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Taxes 11 min read

Tax Deductions for Freelancers: A Complete Guide

Self-employed? Don't leave money on the table. Learn which business expenses you can deduct to reduce your tax bill legally and significantly.

Understanding Self-Employment Taxes

As a freelancer, you're responsible for paying both the employee AND employer portions of Social Security and Medicare taxes—a combined 15.3% on top of your regular income tax. This is called the self-employment tax.

The good news? You can deduct business expenses to reduce your taxable income, and you can also deduct half of your self-employment tax. These deductions can save you thousands of dollars each year.

Important: To claim these deductions, expenses must be "ordinary and necessary" for your business. Keep detailed records and receipts for everything—the IRS requires documentation.

Home Office Deduction

If you use part of your home exclusively and regularly for business, you can deduct a portion of your housing costs. There are two methods:

Simplified Method

  • Rate: $5 per square foot
  • Maximum: 300 sq ft ($1,500)
  • Pros: Easy, no complex calculations
  • Cons: May be less than actual expenses

Regular Method

  • Rate: Actual expenses x business %
  • Maximum: No cap
  • Pros: Often larger deduction
  • Cons: Requires detailed records

What You Can Deduct (Regular Method)

Calculate your home office percentage (office square footage Ă· total home square footage), then apply it to:

  • Rent or mortgage interest
  • Property taxes
  • Utilities (electric, gas, water, internet)
  • Homeowner's or renter's insurance
  • Home repairs and maintenance
  • Depreciation (if you own)

Example: Your home office is 200 sq ft in a 2,000 sq ft home (10%). If your annual housing costs are $24,000, you can deduct $2,400.

Equipment and Technology

Business equipment is deductible, either immediately (Section 179) or depreciated over time:

  • Computers, laptops, tablets
  • Monitors and peripherals
  • Smartphones (business use percentage)
  • Printers, scanners, cameras
  • Software subscriptions (Adobe, Microsoft 365, etc.)
  • Website hosting and domains
  • Cloud storage and backup services
  • Project management tools

Section 179: Allows you to deduct the full cost of qualifying equipment in the year you buy it, rather than depreciating it over several years. Great for expensive purchases.

Professional Services

Fees paid to professionals who help run your business are deductible:

  • Accountant/CPA fees: Tax preparation, bookkeeping, financial advice
  • Legal fees: Contracts, business formation, intellectual property
  • Business coaching: Consulting and mentorship
  • Virtual assistants: Administrative support services
  • Freelance help: Subcontractors for projects

Marketing and Advertising

Costs to promote your business are fully deductible:

  • Website design and development
  • Social media advertising (Facebook, Instagram, LinkedIn ads)
  • Google Ads and SEO services
  • Business cards and promotional materials
  • Email marketing platforms (Mailchimp, ConvertKit)
  • Portfolio hosting and presentation tools
  • Networking event fees and memberships

Education and Professional Development

Courses and training that maintain or improve skills in your current profession are deductible:

  • Online courses and certifications
  • Industry conferences and workshops
  • Professional books and publications
  • Membership in professional organizations
  • Subscriptions to trade journals

Note: Education that qualifies you for a NEW profession is generally not deductible. The training must relate to your current business.

Travel Expenses

Business travel (away from home overnight) is deductible, including:

  • Airfare, train, or bus tickets
  • Hotel accommodations
  • Rental cars and rideshares
  • 50% of meals during travel
  • Tips for service workers
  • Baggage fees
  • Business-related phone calls and internet

Vehicle Expenses

If you drive for business (meeting clients, delivering work), choose one method:

Standard Mileage Rate

72.5 cents per mile (2026)

Simple to track. Just log your business miles.

Actual Expenses

Gas, insurance, repairs, depreciation × business %

May be higher for expensive vehicles. Requires detailed records.

Health Insurance Premiums

Self-employed individuals can deduct 100% of health insurance premiums for themselves, their spouse, and dependents. This includes:

  • Medical insurance
  • Dental insurance
  • Vision insurance
  • Long-term care insurance (with limits)

This is an "above-the-line" deduction, meaning you get it even if you don't itemize deductions.

Retirement Contributions

Self-employed retirement accounts offer huge tax deductions while building your future:

SEP-IRA

Contribute up to 25% of net self-employment income (max $72,000 for 2026). Easy to set up, no annual filings required.

Solo 401(k)

Employee contribution up to $24,500 + employer contribution up to 25% of compensation. Higher limits for high earners.

SIMPLE IRA

Employee contribution up to $17,000 + 3% employer match. Good middle-ground option.

Other Commonly Overlooked Deductions

Bank and Payment Processing Fees

  • Business bank account fees
  • PayPal, Stripe, Square processing fees
  • Wire transfer fees
  • Business credit card annual fees

Office Supplies and Materials

  • Pens, paper, notebooks
  • Printer ink and toner
  • Postage and shipping supplies
  • Desk, chair, and office furniture

Communication Costs

  • Business phone line or percentage of cell phone
  • Internet service (business percentage)
  • Video conferencing subscriptions (Zoom)
  • VoIP and virtual phone services

Insurance

  • Professional liability/errors & omissions insurance
  • Business property insurance
  • Cyber liability insurance

Quarterly Estimated Taxes

As a freelancer, you must pay estimated taxes quarterly to avoid penalties:

2026 Due Dates

Q1

April 15

Q2

June 15

Q3

September 15

Q4

January 15, 2027

Set aside 25-30% of each payment for taxes, and pay quarterly to avoid a large bill (and penalties) at tax time.

Record-Keeping Best Practices

  1. Separate business and personal finances: Get a dedicated business bank account and credit card
  2. Save all receipts: Use apps like Expensify or Receipt Bank to digitize and organize
  3. Track mileage as you go: Apps like MileIQ automatically log business drives
  4. Use accounting software: QuickBooks Self-Employed, FreshBooks, or Wave
  5. Keep records for 7 years: The IRS can audit returns up to 6 years old in some cases

When to Hire a Professional

Consider working with a CPA or tax professional if:

  • Your freelance income exceeds $50,000-75,000
  • You have multiple income streams or complex deductions
  • You're considering forming an LLC or S-Corp
  • You received an IRS notice or are being audited
  • You want to maximize deductions you might be missing

Bottom line: As a freelancer, deductions are your best tool for reducing your tax burden. Track everything, keep meticulous records, and don't leave money on the table. The time spent on good bookkeeping pays for itself many times over at tax time.