22 small business tax deductions for your return in 2026
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Taxes are a fact of life for small business owners. But tax deductions can help you keep more of the money you work so hard to earn.
No matter what your business does or what industry you’re in, there are plenty of items and services you can write off from your income for tax savings, including:
- Cellphone bills
- New computers and other equipment
- Advertising and marketing services
- Certain legal fees
- Business startup costs
Use this checklist to determine what small business tax deductions you can take advantage of for the 2026 tax season.
- 1. Home office
- 2. Office supplies
- 3. Business insurance premiums
- 4. Office rent
- 5. Relocation expenses
- 6. Internet and phone bills
- 7. Continuing education
- 8. Marketing and advertising
- 9. Business vehicles
- 10. Business meals
- 11. Business travel
- 12. Employee salaries and benefits
- 13. Business credit card and loan interest
- 14. Independent contractors
- 15. Business bank fees
- 16. Startup business expenses
- 17. Business losses and bad debts
- 18. Legal and professional fees
- 19. Charitable contributions
- 20. Retirement plan contributions
- 21. Depreciation
- 22. Health insurance premiums
- Adding it up
- Get quotes from trusted carriers with Insureon
1. Home office
There are many perks for small business owners who work from a home office, including flexibility, convenience, and tax breaks from home office expenses.
According to the IRS, taxpayers who work from home can deduct $5 per square foot of space that’s used exclusively as a home office, up to 300 square feet. That equals a maximum deduction of $1,500.
The home office deduction includes the cost of utilities, such as heat, electricity, and Wi-Fi, so those expenses can’t be deducted separately.
To qualify for the home office deduction for 2026, your workspace must meet the following three requirements:
- The workspace has clearly defined boundaries. It should be a separate room or portion of a room. That means working from your bedroom doesn't count.
- It must be the regular place where you work. If you normally work at a nearby co-working space, but sometimes work from your kitchen table, you can’t claim the deduction.
- You must engage in regular and important business from your home office. For example, if you’re a medical provider who sees patients in a hospital, but you sometimes reply to work emails at home, you wouldn’t qualify.
2. Office supplies
Whether you work from home or an office, you probably need certain items to keep your business running. The IRS allows small business owners to write off the cost of office supplies from their taxes.
Examples of office supplies that qualify as deductible expenses include:
- Printer paper
- Markers, pencils, and other writing utensils
- Computer software that’s essential to your business
Having the correct small business insurance is key to maintaining the financial health of your company. Some types of business insurance are required if you want to sign a lease on office space or obtain a business license. Fortunately, business insurance premiums are tax-deductible.
Here are some of the policies that usually qualify for a tax deduction:
- General liability insurance
- Professional liability insurance
- Commercial property insurance
- Business interruption insurance
- Cyber insurance
- Workers’ compensation insurance
- Commercial auto insurance
- Unemployment insurance
- Health and life insurance
4. Office rent
Small business owners who rent office space can deduct the monthly payment from their taxable income. In addition to the cost of rent for the physical building space, you’re also allowed to deduct rent for a business parking spot.
Unlike the home office deduction, the rent deduction only applies to business owners who pay rent on business property outside of their home. If you pay rent on your home or apartment, and you work from home full-time, you should claim the home office deduction instead.
5. Relocation expenses
Whether it was across the state or the country, if you moved your small business, you could recoup some or all of those costs.
For 2026, deducting relocation expenses comes down to the type of small business you own:
- Corporations and limited liability companies (LLCs) can deduct the full expense of the move from company taxes, including transport, packing, loading, surveys, and even brokerage commissions.
- Sole proprietorships and partnerships can deduct the expenses if they move at least 50 miles away and have worked at least 39 weeks at the new location in the 12 months following the relocation.
Keep in mind, this deduction doesn’t apply to home offices. So, if you run your business out of your home and you move into a new house, you can’t claim this tax credit.
6. Internet and phone bills
The IRS will allow you to deduct the cost of your internet and cellphone plan from your 2026 federal income taxes. The only qualification is that your phone and internet use must be essential to your business’s ability to operate every day.
In addition, you can write off the cost of Wi-Fi you have to purchase for work purposes, such as while traveling on a plane or staying at a hotel.
With this deduction, though, things get a little complicated when the phone and internet you use for work are also used for personal purposes. According to the IRS, you can only deduct the percentage of the cost that’s used to conduct your business.
