Updated
What makes a self-employed expense deductible?
An expense is generally deductible if it is both ordinary and necessary for your business. IRS Publication 334 defines an ordinary expense as "one that is common and accepted in your field of business" and a necessary expense as "one that is helpful and appropriate for your business." It doesn't have to be indispensable.
Three practical consequences follow from that test:
- Personal costs don't count. Publication 334 says that when an expense is partly for business and partly personal, you separate the two. The personal part is generally not deductible.
- Some costs are spread over years. Equipment and other property that lasts well beyond the year is generally depreciated, unless an election such as the de minimis safe harbor or section 179 lets you deduct it sooner.
- You need records. Publication 583 says your supporting documents "should show the amount paid and that the amount was for a business expense." The IRS receipt rules guide covers what that means in practice.
Most sole proprietors and single-member LLC owners report business expenses on Schedule C. A few important deductions, such as half of self-employment tax, self-employed health insurance and your own retirement contributions, go on Schedule 1 instead, and the QBI deduction is figured on its own form. If you want the line-by-line view, see Schedule C expense categories.
What can I write off as a 1099 contractor in 2026?
Here are the common categories for tax year 2026 (returns filed in 2027), the rule that usually decides them, and where to read more. "Where it goes" reflects the Schedule C form and its instructions; preparers sometimes place items differently, so treat it as a starting point for you and your CPA.
| Deduction | The rule that usually decides it | Where it goes | IRS source |
|---|---|---|---|
| Home office | The space is used regularly and exclusively as your principal place of business, a place to meet clients, or a separate structure (storage and daycare have exceptions). Simplified method: $5 × up to 300 sq ft, so up to $1,500. Regular method: actual expenses on Form 8829. | Schedule C line 30 | Pub 587 |
| Vehicle | Standard mileage rate or actual expenses, business share only. 2026 rate is 72.5¢ (Jan 1 to Jun 30) and 76¢ (Jul 1 to Dec 31); 2025 was 70¢. Commuting is not deductible. | Line 9 | Pub 463, ch. 4 |
| Business travel | Transportation and lodging when your work takes you away from your tax home long enough that you need sleep or rest. | Line 24a | Pub 463, ch. 1 |
| Business meals | Generally 50%. You (or your employee) must be present, the meal can't be lavish, and it must be with a business contact or while traveling for business. Entertainment is not deductible. | Line 24b | Pub 463, ch. 2 |
| Phone and internet | The business share only. The base charge for the first landline into your home is personal (Pub 587); for mixed-use service, split off the personal part (Pub 334). | Often line 25 (utilities) | Pub 587, Pub 334 |
| Software and subscriptions | The Schedule C instructions say you can deduct ordinary and necessary "technology and software tools," generally including subscription services used to manage your business, but not software that must be depreciated or amortized. | Part V (line 27b) per the instructions; practice varies | Schedule C instructions |
| Equipment | De minimis safe harbor: up to $2,500 per invoice or item (without an applicable financial statement), by annual election. Section 179: up to $2,560,000 for 2026 (reduced once purchases pass $4,090,000), but never more than your taxable income from the active conduct of your business. Bonus depreciation: 100% for qualified property acquired and placed in service after Jan 19, 2025. Your CPA chooses among these. | Line 13 (de minimis amounts go in Part V) | Rev. Proc. 2025-32; Schedule C instructions |
| Business insurance | Premiums for liability, malpractice, fire and theft, and similar business coverage. Vehicle insurance only for the business share, and not if you use the standard mileage rate. | Line 15 | Pub 334, ch. 8 |
| Self-employed health insurance | Figured on Form 7206. Not allowed for any month you were eligible for an employer-subsidized plan; limited to net earnings from the business. | Schedule 1 | Form 7206 instructions |
| Half of self-employment tax | SE tax is 15.3% (12.4% Social Security up to the wage base plus 2.9% Medicare), figured on 92.35% of net earnings; one-half is deductible. | Schedule 1 | Schedule SE |
| Retirement contributions | SEP, SIMPLE and qualified plans. Contributions for your employees go on Schedule C line 19; contributions on your own behalf go on Schedule 1. Limits apply; see Pub 560 or ask your CPA. | Line 19 or Schedule 1 | Pub 560; Schedule C instructions |
| Legal and professional fees | Accountant and attorney fees that are ordinary and necessary and directly related to the business, including tax preparation for the business part of your return. | Line 17 | Schedule C instructions |
| Education | Qualifies if it maintains or improves skills needed in your present work, or is required by law. Not if it meets the minimum requirements of your field or qualifies you for a new trade or business. | Schedule C; ask your CPA which line | Pub 970 |
| Advertising | Listed by Pub 334 among other expenses you may be able to deduct. | Line 8 | Pub 334, ch. 8 |
| Bank fees | Listed by Pub 334 among other expenses you may be able to deduct; business accounts are easiest to support. | Often Part V; practice varies | Pub 334, ch. 8 |
| Contract labor | Payments to non-employees for services. A Form 1099-NEC is generally required for each person you paid $2,000 or more for services in 2026 in the course of your business (the threshold was $600 for 2025). Payments to most corporations, and payments made by card or through a payment app, generally aren't reported on a 1099-NEC. | Line 11 | Schedule C instructions; IRS 1099-NEC FAQ |
| Business gifts | No more than $25 per recipient per year. | Schedule C | Pub 463, ch. 3 |
| Startup costs | In your first year you can elect to deduct up to $5,000, reduced by startup costs over $50,000; the rest is amortized over 180 months. | Part V | Schedule C instructions |
Each of the big categories has its own guide: business meals, the 2026 mileage deduction, the home office deduction and business travel. If you'd rather work through a list with boxes to tick, use the small business tax deductions checklist.
