Tax guide for contractors

Tax deductions for contractors

What general contractors and independent tradespeople can usually write off, and the paperwork that subcontractors create.

Published by Cadus Labs LLC · Last updated November 9, 2026 · How we write these guides

Based on IRS Publication 334, the Instructions for Schedule C, and IRS Publication 463.

Common write-offs

A cost generally has to be ordinary and necessary for your work, and if you also use something personally, only the business share counts.

Common business deductions for contractors
ExpenseHow it's usually handled
ToolsGenerally depreciated. Without an applicable financial statement, you can elect to deduct items up to $2,500 each under the de minimis safe harbor
MaterialsBusiness costs for what you use on jobs
SubcontractorsContract labor. You may need to file Form 1099-NEC at $2,000 or more for 2026
Permits and license feesCosts required for your work
Liability insurance and bondingDeductible as a business insurance cost
Truck and van costsStandard mileage rate or actual costs, not both
Work boots and safety gearProtective gear required for the job, but not everyday clothes

Get a W-9 before you pay a sub

If you pay an unincorporated subcontractor $2,000 or more for work in 2026, you generally need to file Form 1099-NEC. Collect a Form W-9 before the first payment, so you aren't chasing it in January.

Keep the proof as you go

Keep receipts, invoices, and bank records for everything you deduct, and log business miles as you drive them. IRS Publication 463 says you can't deduct amounts you approximate or estimate. Cadus keeps receipts, bank transactions, and mileage together, sorted into Schedule C categories.

Recordkeeping checklist

Save a receipt or invoice for every business purchase.
Log business miles as you drive them.
Separate business and personal use of shared items.
Ask a tax professional about large equipment purchases.

Free tools for this

Calculator

1099 and Self-Employment Tax Calculator

Enter your 1099 income and business expenses to estimate self-employment tax, federal income tax, and what to set aside each quarter. No sign-up, and nothing you type is saved.

Calculator

1099 Contractor Payment Tracker

Estimate which direct contractor payments may need 1099 review, then keep W-9s, contractor records, expenses, and reports organized in Cadus.

Template

Business Expense Log Template

Copy this table to start organizing business purchases, receipt proof, categories, and business purpose before moving records into Cadus.

Template

Receipt Tracker Template

Use this receipt tracker to see which purchases have proof, which receipts are missing, and which items still need review.

Official sources

IRS Publication 334IRS Instructions for Schedule CIRS Publication 463

Related guides

Self-employed tax guide

Self-Employed Tax Deductions

What you can write off when you're self-employed: mileage, home office, phone, supplies, meals, insurance, and more, with the IRS rules and limits.

Schedule C education

Schedule C Expense Categories

Every Schedule C expense line in plain English: what goes on each one, what doesn't, and the records to keep for self-employed workers.

Estimated tax guide

Quarterly Estimated Taxes

2026 estimated tax due dates, who has to pay, how to avoid the penalty, and a worked example for a self-employed worker earning $60,000.

Contractors Deductions FAQ

What can a 1099 contractor write off?

Ordinary and necessary business costs, such as tools, materials, mileage, insurance, permits, and what you pay subcontractors.

Do I need to send my subcontractors a 1099?

Generally yes, if you pay an unincorporated subcontractor $2,000 or more for work in 2026.

Cadus educational content is not tax, legal, or accounting advice. Tax rules can change, and individual facts matter. Review official guidance or speak with a qualified tax professional before filing.