Tax Deductions Every Freelancer Should Know
As a freelancer, every legitimate business expense reduces your taxable income. The more you deduct, the less you pay in self-employment and income tax. Here are the deductions most freelancers miss.
Home office deduction
If you have a dedicated space used exclusively for work, you can deduct a portion of your rent, utilities, insurance, and internet. Two methods:
- Simplified: $5 per square foot, up to 300 sq ft ($1,500 max)
- Regular: Actual expenses prorated by office square footage
Equipment and software
Computers, monitors, keyboards, mice, printers, and all work software are fully deductible in the year you buy them (Section 179). This includes:
- Laptop and desktop computers
- Adobe Creative Cloud, Microsoft 365, project management tools
- Domain names, hosting, SSL certificates
- Professional development courses and books
Health insurance
Self-employed individuals can deduct 100% of health insurance premiums for themselves, their spouse, and dependents. This is an above-the-line deduction — no itemizing required.
Retirement contributions
SEP-IRA contributions (up to $69,000 in 2024) or Solo 401(k) contributions reduce your taxable income. This is one of the most powerful tax-saving tools for freelancers.
Vehicle and travel
If you drive for business (client meetings, supply runs), track mileage. The 2024 standard mileage rate is 67 cents per mile. Business travel, meals (50%), and hotels are deductible.
Other commonly missed deductions
- Phone/internet: Business-use percentage
- Professional services: Accountant, lawyer, business coach
- Marketing: Website, business cards, advertising
- Bank fees: Business account fees, payment processing fees
- Education: Courses, conferences, certifications related to your work
Track everything
Use a spreadsheet or app to log every business expense. Keep receipts (digital is fine). The IRS requires documentation for all deductions.
See how deductions affect your tax bill with our Self-Employment Tax Estimator and Quarterly Tax Calculator. Read more in our Self-Employment Tax Guide.