Small business tax deductions checklist: what you can actually write off

Generic deduction lists tend to name the same five things: home office, mileage, supplies, done. This one covers what actually shows up on a Schedule C, plus two changes that took effect this year and will catch a lot of people off guard if nobody mentions them.

Who this is for

Sole proprietors, and single-member LLCs, which is the same thing on your federal return. An LLC is disregarded for federal tax purposes: forming one changes your legal liability protection, not the form you file or what you can deduct. Both file a Schedule C attached to your personal 1040.

The line items that carry the weight

Schedule C groups deductible expenses into categories, and most small business returns end up using a handful of them repeatedly: advertising, car and truck expenses, contract labor, insurance other than health insurance, legal and professional fees, office expense, rent on business property or equipment, supplies, taxes and licenses, travel, and wages paid to employees. Business meals are deductible at 50 percent, not 100, which is the single most common overstatement we catch on a first-year return.

Vehicle expenses: two rates apply this year

You can deduct actual vehicle costs, or use the standard mileage rate, whichever works out better for you. For 2026 there are two mileage rates in effect, not one: 72.5 cents per mile for miles driven January through June, and 76 cents per mile for miles driven July through December. If your mileage log doesn't separate the two halves of the year, you can't apply the higher rate correctly to the miles that actually qualify for it. Track dates, not just totals.

The 1099-NEC threshold jumped this year

This one is new and it's a bigger change than it sounds like. The reporting threshold for Form 1099-NEC rose from $600 to $2,000 starting with payments made in 2026. If you paid a contractor less than $2,000 for the year, you're no longer required to send them a 1099. That doesn't mean the payment stops being deductible for you, and it doesn't mean the contractor stops owing tax on it. It just means the paper trail changed, so your own bookkeeping needs to track every contractor payment regardless of whether a form gets issued.

The home office deduction, briefly

Still available to Schedule C filers, calculated either by the simplified $5-per-square-foot method or by allocating actual home expenses on Form 8829. We wrote a full breakdown of what qualifies for the home office deduction, including why W-2 employees lost access to it for good this year.

What doesn't count

The personal-use portion of anything mixed-use: a phone you use for both the business and your family, a vehicle that also does school pickup. Commuting from home to a regular workplace doesn't count as business mileage even for the self-employed; the trips that count are between business locations or to meet clients. Clothing is deductible only if it's genuinely unsuitable for everyday wear, a uniform or protective gear, not a nice outfit you happen to wear to client meetings. Fines, penalties, and political contributions are never deductible, no matter how the expense gets categorized internally.

Starting a business this year

Up to $5,000 in qualifying startup costs is deductible in your first year of business, and that amount phases out once total startup costs cross $50,000. Anything above what you can deduct immediately gets amortized over 15 years instead. If you spent the back half of last year setting up before you had your first paying client, some of that spending likely counts. And once you know what your deductions really are, your quarterly estimated payments should be based on that profit, not on your gross.

Common questions

General information from Tax Shop in Lone Tree, Colorado, current as of August 20, 2026. Tax rules change and every return is different, so this is not advice about your own situation. Ask us about your return.