Self-Employed Tax Deductions
Self-employed individuals in 2025 can deduct a broad range of ordinary and necessary business expenses that reduce both income tax and self-employment tax liability. Common deductions include home office costs, business mileage, health insurance premiums, retirement plan contributions, professional fees, and the deductible portion of self-employment tax itself.
Because self-employed taxpayers pay both the employer and employee share of Social Security and Medicare taxes, the IRS allows a deduction equal to half of the self-employment tax paid, which is taken as an above-the-line adjustment to income. This deduction is calculated on Schedule SE and flows directly to Schedule 1 of Form 1040.
Accurate recordkeeping throughout the year is the foundation of maximizing self-employment deductions. Maintaining separate bank accounts and credit cards for business activity, saving receipts, and tracking mileage with a log or app makes it significantly easier to substantiate deductions and reduces exposure if the return is reviewed.