Which self-employed deductions don't go on Schedule C?
Three common ones are claimed on Schedule 1 as adjustments to income: half of your self-employment tax, the self-employed health insurance deduction, and retirement plan contributions you make on your own behalf. The Schedule C instructions are explicit on the last one: contributions for employees go on line 19, but if the plan covers you, your own contributions go on Schedule 1, not Schedule C.
That matters for your records. A SEP contribution or a health insurance premium shows up on your bank statement like any other business payment, but your CPA needs to see it separately.
How does the QBI deduction work for 2026?
The qualified business income (QBI) deduction is not an expense you pay; it is a deduction of up to 20% of your qualified business income, figured on Form 8995 or 8995-A after your business profit is known. The One Big Beautiful Bill Act made it permanent, so it did not expire after 2025.
For tax year 2026:
| QBI item | 2025 | 2026 |
|---|---|---|
| Taxable income threshold | $197,300; $394,600 married filing jointly | $201,750 ($201,775 married filing separately); $403,500 married filing jointly |
| Phase-in range above the threshold | $50,000; $100,000 married filing jointly | $75,000; $150,000 married filing jointly |
| Minimum deduction | None | $400, if you have at least $1,000 of QBI from active businesses in which you materially participate |
Because QBI is based on profit, every legitimate expense you record also changes the QBI figure. Your CPA works that out; your job is to have the expenses documented.
What changed for self-employed deductions in 2026?
- Mileage changed mid-year. The business rate is 72.5¢ a mile for January 1 to June 30, 2026 and 76¢ from July 1, 2026 (IRS Announcement 2026-11). Your log needs to split miles at July 1.
- The 1099-NEC threshold rose to $2,000 for payments made after December 31, 2025. It was $600 for 2025.
- The 1099-K threshold is back to more than $20,000 and more than 200 transactions for payment apps and marketplaces. Income is reportable whether or not you receive a form.
- Section 179 limits rose to $2,560,000, with the phase-out starting at $4,090,000 (2025: $2,500,000 and $4,000,000). Bonus depreciation is permanently 100% for qualified property acquired and placed in service after January 19, 2025.
- QBI is permanent, with a wider phase-in range and the new $400 minimum.
- Employer-provided meals changed. From 2026, section 274(o) disallows deductions for meals provided to employees through an on-site eating facility or for the employer's convenience. The 50% rule for client and travel meals did not change.
- The Social Security wage base rose to $184,500 for 2026 (2025: $176,100), which affects how much of your net earnings is subject to the 12.4% part of SE tax.
- The 2026 Schedule C splits interest into three lines: 16a mortgage, 16b vehicle loan and 16c other.
Example: a freelance web developer's 2026 list
Example (fictional numbers): Maya is a freelance web developer filing Schedule C for tax year 2026. Here is what she gathers for her CPA:
| Item | Her record | Amount she brings |
|---|---|---|
| Design and hosting subscriptions | Monthly card charges plus invoices | $1,800 |
| New laptop | Receipt dated March; she plans to ask about the de minimis election | $2,200 |
| Home office, simplified method | 150 sq ft spare room, used only for work: 150 × $5 | $750 |
| Mileage, Jan to Jun | 1,200 business miles × 72.5¢ | $870 |
| Mileage, Jul to Dec | 1,800 business miles × 76¢ | $1,368 |
| Client lunches | $640 of receipts with names noted; 50% limit | $320 |
| Conference trip | Airfare and hotel, with the agenda | $1,400 |
| Phone | $1,080 for the year; her itemized bills show 60% business use | $648 |
| Subcontractor | Paid one developer (not a corporation) $2,400 by bank transfer, so a 1099-NEC is likely required | $2,400 |
That adds up to $11,756 of potential Schedule C expenses for Maya and her CPA to review. Separately, she brings her health insurance premium statements and her SEP contribution confirmation, because those belong on Schedule 1. Her CPA decides what applies.
What records do I need to back these deductions?
You generally need a record that shows what you paid and why it was for the business. For travel, meals, gifts and car expenses, Publication 463 waives documentary evidence for expenses under $75 (other than lodging), but you still need the amount, date, place and business purpose written down at or near the time.
A card statement helps but doesn't settle it on its own. Publication 583 says: "Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction." Read more in can I use bank statements instead of receipts, and see how long to keep receipts for retention periods. When it's time to hand everything over, the small business tax prep checklist lists what accountants usually ask for.
If you want a list built around a specific line of work, start with write-offs for consultants or write-offs for real estate agents.
Where Amy fits
When you work for yourself, the expenses are yours to find, and the easiest to miss never show up as a single charge. Amy finds them in the records you already have, tells you what's missing and asks only what she can't work out. You and your CPA decide what counts.
