5. The self-employment tax deduction
Because the self-employed pay both the employer and employee halves of Social Security and Medicare, the tax code lets you deduct the employer-equivalent portion, roughly half of your self-employment tax, as an adjustment to income. This happens automatically on your return if you file correctly, but it is worth understanding so you appreciate that your effective rate is lower than the headline self-employment tax figure. Our self-employment tax guide explains how this is calculated step by step.
6. Business use of your phone and internet
The portion of your mobile phone and home internet bills attributable to business is deductible. If you use one line and connection for both personal and business purposes, you claim a reasonable business-use percentage rather than the whole bill. Dedicating a second phone number or line entirely to the business makes this cleaner and often increases the allowable amount.
7. Software, subscriptions, and tools
The tools that keep a modern business running are deductible, from accounting and design software to project management platforms, stock image libraries, and cloud storage. Annual subscriptions, one-off app purchases, and professional online tools all qualify when used for the business. These small recurring costs are easy to forget precisely because they leave your account quietly each month, so a review of your statements before filing usually surfaces several.
8. Professional services and fees
Fees paid to accountants, bookkeepers, lawyers, and consultants for business matters are deductible, as are the costs of tax preparation for your business return. Bank charges on a business account, payment processing fees, and merchant service costs also count. Because these are directly tied to running the business, they reduce profit dollar for dollar.
9. Education and professional development
Courses, certifications, books, and conferences that maintain or improve the skills you use in your current business are deductible. The key limitation is that education qualifying you for a new trade or profession generally does not count, so a graphic designer learning advanced design techniques can deduct the course, while the same person training to become a nurse usually cannot.
10. Marketing and advertising
Everything you spend to attract customers is deductible, including website hosting and domain costs, online ads, printed materials, business cards, and the fees paid to freelancers who create marketing content for you. For many service businesses, advertising is both a growth engine and a reliable deduction, so tracking it carefully serves two purposes at once.
11. Travel and lodging for business trips
When you travel away from your tax home for business, airfare, hotels, rental cars, and a portion of meals are deductible. The trip must be primarily for business, and you should keep an itinerary and records showing the business purpose. Personal days added to a business trip do not disqualify the business portion, but they cannot themselves be deducted.
12. Business meals
Meals with clients, prospects, or collaborators where business is discussed are generally deductible at a set percentage, commonly half of the cost. Keep a note of who you met and the purpose. This is not a licence to deduct every lunch, but genuine business meals are a legitimate and frequently missed expense.
13. Supplies and equipment
Consumable supplies used within the year are fully deductible, while larger equipment purchases can often be expensed immediately under first-year expensing provisions rather than depreciated over many years. This means a laptop, camera, or piece of machinery bought for the business may be deductible in full the year you buy it, which can dramatically reduce a profitable year's tax.
14. Startup costs
Expenses incurred before your business officially opened, such as market research, initial advertising, and professional setup fees, can be partially deducted in your first year with the remainder amortised over time. New business owners frequently overlook these because they were spent before any income arrived, yet they are genuinely deductible.
15. Bad debts and refunds
If you use accrual accounting and previously reported income you were never paid, you may be able to write off the genuine bad debt. Refunds you issue to customers also reduce your taxable revenue. These situations are less common for cash-basis freelancers but matter for growing businesses that invoice on terms.
Keep clean records all year
The single habit that unlocks every deduction on this list is consistent record-keeping. Separate business and personal finances with a dedicated account, log expenses as they happen, and store digital copies of receipts. When filing season arrives you will claim more, worry less, and be far better prepared if questions ever arise. To estimate what you might owe after deductions, try our income tax calculator and self-employment tax guide.
Frequently asked questions
Can I deduct expenses if I work from home part-time? Yes. If a portion of your home is used regularly and exclusively for business, you can claim a home office deduction prorated to the business-use percentage, or use the simplified square-footage method.
Do I need receipts for every deduction? Keep records for everything you claim. Bank and card statements, invoices, and a mileage log are usually sufficient, but retaining receipts for larger purchases is strongly recommended in case of an audit.
Can I deduct health insurance if I am self-employed? Often yes, as an adjustment to income for yourself and your family, provided you are not eligible for coverage through an employer or a spouse's plan during those months.