Small Business Tax Deductions Checklist [2026]

1. 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 = $1,500 max) using the simplified method, or your actual expenses (mortgage interest, utilities, insurance, repairs) using the regular method. The simplified method is easier; the regular method often yields a larger deduction.

Key requirement: The space must be your principal place of business and used only for business — no dual-use spaces. Home office deduction does not apply to W-2 employees who work remotely.

2. Vehicle & Mileage

For 2026, the business standard mileage rate is $0.725/mile through June 30 and $0.76/mile from July 1. Alternatively, eligible taxpayers can use the actual-expense method. Keep dated mileage records and verify method-selection rules.

Two methods: Standard mileage using the applicable 2026 half-year rate vs. actual expenses allocated by business use. First-year choices can restrict later methods; see IRS Publication 463.

3. Equipment & Software (Section 179)

Section 179 can let you deduct qualifying equipment and off-the-shelf software in the year placed in service. For tax years beginning in 2026, the maximum is $2,560,000, reduced dollar-for-dollar when qualifying property costs placed in service exceed $4,090,000. The deduction also cannot exceed taxable income from actively conducted trades or businesses under IRS rules; disallowed amounts can carry forward. Property generally must be acquired by purchase and used more than 50% for business. Potentially qualifying purchases include:

• Computers, laptops, monitors, and printers
• Office furniture (desks, chairs, shelving)
• Eligible off-the-shelf computer software (SaaS subscriptions are generally a separate operating expense, not an equipment purchase)
• Manufacturing equipment and machinery
• Vehicles used for business (subject to limits)

Certain qualified property acquired and placed in service after January 19, 2025 may qualify for 100% bonus depreciation. Exceptions and elections apply; property acquired before January 20, 2025 follows separate phaseout rules. A full write-off is not available for every asset and does not guarantee a refund.

Source: IRS Publication 946 (What’s New for 2026; chapters 2 and 3), checked October 9, 2026. See the Section 179, bonus depreciation, and MACRS comparison for the limits and timing differences.

4. Business Meals

Business meals with clients, prospects, or employees are 50% deductible. The meal must be directly related to business activity, and you (or an employee) must be present. Documentation must include: amount, date, location, business purpose, and who was present.

Note:Meals provided to employees for the employer's convenience (e.g., on-site cafeteria) are 100% deductible through 2025 but may revert to 50% in 2026. Check current tax law.

5. Travel & Transportation

Business travel expenses are fully deductible: airfare, hotels, rental cars, Uber/Lyft at your destination, 50% of meals while traveling, conference fees, and dry cleaning. The trip must be primarily for business — personal days must be separated.

Key rule: If the trip is primarily personal, only direct business expenses are deductible. If primarily business and you extend for personal days, transportation is fully deductible (lodging/meals only for business days).

6. Health Insurance Premiums

Self-employed individuals can deduct 100% of health, dental, and long-term care insurance premiums for themselves, their spouse, and dependents. This is an "above-the-line" deduction (reduces AGI, no itemizing needed). Medicare premiums (Parts B and D) are also deductible.

7. Retirement Contributions

Contributions to SEP IRA, Solo 401(k), or SIMPLE IRA are deductible. For 2026:

• SEP IRA: Up to 25% of net earnings, max ~$69,000
• Solo 401(k): Employee contribution (~$23,000) + employer profit share (up to 25%) = total ~$69,000
• SIMPLE IRA: ~$16,500 employee deferral + 3% employer match

Retirement contributions reduce both income tax AND self-employment tax — a double benefit.

8. Professional Services

Fees paid to accountants, lawyers, consultants, bookkeepers, and business coaches are fully deductible. This includes tax preparation fees for your business (but not personal tax prep for W-2 employees).

9. Advertising & Marketing

All advertising and marketing costs are deductible: Google/Facebook ads, website hosting, SEO tools, content creation, business cards, signage, promotional materials, and client entertainment (subject to 50% meal rules).

10. QBI Deduction (20% Pass-Through Deduction)

The Qualified Business Income deduction allows eligible pass-through business owners (sole props, LLCs, S-Corps, partnerships) to deduct up to 20% of their qualified business income. For 2026, the phaseout threshold is approximately $382,500 (married filing jointly) / $191,250 (single). Above these thresholds, specified service businesses (health, law, consulting, financial services) begin to phase out.