7. Continuing education
If you took a continuing education course in 2026, you might be able to deduct the cost from your taxes. Work-related educational expenses are tax-deductible for self-employed business owners if they meet these qualifications:
- The program maintains or improves the skills necessary for your current job
- You must legally take the course to keep your salary or job
- The program can't be used to help you learn skills for a new trade or business
Some examples of continuing education costs that are tax-deductible include:
- Classes and workshops (online or in-person) in your field
- Subscriptions to professional publications relevant to your business
- Seminars and webinars that apply to your business
8. Marketing and advertising
In 2026, you can typically write off 100% of your marketing and advertising costs, as long as they’re reasonable and being used to directly promote your business.
Examples of expenses that would qualify for this deduction include:
- Printing a batch of business cards or fliers
- Hiring a social media marketer
- Running Facebook or Google ads
- Marketing software subscriptions
- Having a website
- Working with an SEO consultant
"If the vehicle is used solely for business purposes and never used for personal travel... you can deduct 100% of the cost of operating and maintaining the vehicle."
9. Business vehicles
Business vehicle expenses are a tax write-off. If your business vehicle doubles as your personal vehicle, calculating the deduction can be tricky.
For instance, self-employed individuals who drive their personal cars for business purposes may be looking to write off expenses from their hired and non-owned auto insurance policy (HNOA).
In this case, the deduction should be based on the amount of time you use the car for business purposes. Track each business-related trip you make and submit that mileage cost as your deduction. Another option is to use the standard mileage rate, which is 72.5 cents per mile.
If the vehicle is used solely for business purposes and never used for personal travel, such as a work van, you can deduct 100% of the cost of operating and maintaining the vehicle.
Almost every car expense you can think of qualifies for the deduction, including:
- Gas
- Maintenance and repairs
- Car insurance
- Registration fees
- Lease payments
- Tolls
- Parking fees
- License fees
10. Business meals
Are you the kind of business owner who likes to wine and dine your clients? Or maybe you enjoy taking your staff out for occasional work lunches at the local watering hole.
For 2026, meal deductions continue to be 50%. Expensed meals must be work-related, such as taking clients out for dinner to discuss a project proposal, not meeting a co-worker socially for drinks.
To claim the business dining tax deduction, keep a log of:
- The price of the meal
- The date and location
- The business relationship of the people who were there
11. Business travel
If you or your employees travel for business, those expenses are all tax-deductible. However, the IRS has strict rules around who and when this deduction can be claimed. For example, a business trip can be written off if it meets the following criteria:
- It’s overnight
- You travel at least 100 miles from home
- The expenses must be ordinary and necessary
To claim this deduction, make sure to keep a record of all associated expenses from your trip. Receipts will be essential when it comes time to file your taxes. Some of the covered costs include:
- Airfare
- Train tickets
- Hotel and Airbnb costs
- Taxis and rideshare services
- Dry cleaning
- Shipping items, such as to a tradeshow
If you are a consultant who travels for clients, deducting taxes is just one of the opportunities available to help you manage your travel expenses.
12. Employee salaries and benefits
One of the biggest tax deductions for small business owners is the cost of employee wages and employee benefits. However, you can only claim this deduction if you employ someone other than yourself. It doesn’t apply to sole proprietors, partners, or LLC members.
In addition to employee salaries, you’re also allowed to deduct an employee’s paid time off and commission or bonuses, as well as payroll taxes.
13. Business credit card and loan interest
Interest paid on business credit cards or a business loan can be deducted from your federal taxes.
The IRS has the following rules for business owners who want to claim this deduction:
- You must be legally liable for the debt
- Both you and your lender must expect the debt to be repaid
- You and the lender have a true debtor/creditor relationship
14. Independent contractors
Do you rely on contractors or freelancers to provide services for your business? If so, the money you pay them can be written off your taxes. The only rules for this deduction are:
- The contractor must not be an employee of your business
- The services provided must be for your business, not for you personally, as the business owner
If you pay a freelancer or contractor more than $2,000 during the 2026 tax year, you’re required to send them Form 1099-NEC. Failing to do this could result in penalty fees.
15. Business bank fees
A business bank account is a smart investment for all small business owners. And if your bank charges monthly service fees, overdraft fees, or wire transfer fees, you’re allowed to deduct those costs from your taxes.
In addition, if your business sells products and uses a third-party payment vendor, like PayPal or Square, you can deduct those fees, too.
It’s important to understand that this small business tax deduction doesn’t apply to fees related to your personal bank account. So, if your business profits get deposited into your personal checking account, you aren’t eligible for the deduction.
16. Startup business expenses
If you launch a business in 2026, the IRS will allow you to deduct 100% of your startup expenses, up to $5,000.
To qualify as a startup expense, the cost must be a normal deduction for an established business. But in this case, it’s a cost that you incurred before the business officially started operating.
