24 Deduction Categories, Each Mapped to a Current IRS Source

IRS source

Sch C (Form 1040) Instructions; IRS.gov Business Expenses topic; IRC §162

Key rule

Advertising expenses are deductible if ordinary and necessary for your business. Must be directly related to business activities. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses

IRS source

Sch C (Form 1040) Instructions — Part V Other Expenses; IRS.gov Business Expenses topic; IRC §162

Key rule

Bank charges and merchant processing fees are deductible business expenses when incurred for business accounts and transactions; they are not a named Part II line, so they are itemized in Part V and rolled into Line 27b. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses

IRS source

Sch C (Form 1040) Instructions; Pub 463; IRC §274

Key rule

Business meals are 50% deductible (80% for certain DOT hours-of-service workers). Meal must not be lavish or extravagant. Taxpayer (or employee) must be present. Business must be discussed before, during, or after. Entertainment costs remain nondeductible and must not be bundled with the meal cost.

IRS source

Sch C (Form 1040) Instructions; Pub 463

Key rule

Travel expenses away from your tax home overnight for business are deductible if ordinary and necessary. Commuting is NOT deductible. Mixed business/personal travel requires allocation. Meal costs are excluded from Line 24a — they belong on Line 24b.

IRS source

Sch C Instructions; IRS.gov 1099-NEC guidance

Key rule

Payments to independent contractors for services are deductible. Payers must file Form 1099-NEC for payments of $600+ to non-corporate contractors. https://www.irs.gov/forms-pubs/about-form-1099-nec

IRS source

Sch C (Form 1040) Instructions — Part V Other Expenses; IRS.gov Business Expenses topic; IRC §162

Key rule

Education expenses are deductible if they maintain or improve skills required in present work. NOT deductible if they qualify you for a new trade or business. Not a named Part II line — itemized in Part V and rolled into Line 27b. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses

IRS source

Sch C (Form 1040) Instructions — Part V Other Expenses; IRS Notice 2015-82; Treas. Reg. §1.263(a)-1(f)

Key rule

Under the de minimis safe harbor, tangible property costing $2,500 or less per item or invoice (or $5,000 with an applicable financial statement) may be deducted in the year of purchase rather than depreciated. Per Sch C Instructions, these amounts may ONLY be deducted as other expenses (Part V/Line 27b) — they cannot be entered on any other line. ⚠ **The $2,500 figure is the boundary of this safe harbour, not a limit on deductibility.** Property at or above it is deducted through **Sch C Line 13 (Depreciation and section 179)** instead — a line these categories do not carry. State the routing; do not state the §179 rule, whose business-use, income-limitation and vehicle provisions are unharvested (Pass Ω, 2026-08-16). https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations

IRS source

Form 7206; Form 1040 Schedule 1 Instructions

Key rule

Self-employed individuals may deduct health insurance premiums on Form 1040 Schedule 1 (via Form 7206 as of 2023). Not on Schedule C. Cannot exceed net SE income. Not available for months eligible for employer coverage. https://www.irs.gov/forms-pubs/about-form-7206

IRS source

Sch C (Form 1040) Instructions; Pub 587; Rev. Proc. 2013-13

Key rule

$5 per square foot of the portion of the home used regularly and exclusively for business. Maximum 300 sq ft = maximum $1,500/year. Regular and exclusive use test must be met. Enter the worksheet result directly on Line 30.

IRS source

Sch C (Form 1040) Instructions; Pub 587

Key rule

Business percentage of home (office sq ft ÷ total home sq ft) applied to actual home expenses. Direct expenses 100% deductible; indirect expenses by percentage. Cannot exceed gross income from business use. Homeowners must account for depreciation. Figure the deduction on Form 8829 and enter the result on Line 30.

IRS source

Sch C (Form 1040) Instructions; Pub 334 (Tax Guide for Small Business), Ch. 8 — Insurance; IRS.gov Business Expenses topic; IRC §162

Key rule

Premiums for insurance that is ordinary and necessary to protect your business are deductible. Includes liability, property, malpractice, and business continuation insurance. Health insurance premiums (self-employed) are excluded from this line — see category 8. https://www.irs.gov/publications/p334

IRS source

Sch C (Form 1040) Instructions; IRC §163; IRS.gov Business Expenses topic

Key rule

Business interest expense is deductible when loan proceeds are used for business purposes. Must allocate interest for mixed business/personal use. General business loan interest not secured by real property, or mortgage interest with no Form 1098, is entered on Line 16b — not 16a. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses

