Small Business Tax Deductions: 23 Expenses You Can Write Off in 2026

Trying to navigate the various tax deductions for small businesses can get confusing, and to protect your business and avoid fines, it’s important to work within the IRS parameters. To do this, proper tax return preparation and business accounting and bookkeeping are essential. To get started, consider some of the biggest small business tax deductions you can write off in 2026.

Quick Overview: Small Business Tax Deductions for 2026

• Small business tax deductions can reduce taxable business income, potentially lowering the amount a business owes.
• Qualifying expenses generally must be ordinary, necessary, and directly connected to operating the business.
• Common write-offs include commercial rent, utilities, payroll, marketing, software, insurance, professional fees, travel, and business meals.
• Mixed-use expenses, such as vehicles, phone service, internet, and home office costs, are generally deductible only for the portion used for business.
• Maintaining accurate records and working with a tax professional can help owners claim eligible deductions while following IRS requirements.

What Are Small Business Tax Deductions?

Small business tax deductions are eligible expenses that business owners can subtract from their taxable income. By reducing the amount of income subject to tax, these deductions may lower the business’s overall tax liability.

Generally, the IRS requires a deductible expense for small business owners to be both ordinary and necessary. An ordinary expense is common and accepted within the business’s industry, while a necessary expense is helpful and appropriate for operating the business. It doesn’t have to be essential to qualify. Depending on the applicable tax rules, an expense may be fully deductible, partially deductible, or deducted over several years through depreciation. 

Who Can Claim Small Business Tax Deductions?

Small business tax deductions may be available to sole proprietors, freelancers, independent contractors, partnerships, LLCs, S corporations, and C corporations, as long as the write-offs are for business purposes that qualify under IRS requirements. However, how deductions are claimed depends on the business structure, so it’s important to work with a qualified tax professional to better understand your circumstances.

23 Small Business Expenses to Write Off in 2026

While there are several deductible business expenses that you can use within a tax year, something isn’t automatically deductible just because you paid for it from a business account. Instead, it’s important to separate costs for personal and business use to avoid triggering IRS audits or more serious complications. Luckily, there are still a lot of things that qualify during tax season. The following are some common small business tax deductions that many business owners miss.

1. Commercial Rent

Rent paid for an office, storefront, warehouse, studio, or other commercial property is generally deductible when the space is used for business. Related rental costs, such as equipment or vehicle lease payments, may also qualify. However, you generally can’t deduct rent if you own the business property or have equity in it. Payments made under a lease-to-own arrangement may also need to be treated as a purchase rather than a rental expense.

2. Utilities

Businesses can generally deduct utility expenses associated with operating a commercial location, including:

• Electricity
• Water and sewer services
• Heating and natural gas
• Trash collection
• Security services

Utilities for a home-based business are handled differently. In that case, only the portion attributable to the qualifying home office may be deductible.

3. Home Office Expenses

With that being said, you may qualify for the home office deduction if you use part of your home regularly and exclusively for business. The space generally must also serve as your principal place of business, although separate structures and certain spaces used for storage or daycare may follow different rules. Two common calculation methods are available:

• Simplified method: Deduct a prescribed amount per square foot of qualifying office space, up to 300 square feet.
• Actual-expense method: Deduct the business-use percentage of eligible costs such as rent, mortgage interest, utilities, insurance, repairs, and depreciation.

Employees generally can’t claim the federal home office deduction for remote work expenses. It’s primarily available to qualifying self-employed individuals and business owners if you run your business out of your home.

4. Advertising, Marketing, and Promotion

Reasonable expenses used to advertise or promote a business are generally deductible, which can help for those planning to start a business or if you’re trying to grow your business. These may include:

• Digital and print advertisements
• Website design and hosting
• Social media marketing
• Email marketing platforms
• Business cards and brochures
• Promotional materials
• Search engine optimization services
• Sponsorships that directly promote the business

5. Office Supplies

Consumable items used during normal business operations can generally be deducted in the year they’re purchased. Examples include paper, pens, printer ink, folders, shipping materials, cleaning products, and postage. Larger purchases expected to remain useful for more than one year may need to be classified as equipment or business assets instead of supplies.

6. Business Equipment

Computers, printers, machinery, furniture, tools, and similar equipment may also qualify for a deduction. However, the cost may need to be recovered over the asset’s useful life through depreciation rather than deducted all at once. Depending on the asset and current tax rules, a business may be able to accelerate the deduction through Section 179 or bonus depreciation. Since eligibility, annual limits, business-income restrictions, and phaseouts can apply, major equipment purchases should be reviewed carefully before filing.

7. Software and Online Services

Software used to operate or manage a business is generally deductible, and monthly or annual subscriptions are typically treated as operating expenses. Common examples include:

• Accounting and bookkeeping software
• Customer relationship management platforms
• Project management tools
• Cloud storage
• Cybersecurity services
• Design and editing programs
• Scheduling and communication tools
• E-commerce platforms

8. Business Phone and Internet Costs

Phone and internet services are tax-deductible to the extent they’re used for business. A dedicated business phone or internet connection may be fully deductible, while a mixed-use service must be divided between business and personal use.

9. Employee Wages

Businesses can generally deduct reasonable wages, salaries, commissions, and bonuses paid to employees to help with tax savings throughout the year. Compensation must be for services actually performed and shouldn’t be excessive in relation to the employee’s responsibilities; otherwise, it can trigger issues at tax time.

