What business expenses can a 1099 contractor deduct?

Every dollar of legitimate business expense is a dollar of income you’re not taxed on. For most freelancers that’s a 25–35% saving per dollar, once you factor in self-employment tax + federal income tax. The IRS standard is that an expense be both ordinary (common in your line of work) and necessary (helpful and appropriate for the work) — not lavish, not personal.

The deductions almost every freelancer can claim

Home office

If you have a space in your home used regularly and exclusively for work, you can deduct a portion of rent or mortgage interest, utilities, insurance and depreciation. The simplified method pays $5 per square foot, up to 300 sq ft ($1,500 max). The regular method is more paperwork but usually deducts more.

Health insurance premiums

Self-employed people can deduct 100% of health, dental and qualified long-term-care insurance premiums for themselves, a spouse and dependents — as long as you weren’t eligible for a subsidized plan through a spouse’s employer.

Retirement contributions

SEP-IRA, Solo 401(k) and SIMPLE IRA contributions all reduce taxable income. A Solo 401(k) is usually the most generous: in 2026 you can contribute up to $23,500 as “employee” plus 25% of net self-employment earnings as “employer” — combined limit $70,000.

Software and subscriptions

• Bookkeeping, invoicing and tax software
• Design, dev and productivity tools (Figma, Adobe, GitHub, Notion)
• Cloud storage, hosting and domains
• Industry-specific subscriptions (stock photos, sample libraries)

Equipment and computers

Laptops, monitors, cameras, tools — anything you use for the business. You can deduct the full cost in the year of purchase using Section 179 or special depreciation, rather than spreading it over years. If something has both work and personal use, you can only deduct the business-use percentage.

Phone and internet

Business-use portion only. If you use your phone 70% for work and 30% for personal, deduct 70% of the bill. Be honest — this is a classic audit-flag category.

Mileage or vehicle expenses

Drives to client meetings, supply runs, between job sites. In 2026 the standard mileage rate is $0.70 per mile for business use. The alternative is the actual-expense method (gas, insurance, depreciation × business-use %). Pick one in year one and stick with it.

Education and training

Courses, books, conferences and certifications that maintain or improve skills in your current line of work are deductible. Education that qualifies you for a new profession is not.

Marketing and advertising

• Website, hosting, domains
• Paid ads (Google, Meta, LinkedIn, X)
• Business cards, branded merch, photography
• Sponsorships and content partnerships

Professional services

Fees paid to lawyers, accountants, bookkeepers, consultants and contractors. If you pay any individual contractor $600 or more in a year, you owe them a 1099-NEC by January 31.

Travel

Overnight travel for business is deductible — flights, hotels, ground transport, 50% of meals. The trip must be primarily for business; tacking a vacation day onto a real client trip is fine, but a vacation with a single coffee meeting is not.

Bank fees, interest and merchant processing

Fees on business checking accounts, credit card interest on business cards, Stripe / Square / PayPal processing fees. Use a dedicated business account from day one — it’s the single best record-keeping move you can make.

Insurance

Business liability insurance, professional indemnity / errors & omissions, workers comp if you have employees. Personal car and home insurance are not deductible (unless tied to the business-use portion of vehicle or home office).

Things you can’t deduct

• Commuting from home to a regular place of business
• Personal clothing, even if you wear it to client meetings (unless it’s a uniform that can’t double as street clothes)
• Federal income tax payments
• Fines and penalties
• Political contributions
• The personal-use portion of any dual-use item

RevTrackr’s receipt scanner reads the vendor, amount, currency and date off any receipt photo and files the transaction under the right business automatically — which is the part most freelancers give up on by Q3 and then dread in April.