Many startup expenses may qualify for this deduction, such as:
- Working with a business consultant
- Traveling to conferences
- Attending training events in the industry
- Launching a marketing campaign
- Building a website
17. Business losses and bad debts
If your business lost money during the taxable year, the IRS allows you to write off the loss. For sole proprietors and LLC owners, you can write off the losses in full from your personal tax return.
There’s no limit to the amount of money you can write off. And if your business experiences losses for several consecutive years, you won’t get penalized.
Additionally, if a third-party, like a customer, supplier, or employee, owes your business a debt they refuse to pay, you might be able to write off the bad debt on your tax return. It must be considered a business bad debt to deduct it, and must be either:
- Acquired or created by your business
- Related to your business, when it became uncollectible or worthless
These types of debt typically result from credit sales to customers or loans to suppliers, clients, employees, or distributors.
18. Legal and professional fees
The cost of working with professionals, such as a lawyer, accountant, or bookkeeper, is a small business tax write-off. If the professional services provided were necessary and relevant to your business, it counts.
19. Charitable contributions
In 2026, the rules around charitable donation tax deductions changed. If your business donated money to a charitable organization during this tax year, you can still use it to lower your tax liability, you just need to understand the new regulations.
The key 2026 business donation rules include:
- C corporations’ charitable contributions must exceed 1% of the company’s taxable business income to be deductible under current C corp tax deductions, capped at 10%.
- Pass-through entities, including sole proprietors and S corps, are subject to a 0.5% adjusted gross income (AGI) floor that applies to itemized deductions.
- A universal deduction allows non-itemizers to deduct up to $1,000 in cash donations ($2,000 for married filing jointly).
If your business is structured as a sole proprietorship or LLC, the IRS recommends writing off charitable donations on your personal taxes. However, if your business is set up as an S corporation, you should take the deduction on your business tax return.
20. Retirement plan contributions
If you're like many small business owners, you probably make 100% of your own retirement plan contributions. The IRS recognizes this and allows you to deduct your contributions from your income taxes if you have one of the following retirement accounts:
- Roth IRA
- Traditional IRA
- Keogh plan
- Solo 401(k)
21. Depreciation
If you own assets that are essential to your business operation, you might be able to write off the depreciation from your income taxes. Examples of depreciating business assets include:
- Real estate (i.e. your office, if you own a commercial building)
- Computers and electronic equipment
- Machinery
- Business use vehicles
- Office furniture and appliances
For the 2026 tax year, business owners can get a 100% bonus first-year depreciation deduction for eligible property acquired after January 19, 2025. Additionally, the Section 179 deduction limit increased to $2,560,000 with a phase-out threshold of $4,090,000.
If you want to claim a depreciation tax deduction, you must file Form 4562 with your tax return.
If you're planning to take the depreciation tax deduction, consider talking to a tax professional or your personal tax preparer. They can help you understand what assets qualify for this tax credit, how much you can write off based on the tax laws, and what the restrictions are.
For example, computers and cars can only be written off for depreciation over five years, while furniture and appliances can be written off over seven.
Small business owners who are sole proprietors typically pay for their own health insurance benefits. Fortunately, you're allowed to deduct the cost of your health insurance premiums from your tax bill.
In addition, LLC members, partners in partnerships, and S corporation shareholders can also take advantage of this deduction. There's no limit to the amount of money you can deduct from your tax bill.
Adding it up
To claim small business tax deductions, it's important to track and log your expenses throughout the tax year. When you keep meticulous records, it makes your life easier during tax time, and if you were ever audited, you would have proof of those expenses.
When you go through the small business tax deduction checklist and file your business taxes, it's a good time to take inventory of your business insurance coverage. An annual review will ensure you have the appropriate policies and the right amount of coverage for your business's needs in 2026.
Whether the last year was one of growth, loss, or simply staying the course, you might be able to find additional insurance savings. For example, if you moved to a new state or downsized your business, make sure to get new insurance quotes to see if you can get a lower premium.
Get quotes from trusted carriers with Insureon
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Get free quotes by filling out our easy online application, or speak with a licensed insurance agent about your small business needs.
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Jess Holy, Senior Copywriter
Jess is a dedicated wordsmith fluent in marketing writing, grammar and a well-placed pun. She’s put her spin on content for national brands like Big Brothers Big Sisters of America and Ulta, as well as B2B technology vendors including IBM, Lenovo and Microsoft. Jess’ favorite part of her career is using writing to positively impact others; and when she’s not writing, she’s reading a book with a hot cup of coffee.
