How to claim every tax deduction you're entitled to as a self-employed person

As a self-employed person, you are both the employee and the employer. That means you pay both halves of Social Security and Medicare taxes — 15.3% instead of 7.65%. But it also means you qualify for deductions most employees cannot touch. Here is how to claim every deduction you are entitled to.

The home office deduction

If you use part of your home regularly and exclusively for business, you can deduct $5 per square foot (up to 300 sq ft) using the simplified method, or actual expenses using the regular method. The simplified method gives you up to $1,500 with no calculations. The regular method lets you deduct a percentage of rent, utilities, internet, and maintenance. Most freelancers should use the simplified method unless their home office is a large portion of their home.

Vehicle expenses

You have two options. The standard mileage rate for 2025 is 67 cents per mile. Track all business miles and multiply. The actual expense method lets you deduct the business percentage of gas, maintenance, insurance, depreciation, and repairs. Track your miles with a log or app. Commuting miles do not count — only miles driven for business purposes.

Health insurance premiums

Self-employed individuals can deduct 100% of their health insurance premiums (medical, dental, and long-term care) for themselves, their spouse, and their dependents. This deduction is taken on Form 1040 and does not require itemizing. If you have a high-deductible plan, you can also contribute to a Health Savings Account (HSA) and deduct that too.

Retirement contributions

A SEP IRA lets you contribute up to 25% of your net self-employment income, up to $69,000 for 2025. A Solo 401(k) lets you contribute both as employee (up to $23,000) and employer (up to 25% of compensation), for a total of up to $69,000. These contributions are tax-deductible and grow tax-deferred.

Business equipment and supplies

Section 179 lets you deduct the full cost of qualifying equipment in the year you buy it rather than depreciating it over time. Computers, software, office furniture, cameras, tools — if you use it for business, deduct it. The limit for 2025 is $1,160,000.

The self-employment tax deduction

You can deduct half of your self-employment tax (the employer-equivalent portion) on your Form 1040. This does not reduce your self-employment tax itself, but it reduces your adjusted gross income, which may lower your income tax.

Use the Tax Deduction Finder to discover which deductions apply to your specific situation, and consult a tax professional if you have questions.

Frequently asked questions