A practical checklist of common US small business tax deductions for 2026, with the records you need to claim them.
Quick answer: Common small business tax deductions include the home office, business mileage, equipment and software, office supplies, rent, utilities, insurance, advertising, professional fees, business travel, 50% of qualifying business meals, wages, retirement contributions and interest on business loans. For 2026, the IRS business mileage rate is 72.5 cents per mile from January to June and 76 cents from July 1. Every deduction must be ordinary, necessary and backed by records.
Deductions lower your taxable profit, so missing them means paying more tax than you need to. Many owners overlook small, regular costs that add up over a year.
Use this checklist as you prepare your 2026 records. It covers common US federal deductions for sole proprietors, LLCs and small corporations. Rules have limits and exceptions, so confirm your situation with a tax professional.
We have grouped the deductions into simple categories, so you can tick them off as you go through your bank statements, receipts and mileage records before filing.
In this article
- What makes an expense deductible?
- What is on the small business tax deductions checklist?
- What records should you keep?
- Where do you claim deductions?
- What mistakes should you avoid?
- What can you do before the year ends?
- Frequently asked questions
- Final thoughts
What makes an expense deductible?
The IRS says a business expense must be both ordinary, meaning common in your trade, and necessary, meaning helpful and appropriate for your business. Personal expenses are not deductible, and mixed expenses must be split between business and personal use.
What is on the small business tax deductions checklist?
Workspace and running costs
- Home office: For space used regularly and exclusively for business. The simplified method allows $5 per square foot, up to 300 square feet.
- Rent: For offices, shops or storage.
- Utilities: Electricity, internet and phone used for business.
- Office supplies: Paper, ink, postage and small items.
- Repairs and maintenance: Keeping business property in working order.
Vehicles and travel
- Business mileage: 72.5 cents per mile from January 1 to June 30, 2026, and 76 cents from July 1, 2026, according to the IRS and CPA Practice Advisor. Or claim actual vehicle expenses instead.
- Business travel: Flights, hotels and transport for trips away from your tax home.
- Business meals: Generally 50% deductible when there is a clear business purpose.
- Parking and tolls: For business trips.
Omar drives to client sites for his plumbing business and logged 4,000 business miles from January to June and 4,000 from July to December 2026. Using the standard rates, his mileage deduction is $2,900 for the first half (4,000 × $0.725) plus $3,040 for the second half (4,000 × $0.76), or $5,940 in total.
Equipment, software and assets
- Equipment: Computers, tools and machinery. Section 179 lets many businesses deduct qualifying purchases in the year bought, with a 2026 limit of about $2.56 million.
- Software and subscriptions: Accounting, design and cloud tools.
- Website costs: Hosting, domains and design.
People and services
- Wages and contractor payments: Pay for employees and independent contractors. See our guide to Form W-9.
- Professional fees: Accountants, lawyers and consultants. Read about hiring a business attorney.
- Retirement contributions: For you and your staff, through plans such as a SEP IRA or Solo 401(k).
- Health insurance: Self-employed people may deduct premiums, subject to rules.
Finance, marketing and other
- Business insurance: Liability, property and professional cover.
- Advertising and marketing: Ads, printing, sponsorships and promotions. See our marketing ideas.
- Loan interest: Interest on business loans and credit cards.
- Bank and card fees: Merchant fees and account charges.
What records should you keep?
- Receipts and invoices: For every expense you claim.
- Mileage log: Dates, destinations, purpose and miles for each trip.
- Bank and card statements: Ideally from separate business accounts.
- Home office measurements: Square footage of the workspace and the home.
- Asset records: Purchase dates and costs for equipment.
Use an app to photograph receipts and log mileage as you go. Rebuilding a year of records at tax time is stressful and often leads to missed deductions or numbers you cannot back up.
Where do you claim deductions?
| Business type | Where deductions are reported |
|---|---|
| Sole proprietor or single-member LLC | Schedule C with your Form 1040 |
| Partnership or multi-member LLC | Form 1065, with each owner’s share on a Schedule K-1 |
| S corporation | Form 1120-S, with owners’ shares on Schedule K-1 |
| C corporation | Form 1120 |
The type of deduction is usually the same across structures, but some items, such as owner health insurance and retirement plans, work differently depending on how your business is taxed. See our guide to S corp vs LLC.
What mistakes should you avoid?
- Claiming personal expenses: Family meals, personal phones and holidays do not count.
- Mixing accounts: Separate business and personal spending makes deductions easier to prove.
- Missing the exclusive-use rule: A home office used as a guest room does not qualify.
- Forgetting small costs: Bank fees, software and postage add up.
- Skipping professional advice: Big purchases and new rules can change the best approach.
A freelance designer claimed her whole internet bill, though her family also used it heavily. After talking to an accountant, she claimed only the business share, which kept her return accurate and easier to defend.
Download your business bank and card statements for this year and highlight every expense. Compare them with the checklist above and note any categories you have not been tracking.
What can you do before the year ends?
- Review your profit: Estimate this year’s profit so you can plan.
- Time large purchases: Equipment bought and placed in service before December 31 may be deductible this year.
- Fund retirement plans: Check the deadlines for your plan type.
- Pay outstanding bills: Cash-basis businesses deduct expenses when paid.
- Organise records: Reconcile accounts and collect missing receipts.
The IRS 2026 mileage announcement and its mid-year update are worth saving with your records, so your mileage claim uses the right rate for each period.
Frequently asked questions
What can small businesses deduct?
Ordinary and necessary costs such as rent, supplies, software, mileage, insurance, advertising, wages and professional fees.
What is the 2026 business mileage rate?
72.5 cents per mile from January to June 2026, and 76 cents from July 1, 2026.
Can I deduct my home office?
Yes, if the space is used regularly and exclusively for business. The simplified method is $5 per square foot, up to 300 square feet.
Are business meals deductible?
Generally 50%, when there is a clear business purpose and you keep records.
What is the Section 179 limit for 2026?
About $2.56 million, with a phase-out starting at about $4.09 million of qualifying purchases.
Do I need receipts for every deduction?
You need records that prove the expense and its business purpose, such as receipts, invoices and logs.
Can I deduct expenses from before my business started?
Some startup costs can be deducted, up to a limit in the first year, with the rest spread over time. Ask a tax professional how this applies to you.
Final Thoughts
- Deductions must be ordinary, necessary and backed by records.
- Track mileage at the right 2026 rate for each half of the year.
- Do not miss software, fees, insurance and small regular costs.
- Keep separate accounts and ask a tax professional for big decisions.