Top Tax Deductions for Freelancers and Small Business Owners in 2025
If you’re self-employed, freelancing, or running a small business, taxes can feel overwhelming. The good news is that the U.S. tax code offers valuable deductions designed to lower your tax bill and keep more of your hard-earned money. Here are the top tax deductions freelancers and small business owners should take advantage of in 2025.
1. Home Office Deduction
If you use a portion of your home exclusively for work, you can deduct a portion of:
- Rent or mortgage interest
- Utilities and home insurance
- Repairs and maintenance
Tip: Choose between the simplified method ($5 per sq. ft, up to 300 sq. ft) or the actual expense method based on your situation.
- Pro Tip: Check out the IRS Home Office Deduction Calculator to determine your eligibility: IRS Home Office Calculator.
2. Phone and Internet Bills
If you use your phone and internet for business, you can deduct a portion (or all) of those expenses.
Tip: Keep a record of how much of the service is for business versus personal use. If you’re using your phone for work all the time, you can deduct the full amount.
- Pro Tip: Use apps like Expensify to track business-related expenses: Try Expensify.
3. Business Vehicle Use
If you use your car for business, you can deduct either the mileage or actual expenses (like gas, insurance, and maintenance).
- 2025 IRS standard mileage rate: Estimated at ~66.5 cents per mile.
Tip: Use mileage tracking apps like MileIQ or Everlance to keep accurate records.
4. Office Supplies and Equipment
Any tools, technology, or supplies you use for your business are deductible, such as:
- Office furniture (desks, chairs, etc.)
- Laptops, printers, cameras, and other tech
- Software and subscriptions like Canva, Adobe, Notion, etc.
- Pro Tip: Keep receipts or track these purchases through software like QuickBooks or FreshBooks to maintain organized records: QuickBooks Online.
5. Health Insurance Premiums
If you’re self-employed and not eligible for an employer-sponsored health plan, you may deduct 100% of your health insurance premiums—including premiums for your dependents.
6. Education and Training
Expenses related to improving your skills, such as courses, certifications, workshops, and books, are deductible.
Example: An online course in digital marketing or business management qualifies.
- Pro Tip: Udemy, Coursera, and other educational platforms may provide certificates that you can use for your tax deductions: Explore Udemy courses.
7. Marketing and Advertising
Any costs related to promoting your business are deductible, including:
- Website costs and hosting fees
- Social media ads
- Business cards, branding materials, and promotional products
Tip: Even your domain name and website hosting costs can be deductible if they are tied to your business.
- Pro Tip: Platforms like Google Ads and Facebook Ads often offer detailed reports for tax purposes.
8. Professional Services
Legal, accounting, and consulting fees related to your business are fully deductible.
- Hiring a tax professional? That counts too!
Tip: Keep detailed invoices and receipts for these services.
9. Business Insurance
Any business-related insurance, including liability, professional indemnity, or equipment coverage, is deductible.
- Pro Tip: Compare business insurance policies using resources like Insureon or Next Insurance for small businesses: Get a quote from Insureon.
10. Self-Employment Tax Deduction
You’re responsible for both the employer and employee portions of Social Security and Medicare taxes. However, you can deduct half of that self-employment tax from your adjusted gross income.
Tip: Use tax software like TurboTax Self-Employed or work with a CPA to calculate and track this deduction accurately: TurboTax for Self-Employed.
Final Thoughts
Tracking and claiming these deductions can significantly reduce your taxable income and help you run a more profitable business. The key to maximizing your deductions is to keep good records, save your receipts, and, if needed, work with a qualified tax preparer to ensure you’re covering all your bases.
Don’t leave money on the table—claim what’s yours! For more self-employment tax tips, visit the IRS website and explore tools that make managing business expenses easier.
For more detailed guides on maximizing tax deductions, check out NerdWallet’s Tax Tips for Small Business Owners: NerdWallet Tax Tips.