IRA: agents with good years can shelter tens of thousands of dollars.
- Self-employed health insurance premiums on Form 7206. See Self-Employed Health Insurance Deduction Explained.
- QBI deduction: up to 20% of qualified business income. Real estate agents are not a specified service business, so there’s no income cutoff for the service rule.
Frequently asked questions
Are real estate agents 1099 contractors?
Licensed agents paid by commission under a written contract are statutory nonemployees and taxed as self-employed.
Can I deduct clothing for showings?
Only if it’s unsuitable for everyday wear, such as branded apparel. Suits and business clothes aren’t deductible.
Can I deduct expenses for a listing that never sold?
Yes. Marketing and costs you paid are deductible in the year you paid them, whether or not the sale closed.
Should I pay quarterly estimated taxes?
Yes. With no withholding on commissions, you usually need to pay quarterly estimated taxes to avoid penalties.
This article is general information, not tax advice. Consult a CPA or Enrolled Agent for your situation.
Sources
IRS Publication 15-A (statutory nonemployees); IRS Publication 463, Travel, Gift and Car Expenses; IRS Publication 334, Tax Guide for Small Business; IRS 2026 standard mileage rate and the July 2026 increase. Example figures are FreelancerTaxHQ illustrations.