Self-employed tax guide
A plain-English list of common deductions for freelancers, contractors, and gig workers, with the limits that catch people out and the records each one needs.
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.
A business expense generally has to be ordinary and necessary. IRS Publication 334 describes ordinary as common and accepted in your field, and necessary as helpful and appropriate for your business. If you also use something personally, only the business share counts.
These reduce your profit, which lowers both your income tax and your self-employment tax.
| Expense | How it works |
|---|---|
| Car and truck | Standard mileage rate or actual costs. Parking and tolls for business are deductible on top of the standard rate |
| Home office | Simplified method of $5 per square foot, up to 300 square feet, or actual costs on Form 8829. The space has to be used regularly and only for business |
| Phone and internet | The business share only, so keep a note of how you worked it out |
| Supplies and materials | What you use up in the business |
| Software and subscriptions | Tools you pay for to run the business |
| Advertising | Website costs, ads, business cards, and listings |
| Business insurance | Liability and other coverage for the business |
| Legal and professional fees | Accountants, bookkeepers, and lawyers for the business |
| Business meals | In most cases, 50% of the cost, and you have to record who you met and why |
| Business travel | Transportation and lodging when you're away overnight for work. Meals on the trip follow the 50% rule |
| Contract labor | What you pay subcontractors. You may need to file Form 1099-NEC |
| Interest on business debt | The business share of loan or credit card interest |
| Equipment | Generally capitalized and depreciated. Without an applicable financial statement, you can elect the de minimis safe harbor to deduct items up to $2,500 each |
| Startup costs | If your business began this year, you can elect to deduct up to $5,000 of certain costs. The limit shrinks once total startup costs pass $50,000 |
The IRS business standard mileage rates are 72.5 cents per mile for January 1–June 30, 2026, and 76 cents per mile for July 1–December 31, 2026.
A few valuable deductions go on Schedule 1 instead. These lower your income tax, but not your self-employment tax.
You can deduct half of your self-employment tax. You may be able to deduct health insurance premiums for yourself, your spouse, and your dependents, even if you don't itemize, though medical sharing programs and plans that aren't insurance don't qualify. Contributions to a retirement plan for the self-employed can also be deductible.
These are the ones people most often get wrong.
| Cost | Why not |
|---|---|
| Your commute | Driving between home and your regular place of work is personal, however far it is |
| Personal spending | Groceries, rent, and personal subscriptions don't become business costs because you paid with a business card |
| Everyday clothes | Work clothes count only if they're required and not suitable for everyday wear |
| Traffic tickets and fines | Penalties paid to a government aren't deductible |
A deduction only holds up if you can show it. Keep receipts, invoices, and bank records, and write down the business purpose for meals and travel. For mileage, IRS Publication 463 says you can't deduct amounts you approximate or estimate.
Cadus keeps receipts, bank transactions, and mileage together and sorts expenses into Schedule C categories, so this is done as you go instead of in April.
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
Estimate the simplified home office deduction using IRS guidance, then keep home office records, receipts, expenses, and reports organized in Cadus.
Calculator
Estimate the standard mileage deduction for U.S. business driving, then use Cadus to keep mileage, expenses, receipts, invoices, and tax reports organized.
Template
Copy this table to start organizing business purchases, receipt proof, categories, and business purpose before moving records into Cadus.
Template
Use this receipt tracker to see which purchases have proof, which receipts are missing, and which items still need review.
Schedule C education
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.
IRS-backed tax education
Learn how the IRS home office deduction works for self-employed workers, including exclusive and regular use, simplified method, actual expenses, and Form 8829.
Mileage deduction education
Learn the two IRS business mileage rates for 2026, the July 1 change, and how self-employed workers can keep clear trip and vehicle records.
Ordinary and necessary business costs, such as mileage, a home office, the business share of your phone, supplies, software, advertising, insurance, and professional fees.
In most cases, 50% of the cost of a business meal. Keep the receipt and note who you met and why.
Not the payment itself. You either take the standard mileage rate or deduct the business share of actual costs, including depreciation or lease payments. If you're self-employed, you can deduct the business share of car loan interest even with the standard rate.
Business expenses on Schedule C do, because they lower your profit. Deductions on Schedule 1, like self-employed health insurance, lower income tax only.