Smart Money Moves for Self-Employed Folks
USAFri Jan 16 2026
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Being self-employed comes with a lot of freedom, but it also means dealing with taxes. The good news is that there are plenty of tax deductions that can help you save money. Let's break down some of the most common ones.
First up, retirement savings. Just because you're self-employed doesn't mean you can't save for retirement. Plans like a solo 401(k) or SEP IRA can help you reduce your taxable income while saving for the future. Contributions to these plans are not taxed in the year they are made, and the money grows tax-deferred until you withdraw it.
Next, if you work from home, you might be able to deduct some of your home expenses. The home office deduction can be a bit tricky, but it can be worth it if you qualify. You can use either the regular method or the safe harbor method to calculate your deduction. Just make sure your home office meets the IRS's strict rules.
If you use your car for business, you can deduct those expenses too. You can either deduct the actual expenses or use the standard mileage rate. Just remember that commuting expenses are not deductible. And if you use your car for both business and personal use, there might be a new deduction available for personal car loan interest.
Business travel can also be deducted if the trip is primarily for business. You can deduct expenses like meals, airfare, hotels, and conference fees. Just make sure the expenses are necessary and not extravagant.
Healthcare expenses can also be deducted. If you're self-employed, you can deduct the cost of health insurance premiums for yourself, your spouse, and your dependents. You might also qualify for a tax credit for up to 50% of the health insurance premiums for your employees.
Believe it or not, you can even deduct some of your taxes. Certain state, local, and foreign taxes directly related to your business can be deducted on your federal return. And some states allow businesses to deduct their federal taxes paid on the state return.
If you have employees or contract workers, you can deduct their wages. Just make sure to send them a 1099-NEC form if you pay them at least $600.
Renting a business office space can also be deducted. The cost of renting a storefront or office is considered a deductible business expense.
Marketing your business is a big part of growing it. Thankfully, advertising costs are deductible. Business cards, online advertising, billboards, mailers, and even your business website are all examples of acceptable business purpose deductions.
As a small business owner, you might need professional services like legal, tax, or business coaching. These are all considered tax-deductible expenses.
The cost of materials and supplies used during your trade or business can also be deducted. Just make sure to keep good records in case you get audited.
Insurance coverage is another deductible expense. Umbrella policies, business liability insurance, and malpractice coverage are all examples of deductible insurance.
Finally, if you're starting a business, you can deduct up to $5, 000 of business startup costs. Just make sure to understand what can and can't be deducted.
Just remember, not all self-employed expenses qualify as a tax deduction. They must be ordinary and necessary for your trade or business. So, determine what deductions you qualify for and take advantage of them on your upcoming income tax return.
