Tax deductions for solopreneurs
Common US tax deductions for self-employed people: home office, vehicle, startup costs, health insurance, retirement and more, with IRS sources.
Deductions reduce your profit, which lowers both income tax and self-employment tax. The IRS rule is that business expenses must be ordinary and necessary for your business (IRS: deducting business expenses).
| Deduction | Key rule | IRS source |
|---|---|---|
| Home office | Regular and exclusive business use. The simplified method is $5 per square foot, up to 300 sq ft | Home office deduction |
| Vehicle | Standard mileage rate or actual expenses; keep a mileage log | Standard mileage rates |
| Startup costs | Up to $5,000 deductible in the first year (phased out above $50,000 of costs); the rest amortized | Publication 535 |
| Health insurance | Self-employed health insurance deduction if you have a net profit and no employer plan available | Publication 535 |
| Retirement | SEP-IRA or solo 401(k) contributions | Retirement plans for self-employed people |
| Half of SE tax | Deduct half your self-employment tax when calculating AGI | Self-employment tax |
| Software, equipment, phone, internet | Business-use share only | Business expenses |
Also check
- Qualified business income (QBI) deduction: many sole proprietors can deduct up to 20% of qualified business income, subject to limits (IRS: QBI deduction).
- Education that maintains or improves skills used in your current business.
Keep records
Keep receipts and a mileage log; the IRS can ask for proof. Accounting software helps: our comparison.
General information, not tax advice. Rules and amounts change; check the linked IRS pages for the current year.
Frequently asked questions
Can I deduct my home office as a solopreneur?
Yes, if part of your home is used regularly and exclusively for business. The simplified method allows $5 per square foot up to 300 square feet.
Are LLC formation costs deductible?
Startup and organizational costs can generally be deducted up to $5,000 each in the first year, with the rest amortized. See IRS Publication 535.
Sources
- IRS: deducting business expenses irs.gov
- Home office deduction irs.gov
- Standard mileage rates irs.gov
- Publication 535 irs.gov
- Retirement plans for self-employed people irs.gov
- Self-employment tax irs.gov
- IRS: QBI deduction irs.gov
Checked 21 Oct 2026. Spotted an error? Tell us.
Update history
- : first published; figures checked against the sources listed.