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Freelance Tax Deductions: What You Can (and Can’t) Write Off

Last updated: October 23, 2026. Educational content only, not tax advice.

Every dollar of legitimate business expense reduces your net profit, and that lowers both your income tax and your self-employment tax. Knowing what qualifies is one of the most valuable skills a freelancer can have. This guide covers common U.S. federal deductions, the rules that limit them, and the records you need. Rules change and depend on your situation, so confirm details with the IRS or a licensed tax professional.

The basic test

The IRS allows deductions for expenses that are both ordinary (common in your type of business) and necessary (helpful and appropriate for it). Most freelancers report these on Schedule C. Personal expenses are never deductible, and expenses that mix personal and business use can be deducted only for the business portion.

Common business deductions

Home office

You may deduct part of your home costs if you use a space regularly and exclusively for business. You can use the simplified method, which allows a flat amount per square foot for up to 300 square feet, or calculate actual expenses as a percentage of your home. A desk in a shared living room usually does not qualify. See the IRS page on the home office deduction for current details.

Vehicle and travel

Driving for business, such as visiting clients, can be deducted using either the standard mileage rate or your actual vehicle costs. The IRS sets the standard rate each year, so check the current figure. Commuting from home to a regular workplace is not deductible. Keep a mileage log that records the date, destination, purpose and miles. Business travel costs like transportation and lodging may also qualify when the trip is primarily for business.

A real example: delivery driving

On the side, I deliver food and groceries, and mileage is the biggest deduction in that work. I track the miles I drive for deliveries and deduct them using the standard mileage rate. Because delivery work involves so much driving, the deduction can be large compared with what the work pays. In my case, it offsets the profit from that side income, so that income does not create a tax bill for me. Your result will depend on your own miles, pay and records.

If you do something similar, keep a few points in mind:

Deductions that are not on Schedule C

What you generally cannot deduct

A worked example: what deductions are worth

Suppose a freelancer collects $80,000 in revenue and has $12,000 of legitimate business expenses. Without tracking those expenses, taxable profit would be $80,000, and self-employment tax would be about $11,300 (80,000 × 0.9235 × 0.153). With the deductions, profit falls to $68,000, and self-employment tax drops to about $9,600. That is roughly $1,700 saved on self-employment tax alone.

Lower profit also reduces income tax. At an assumed 22% rate, $12,000 of deductions is worth about $2,640 more. Altogether, the freelancer keeps roughly $4,300 more than if the expenses had gone unrecorded. The figures are simplified for illustration: your actual savings depend on your tax bracket, state and other deductions. The lesson is that every legitimate, documented expense is worth a meaningful fraction of its cost, but it is never a reason to spend money you do not need to spend. A $100 purchase saves you perhaps $30 to $40 in tax, so you still pay the rest.

Mixed-use expenses: how to allocate

Many expenses serve both business and personal life, such as a phone, internet connection, or laptop. Deduct only the business share, and be able to explain how you calculated it. Common methods include the percentage of time the item is used for work, the share of a home used exclusively for business, or the miles driven for business divided by total miles. Write down your method, apply it consistently from year to year, and keep supporting records such as a mileage log or a note on how many hours a week you use the item for work.

Mistakes that raise red flags

Keeping good records

Deductions only help if you can back them up. Use a separate bank account and card for business, save receipts digitally, and note the business purpose on anything that could look personal. The IRS generally advises keeping records for at least three years after you file, and longer in some situations. A simple monthly bookkeeping habit, or accounting software, makes tax time much easier and also gives you accurate numbers for your quarterly estimates. Read our guide to quarterly estimated taxes to see how deductions affect each payment.

A year-end checklist

Before the year closes, review your records. Reconcile your business bank account with your bookkeeping, gather receipts and invoices, total your mileage, and list any equipment you bought. Check whether making a retirement contribution or paying a business expense before December 31 makes sense for your situation. Compare year-to-date profit with your quarterly estimates to see whether you will owe more or have overpaid, then ask your tax preparer what to bring to your appointment. Starting this process in December rather than April leaves time to fix problems.

Official sources

For the full rules, see IRS Publication 535, Business Expenses, and the instructions for Schedule C. This article is general information, not tax advice. Consider consulting a licensed CPA or enrolled agent.