Every dollar of legitimate deduction reduces your taxable income. For a small business owner in the 22% or 24% federal bracket, a $5,000 deduction is worth $1,100 to $1,200 in actual tax savings. That’s real money — and it’s money that belongs to you if you’re entitled to the deduction.
Here are seven deductions that small business owners frequently overlook.
1. The Home Office Deduction
If you have a dedicated space in your home used regularly and exclusively for business, you may be able to deduct a portion of your mortgage interest or rent, utilities, and insurance. Many business owners avoid this deduction because they’ve heard it triggers audits — but when documented correctly, it’s a completely legitimate write-off.
2. Business Use of Your Vehicle
If you drive for business purposes — client visits, supply runs, meetings — you can deduct either the actual expenses (gas, maintenance, insurance) or the standard mileage rate (67 cents per mile in 2024). The key is keeping a mileage log. Most people don’t, and as a result they leave a significant deduction on the table every year.
3. Health Insurance Premiums
If you’re self-employed and pay for your own health insurance, you may be able to deduct 100% of the premiums for yourself and your family. This is an above-the-line deduction, meaning it reduces your adjusted gross income regardless of whether you itemize.
4. Retirement Contributions
Contributing to a SEP-IRA, Solo 401(k), or SIMPLE IRA reduces your taxable income now while building wealth for later. A SEP-IRA allows contributions of up to 25% of net self-employment income, up to $69,000 for 2024. This is one of the most powerful tax-reduction tools available to self-employed professionals.
5. Professional Development and Education
Courses, books, seminars, certifications, and coaching that maintain or improve skills related to your current business are deductible. If you paid for a course this year that made you better at what you do, it likely qualifies.
6. Software and Subscriptions
Project management tools, accounting software, design subscriptions, cloud storage, and other software you use for business are fully deductible. Many business owners pay for these without tracking them as business expenses.
7. The Qualified Business Income (QBI) Deduction
Eligible self-employed individuals and pass-through business owners may be able to deduct up to 20% of their qualified business income. This deduction has income limits and phase-outs depending on your profession, but for many small business owners it represents a significant reduction in taxable income. If you haven’t discussed this with a tax professional, it’s worth a conversation.
The list above covers the basics — but every business is different, and the deductions that matter most depend on your specific situation. If you’d like to make sure you’re not leaving money on the table, reach out to Sadler Accounting. We serve small business owners throughout the Fort Worth and Keller, TX area.