IRS source

Sch C (Form 1040) Instructions; IRS.gov Business Expenses topic; IRC §162

Key rule

Fees charged by attorneys, accountants, and other professionals for business-related services are deductible, including tax advice and tax return preparation fees related to the business, and expenses incurred resolving asserted tax deficiencies. Personal legal fees are not deductible. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses

IRS source

Sch C (Form 1040) Instructions; IRS.gov Business Expenses topic; IRC §162(f)

Key rule

License and regulatory fees required to practice your profession or operate your business are deductible on Line 23, alongside state/local business taxes, real and personal property taxes on business assets, and certain payroll-related taxes. Fines and penalties are not deductible (IRC §162(f)). Federal income taxes and self-employment tax are not deductible on this line. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses

IRS source

Sch C Instructions; IRS.gov Business Expenses topic

Key rule

Office supplies consumed in business operations in the current year are deductible. Items not used up within the year may need to be capitalized. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses

IRS source

Sch C (Form 1040) Instructions; IRS.gov Business Expenses topic; IRC §162

Key rule

Deduct utility expenses only for trade or business use. For a home landline: do not deduct the base rate (including taxes) of the first phone line into your residence, but you may deduct the business percentage of any additional line's full charges, or any business long-distance/toll charges on the first line. Phones (mobile or landline) used exclusively for business, or the business-use percentage of a mixed-use phone, are deductible on Line 25. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses

IRS source

Sch C Instructions; IRC §162

Key rule

Rent paid for property used in your business is deductible. Payments to related parties must be at arm's length. Rent paid for your home is not deductible here — use home office provisions instead. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses

IRS source

Sch C (Form 1040) Instructions; IRS.gov Business Expenses topic; Treas. Reg. §1.162-4

Key rule

Deductible cost of incidental repairs and maintenance that do not add to the property's value or appreciably prolong its life. Do not deduct the value of your own labor. Amounts spent to restore or replace property must be capitalized, not deducted here. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses

IRS source

Pub 560; Form 1040 Schedule 1 Instructions

Key rule

SEP IRA: up to 25% of net SE compensation (after deducting half of SE tax), maximum $72,000 for 2026 (confirmed IRS COLA notice; up from $70,000 in 2025). Deduction on Form 1040, not Schedule C. Deadline: filing deadline including extensions. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-sep-contribution-limits-and-work-years

IRS source

Sch C (Form 1040) Instructions — Part V Other Expenses (technology and software tools); IRS.gov Business Expenses topic; IRC §162

Key rule

Software and subscription costs used in business operations are deductible in the year paid (cash basis), per Sch C Instructions' explicit "Technology and software tools" guidance under Part V. Applies to SaaS tools, apps, and digital services with a clear business purpose. Tools that must be capitalized/depreciated or expensed under §179 (most standalone computer software purchases) are excluded — see Pub 946. Not a named Part II line — itemized in Part V and rolled into Line 27b. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses

IRS source

Sch C (Form 1040) Instructions; Pub 463; IRS Notice 2026-10

Key rule

Standard mileage rate for 2026: $0.725 per business mile (IRS Notice 2026-10; up from $0.70 in 2025). Must keep a contemporaneous mileage log. Commuting is not deductible. Cannot use standard mileage if you previously used MACRS depreciation on the vehicle. Complete Part IV of Schedule C unless Form 4562 is required.

IRS source

Sch C (Form 1040) Instructions; Pub 463

Key rule

Actual expenses include gas, oil, repairs, insurance, registration, depreciation (MACRS) — enter the total on Line 9, with depreciation shown on Line 13 and lease payments on Line 20a. Business-use percentage applied to all costs. More complex; generally cannot switch from actual to standard mileage in later years. Section 179 expensing and bonus depreciation may apply to business vehicles.

IRS source

Sch C (Form 1040) Instructions; Pub 587; IRS.gov Business Expenses topic

Key rule

Utilities for a separate business location are deducted in full on Line 25. For home-based businesses using the simplified method, utilities are included in the $5/sq ft rate — do not deduct separately on Line 25. For the actual-expenses home-office method, utilities allocable to the home office are part of the indirect expense calculation on Form 8829, not Line 25. https://www.irs.gov/publications/p587

IRS source

Sch C (Form 1040) Instructions — Part V Other Expenses; IRS.gov Business Expenses topic; IRC §162; IRC §274(b)

Key rule

Expenses are deductible if ordinary and necessary for your business, and not deducted elsewhere on Schedule C. Business gifts limited to $25 per recipient per year (IRC §274(b)). Professional dues, trade publications, and safety equipment generally qualify. Excludes business equipment/furniture, permanent improvements, personal/living/family expenses, charitable contributions, and fines/penalties. https://www.irs.gov/businesses/small-businesses-self-employed/business-expenses