10. Employee Benefits

The cost of providing qualifying employee benefits may also be deductible. Depending on the benefit and how the plan is structured, deductible costs may include:

• Employer-sponsored health coverage
• Group-term life insurance
• Retirement plan contributions
• Education assistance
• Dependent care assistance
• Paid leave
• Employee achievement awards

11. Independent Contractor Payments

Payments made to freelancers, consultants, and other independent contractors are generally deductible when their services are related to the business. Examples include payments to copywriters, graphic designers, virtual assistants, photographers, developers, and repair professionals. Businesses should collect Form W-9 from contractors and determine whether they must issue Form 1099-NEC. 

12. Payroll Taxes

Employers can generally deduct the taxes they pay on employee wages. These may include:

• The employer portion of Social Security and Medicare taxes
• Federal unemployment taxes
• State unemployment taxes
• Certain state and local payroll taxes

However, federal income tax and the employee portion of payroll taxes withheld from wages aren’t additional business expenses because those amounts are paid on the employee’s behalf.

13. Business Insurance

Premiums for ordinary and necessary business insurance policies may be deductible. Qualifying coverage can include:

• General liability insurance
• Professional liability insurance
• Commercial property insurance
• Workers’ compensation insurance
• Cyber liability insurance
• Business interruption insurance
• Commercial auto insurance
• Product liability insurance

14. Professional Service Fees

Fees paid to professionals for legitimate business services are usually deductible. This may include work performed by:

• Accountants and bookkeepers
• Attorneys
• Tax professionals
• Business consultants
• IT specialists
• Marketing consultants

15. Bank and Payment Processing Fees

Fees associated with a business bank account or accepting customer payments are generally deductible. This includes things like wire transfer fees, credit card processing charges, fees required from online payment platforms, and more. However, it’s important that new business owners separate personal from business on their tax bill to avoid issues.

16. Business Loan and Credit Card Interest

Interest paid on a business loan, line of credit, or credit card may be deductible when the borrowed money is used for business. The use of the funds, not simply the name on the account, helps determine whether the interest qualifies. If a loan is used for both personal and business purposes, the interest must generally be allocated accordingly.

17. Business Vehicle Expenses

When a vehicle is used for business, the owner may generally choose between two deduction methods:

• Standard mileage method: Multiply qualifying business miles by the applicable IRS mileage rate. Currently in 2026, the rate is 76 cents per business mile driven.
• Actual-expense method: Deduct the business-use percentage of expenses such as gas, insurance, repairs, registration, lease payments, and depreciation.

18. Business Travel

Travel expenses may be deductible when a business owner or employee travels away from their tax home for a legitimate business purpose. However, personal sightseeing, entertainment, and expenses for family members usually aren’t deductible. When a trip combines business and personal activities, the costs must be allocated based on the circumstances and the trip’s primary purpose.

19. Business Meals

Business meals are generally 50% deductible when the expense is ordinary, necessary, and connected to conducting business. The taxpayer or an employee must generally be present, and the meal can’t be lavish or extravagant under the circumstances. Make sure you include the details, date, location, attendees, and purpose if claiming these as itemized deductions to ensure you’re upholding the proper tax laws.

20. Repairs, Maintenance, and Depreciation

Routine repairs and maintenance that keep business property in normal operating condition are generally deductible. Additionally, costs that improve a property, restore it substantially, or adapt it to a new use may need to be capitalized and depreciated, which spreads the cost of an eligible long-term asset across its expected recovery period. If you need tax advice or tax preparation and aren’t sure how to handle depreciation as a tax write-off, working with a professional CPA can help.

21. Education and Professional Development

Education expenses may be deductible when they maintain or improve skills needed in the owner’s or employee’s trade or business. Eligible expenses could include tuition, workshops, webinars, professional certifications, books, and required course materials.

However, education generally isn’t deductible as a business expense when it:

• Is required to meet the minimum qualifications for a new trade or profession
• Prepares the taxpayer to enter a different line of work
• Has no clear connection to the existing business

22. Professional Memberships and Subscriptions

Many small business owners are involved in professional organizations or chambers of commerce to help with growth and networking. If you use them in ways related to your business, the dues or subscriptions can often be used to help with tax breaks, but they need to have a clear professional or business connection. 

22. Licenses, Permits, and Certain Business Taxes

Fees required to operate a business may be deductible, such as occupational licenses, health permits, building permits, annual registration fees, and industry-specific certifications. Businesses may also be able to deduct certain state and local taxes, including:

• State income or franchise taxes
• Employer payroll taxes
• Personal property taxes on business assets
• Real estate taxes on business property
• Sales taxes paid on deductible purchases

23. Startup and Organizational Costs

Startup costs are expenses incurred while investigating or preparing to open a business. They may include market research, pre-opening advertising, employee training, travel to suppliers, and professional fees used exclusively for business. 

How to Maximize Small Business Tax Deductions in 2026

Although the above can be used as a small business tax deduction checklist, there are several different ways to maximize your tax return while staying within legal tax codes. To help ensure that more of your business income is staying in your pocket, partner with the professionals at Del Real Tax today. Book your free tax discovery or contact us to learn more today.