25 Tax Deductions for Small Businesses in 2026

When you’re filing taxes for your small business, it’s common to start wondering about what deductions you can make to reduce your taxable income. What expenses are deductible and what isn’t? You want to optimize your tax situation as much as possible, but you aren’t sure where to start—and finding the right Tax Prep Services Services For Small Business can help you stay on track.

We’ve compiled this list of 25 common small business tax deductions you should know to get you started. Stick around to see the full list and get some tips for success along the way. 

What Are Small Business Tax Deductions?

A small business tax deduction is a write-off allowed by the IRS that lowers your taxable income. The IRS states that acceptable tax deductions must be necessary and ordinary business expenses, based on your type of business. They often fall under categories like home office expenses, advertising, travel, or rent and utilities. 

While it’s common to start thinking about potential tax benefits when you’re nearing tax season, it’s also something that can help with everyday business decisions throughout the year. 

For instance, your company may be considering investing in a marketing campaign, but debating whether it’s worth the cost. If your team finds that part or all of those advertising expenses are tax-deductible, it might make it feel more financially manageable. 

Working with a tax professional year-round can help you optimize your tax situation as much as possible, make strategic business decisions, and understand which tax deductions may apply to your situation. 

Why 2026 Small Business Tax Deductions Matter More Than Ever

Small business tax deductions matter more than ever because recent legislation has made certain deductions permanent and more generous. It’s important to deduct any expenses that are appropriate based on your business situation since it lowers your taxable income and, in turn, your overall tax bill. That way, you can use any money you save to have better cash flow when reinvesting in your business. 

The One Big Beautiful Bill Act (OBBBA) that was recently passed prevented the expiration of many tax cuts that were set to end in 2025 and expanded the Section 179 deduction so businesses could deduct the full cost of software and equipment purchases in the year they enter operations. 

That extra tax relief is also important with material and product costs rising in many industries and businesses looking to manage their expenses as much as possible. To learn more about the Pros and Cons of hiring a tax professional for your small business, read our blog.

25 Tax Deductions Every Small Business Owner Should Know

Not every tax deduction will apply to your situation. That said, here are 25 common ones that every business owner should know when it comes to determining what ordinary and necessary expenses you may be able to claim: 

1. Home office deduction: Lets you claim expenses like rent, utilities, and mortgage interest if you have a dedicated office space at home that you use for a significant amount of work. 
2. Office supplies: Any supplies you use for work, like shipping materials, printer ink, or software subscriptions, are deductible. 
3. Office furniture: Desks, chairs, filing cabinets, and other office furniture may qualify for depreciation or even immediate expensing in some cases. 
4. Business property and equipment: Computers, machines, or other business property may qualify for deductions or depreciation depending on the type of asset. 
5. Marketing expenses: Costs to advertise your business may be deductible, such as website costs, ads, or content creation expenses. 
6. Legal and professional fees: Professional service fees for accountants, attorneys, consultants, etc., are often deductible as ordinary business expenses. 
7. Independent contractors: Any payments you make to independent contractors are deductible as long as they’re tied to your business operations. 
8. Employee wages and payroll taxes: Employee wages and employer-paid payroll taxes (like Social Security and Medicare portions) are deductible.
9. Business insurance premiums: Coverage such as general liability, workers’ comp, or commercial property insurance is deductible. 
10. Health insurance premiums: Those who are self-employed can deduct health insurance premiums paid for themselves, spouses, and dependents (with some limitations). 
11. Retirement plans: Contributions you make to a retirement plan, such as a solo 401(k), may be tax-deductible. 
12. Qualified business income (QBI) deduction: Many small businesses may qualify for the qualified business income deduction (also known as the business income QBI deduction).
13. Business loans and interest: Interest paid on business loans, credit lines, and certain business credit cards is often deductible. 
14. Mortgage interest: If you own property that you use for business, you may be able to deduct part of the mortgage interest tied to the space. 
15. Lease payments: Rent and lease payments on business vehicles, equipment, and machinery are often deductible. 
16. Property taxes: You can often deduct the amount paid for property taxes on any business-related property you own. 
17. Business travel expenses: Flights, hotels, and transportation costs that are ordinary and necessary for business-related travel may be deductible. 
18. Business meals: Part of the costs for meals during meetings with clients or team members may be deductible if they’re for legitimate business reasons. 
19. Education expenses: Courses, certifications, conferences, and training that improve business skills may qualify for deductions. 
20. Software subscriptions and hosting fees: Any software you use for your business or hosting fees for your website may be deductible. 
21. Business property repairs and maintenance: Repairs that keep assets in working condition may be deductible. 
22. Registration fees and licenses: Business licenses and registration fees required to legally operate your company are typically deductible.
23. Startup and organizational costs: If you recently formed your business, some startup costs and organizational expenses (like filing fees, research, market analysis, etc.) may be deductible in the first year. 
24. Business utilities and internet: Electricity, gas, water, phone lines, and dedicated business internet service count as business utilities and are deductible when they’re used for your operations.
25. Bad debt: If you previously reported income but later couldn’t collect it, certain bad debts tied to customers or clients may be deductible when they become worthless.

How Do Self-Employed Individuals Claim Tax Deductions?

If you’re self-employed, you would typically use Schedule C (Form 1040) to report business expenses and calculate your net profit. The resulting net profit (gross income minus expenses) is what you would pay income tax and self-employment tax on. 

Common Tax Deduction Mistakes Business Owners Make

Some of the most common tax deduction mistakes business owners make are: 

• Inaccurate or incomplete record-keeping that results in missing potential deductions or claiming too many deductions. 
• Making record-keeping errors due to mixing business and personal expenses.
• Ignoring small recurring expenses like software subscriptions. 
• Not keeping mileage logs or proof for vehicle deductions. 
• Missing depreciation on equipment purchases. 

If you aren’t sure where to start when calculating deductions, have a complex business situation, or just want to handle the process more efficiently, working with a professional tax preparer can make things easier. We offer services that can help at Milestone. 

How Milestone Helps With Strategic Tax Planning For Small Businesses

Managing taxes for your small business is crucial to ensure you hit deadlines, report accurately, and deduct the appropriate expenses where you can. We offer remote tax preparation services at Milestone that make the process much easier. 

Whether you want to accurately file your year-end tax return or strategically plan throughout the year to optimize your tax situation, we can help with all your needs to ensure you’re making educated business and tax decisions. 

Additionally, we offer several other services that can help small businesses, including bookkeeping, accounting, human resources, and fractional CFO services. 

Want to learn more? Get in touch with Milestone today to learn how we can help you manage small business taxes effectively.