The Deduction Most People Miss Entirely

You may deduct half of your self-employment tax when working out your adjusted gross income. It is not itemised, you do not need to give anything up to claim it, and it applies whether you take the standard deduction or not. It exists for the same reason as the 92.35% adjustment: an employer would have paid half your FICA and deducted it as a business expense, so the self-employed are allowed the equivalent.

Home Office: Two Methods, One Hard Requirement

The room must be used regularly and exclusively for business. Exclusively is the word that disqualifies most claims — a desk in the corner of a bedroom that doubles as anything else does not qualify, and the IRS has litigated this repeatedly.

If it does qualify, you choose between:

• Simplified: $5 per square foot, up to 300 square feet — a maximum of $1,500. No receipts, no depreciation, no recapture when you sell the house.
• Actual expenses: the business-use percentage of rent or mortgage interest, utilities, insurance and repairs. Usually larger, and it requires records and depreciation tracking.

Read the complete 2026 home office deduction guide for the exclusive-use test, worked examples of both methods, and the depreciation-recapture trap.

You may switch methods year to year. For a genuinely dedicated room in an expensive home, actual expenses often wins by a wide margin; for a small corner, the simplified method is rarely worth beating.

What Is Not Deductible, However Much It Feels Like It Should Be

Your commute. Home to a regular workplace is personal, always. The exception is real and worth knowing: if your home is your principal place of business, trips from there to client sites become business miles.

Clothing you could wear anywhere. The test is not whether you bought it for work — it is whether it is suitable for ordinary wear. A branded uniform or steel-toed boots qualify. A good suit does not, no matter what you paid.

The whole of a business meal. Business meals are generally limited to 50%, and the meal has to have a business purpose and a person attached to it. Eating alone between jobs is not a deduction.

Anything without a record. A deduction you cannot evidence is a deduction you lose on audit, with interest.

Two Deductions Worth More Than Most Line Items

Self-employed health insurance. Premiums for you, your spouse and dependants can usually be deducted from income — not as an itemised medical expense, which is subject to a floor most people never clear. It is unavailable for any month you were eligible for an employer plan, including through a spouse.

Retirement contributions. A SEP-IRA or solo 401(k) lets the self-employed shelter far more than an ordinary IRA allows, and a solo 401(k) permits both an employee deferral and an employer contribution from the same business. This is usually the largest single lever available to a profitable sole trader, and it is the one most often left untouched.

What This Calculator Cannot See

It totals the deductions you enter. It does not test whether you qualify for them, does not apply income limits or phase-outs, does not model the qualified business income deduction, and does not know your state's rules, which frequently differ from the federal ones. Use it to size the opportunity, then have the position checked before you file.

Primary sources: IRS Publication 535, Business Expenses · IRS Publication 587, Business Use of Your Home · IRS Publication 463, Travel, Gift, and Car Expenses. Checked against these sources on 11 September 2026.