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.
Related guides
- Tax Deductions for Travel Nurses
- Tax Deductions for Photographers
- Tax Deductions for Hair Stylists and Barbers
- Receipts and Records: What the IRS Requires You to Keep
About this guide
Written by the Freelancer Tax HQ editorial team, based on our professional experience, official US government sources (IRS, SSA and other agencies) and reputable informational articles listed in the sources below. Last reviewed on . Tax rules change often, and we update this guide when they do. Read our editorial policy or report an error.
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.
Official resources linked in this guide: IRS: Self-Employment Tax; IRS: Tax preparer credentials; IRS: About Form 7206.