What Business Expenses Are Tax Deductible? A Complete Guide for 2025

Understanding what business expenses are tax deductible is essential for small business owners, freelancers, and entrepreneurs who want to reduce their taxable income and save money during tax season. With the right knowledge, you can legally deduct several common expenses and keep more of your hard-earned profits.

What Business Expenses Are Tax Deductible?

In simple terms, what business expenses are tax deductible refers to costs that are considered ordinary and necessary for running your business. The IRS allows deductions only if the expenses are directly related to business operations.

Let’s explore what business expenses are tax deductible in various categories.

1. Office Expenses

One of the most common answers to what business expenses are tax deductible includes office supplies like paper, pens, postage, and printing materials. You can also deduct office furniture and equipment, such as desks and computers, under Section 179.

2. Home Office Deduction

If you work from home, understanding what business expenses are tax deductible means knowing that a portion of your home expenses like rent, mortgage interest, utilities, and repairs may qualify. The space must be used exclusively and regularly for business.

3. Travel and Transportation

When considering what business expenses are tax deductible, travel-related costs like airfare, hotel stays, car rentals, and meals while traveling for business are allowed. Additionally, mileage for business driving (not commuting) is deductible at the standard IRS mileage rate.

4. Utilities and Internet

For businesses wondering what business expenses are tax deductible, utilities like electricity, water, phone bills, and internet service (if used for business) fall under this category. Even partial deductions apply if services are shared with personal use.

5. Marketing and Advertising

Marketing is essential, and it’s good news that this fits under what business expenses are tax deductible. Business cards, website hosting, paid ads, SEO services, and promotional materials can all be deducted.

6. Professional Services

Hiring accountants, lawyers, consultants, or IT experts? These service fees are clearly part of what business expenses are tax deductible because they support and maintain your business operations.

7. Employee Salaries and Benefits

Salaries, wages, commissions, bonuses, and even employee benefits like health insurance and retirement contributions are all part of what business expenses are tax deductible—as long as they are reasonable and necessary.

8. Insurance Premiums

Business insurance like liability, malpractice, workers’ compensation, and property insurance all count when analyzing what business expenses are tax deductible. Health insurance for the self-employed may also qualify.

9. Depreciation

Understanding what business expenses are tax deductible includes knowing that you can deduct the depreciation of business assets over time—like vehicles, machines, or buildings.

10. Education and Training

Workshops, seminars, courses, or books related to your trade are part of what business expenses are tax deductible. They must directly improve your skills for your current business.

Frequently Asked Questions

Q1: What business expenses are tax deductible for a small business owner?
A: Common deductions include rent, utilities, office supplies, advertising, employee wages, professional fees, and travel expenses.

Q2: What business expenses are tax deductible if I work from home?
A: You may deduct a portion of rent or mortgage, utilities, internet, and home office supplies—if the space is used exclusively for business.

Q3: What business expenses are tax deductible for a freelancer?
A: Freelancers can deduct software, client-related travel, internet, professional services, and even subscriptions directly related to their work.

Q4: What business expenses are tax deductible when using my personal vehicle?
A: You can deduct business-related mileage, gas, tolls, and parking if you track your usage and separate it from personal driving.

Q5: What business expenses are tax deductible under IRS rules?
A: Only expenses that are “ordinary and necessary” for your industry and directly related to your business operations are allowed.

Q6: What business expenses are tax deductible for startup costs?
A: You can deduct up to $5,000 in startup expenses like market research, legal fees, and advertising when beginning your business.

Q7: What business expenses are tax deductible that are often missed?
A: Bank fees, subscriptions, education, and even part of your phone bill often qualify but are overlooked.

Q8: What business expenses are tax deductible for online businesses?
A: Hosting fees, domain registration, ecommerce tools, virtual assistants, and digital marketing are all deductible.

Q9: What business expenses are tax deductible for LLCs or sole proprietors?
A: The structure doesn’t change much—rent, advertising, insurance, and operating costs still apply.

Q10: What business expenses are tax deductible annually?
A: Most ordinary and necessary expenses, like utilities, wages, and rent, are deducted in the year they’re paid.

Final Thoughts

Now that you know what business expenses are tax deductible, keep accurate records and save receipts. Using accounting software or hiring a tax professional can help ensure you don’t miss valuable deductions.

Maximizing your understanding of what business expenses are tax deductible can lead to big savings—and fewer surprises during tax season.