Tax Deductions List: 75 Items You May Be Able to Write Off | Entrepreneur (2024)

Benjamin Franklin said it best when he coined the phrase, "A penny saved is a penny earned."

Many business owners take years to understand that taxes are one of their biggest costs, and it really doesn't take a lot of effort to make sure you aren't missing something on your taxes.

Before setting forth my list of the top 75 deductions/strategies, allow me to make an important point: You are the captain of your own ship. You don't have to be an accountant to manage your accountant. Make sure you have a regular conversation with your tax preparer and discuss these items.

Your accountant should be suggesting these to you…and they should be trying to find ways to write-off expenses — not just telling you no and talking down to you. Use this list as a discussion point and make sure you have the right person helping you with your taxes.

What are tax deductions?

Tax deductions, a vital component of the income tax system, are amounts subtracted from your gross income, thereby lowering your taxable income. Essentially, they decrease the amount of income on which you're taxed, ultimately reducing your tax liability.

Different types of deductions exist, and understanding them can be crucial in lessening your tax bill and potentially increasing your tax refund.

Two types of tax deductions are itemized deductions and the standard deduction:

• The standard deduction is a fixed amount that reduces your taxable income, regardless of your expenses during the tax year. This amount varies depending on your filing status, such as single, married filing jointly or head of household.
• Itemized deductions, on the other hand, allow taxpayers to reduce their taxable income based on specific expenses incurred throughout the tax year. Taxpayers typically choose to itemize deductions if their total itemized deductions are greater than the standard deduction.

What are the different types of taxpayers?

The U.S. tax system recognizes several types of taxpayers, each with its unique circ*mstances and potential tax benefits. Understanding these categories is essential to properly manage tax liability and take advantage of available tax breaks.

Individuals

These are the most common taxpayers, often earning income from wages, salaries and tips. They may also have investment income, such as interest, dividends and capital gains. This group may even include winnings from gambling, which are considered taxable income and any gambling losses can be itemized as deductions to offset those winnings.

Individual taxpayers can use standard or itemized deductions and may be eligible for tax credits like the Earned Income Tax Credit or the Lifetime Learning Credit. These deductions and credits can considerably reduce their federal income tax liability.

Self-Employed

Self-employed taxpayers run their businesses. They could be freelancers, contractors or small business owners. In addition to standard or itemized deductions, they have access to business deductions that lower their taxable income.

These include business travel expenses, home office deduction and equipment costs. They also pay self-employment tax, which covers Social Security and Medicare taxes, but half of this amount is deductible. Furthermore, if they pay for their own health insurance premiums, these costs can also be deducted.

Homeowners

Homeowners may be eligible for deductions that can significantly lower their taxable income. These include deductions for mortgage interest and real estate taxes.

Homeowners in states with high sales tax rates might find it more beneficial to deduct their sales taxes instead of state income tax. They may also be eligible for expense deductions for certain energy-efficient home improvements.

Retirees

Individuals who are retired have unique tax considerations. Depending on their income level, a portion of Social Security benefits may be taxable.

Retirees can also deduct medical expenses exceeding a certain percentage of their adjusted gross income, which could include health insurance premiums. Additionally, they may be eligible for tax credits that assist with dependent care expenses.

Students

Students, or their parents, can be eligible for several education-related tax benefits. These may include the American Opportunity Credit or the Lifetime Learning Credit, which can significantly reduce federal income tax liability.

Student loan interest can also be tax-deductible, effectively lowering the overall expense of education.

75 possible tax deductions (plus two bonus deductions)

Consider this list of 75 possible tax deductions for business owners. It's just a start and not every one of these items is always a viable deduction, but certainly worth a discussion.

1. Accounting fees: Expenses for services provided by a tax professional, such as a Certified Public Accountant (CPA) or tax software, can be deducted. This includes preparation of business tax forms, financial auditing and business advice.
2. Advertising: Any costs for advertising your business and its services/products are tax-deductible. This includes traditional marketing channels and digital advertising, like social media promotions and maintaining your business website.
3. Amortization
4. Auto Expenses – Article and Video: If a vehicle is used for business purposes, you can deduct related expenses. This could be either actual car expenses, including gasoline, car maintenance and depreciation or the standard mileage rate set by the IRS.
5. Banking fees: These could include fees for maintaining your business banking accounts, ATM fees and credit card fees.
6. Board Meetings – Article and Video: The cost of board meetings can be written off as a business expense. This includes any travel expenses related to attending board meetings and, in some cases, meals provided during meetings.
7. Building repairs and maintenance
8. Business Travel – Article and Video
9. Business association membership dues
10. Charitable deductions made for a business purpose: If your business makes charitable contributions to nonprofit organizations, these are generally deductible. However, there are specific rules and limits for deducting charitable donations, such as a ceiling based on your business's net income.
11. Children on Payroll – Article and Video
12. Cleaning/janitorial services
13. Cameras
14. Collection Expenses
15. Commissions to affiliates
16. Computers and tech supplies
17. Consulting fees
18. Continuing education for yourself to maintain licensing and improve skills: As a business owner, you can deduct education expenses to maintain or improve skills necessary for your business. Similarly, if you pay for your employees' training and education related to their job, these costs are deductible.
19. Conventions and trade shows
20. Costs of goods sold
21. Credit card convenience fees
22. Depreciation: If your business purchases property like buildings, equipment or vehicles, you can't deduct the cost in the year you bought them, but you can depreciate them over their useful life.
23. Dining and Office food – Article and Video
24. Drones
25. Education and training for employees
26. Equipment
27. Exhibits for publicity
28. Franchise fees
29. Freight or shipping costs
30. Furniture or fixtures
31. Gifts for customers ($25 deduction limit for each)
32. Group insurance (if qualifying)
33. Health insurance – Video: If you're self-employed and pay for your own health insurance, you may be able to deduct your insurance premiums. This also extends to your family members' premiums. Additionally, if you offer health insurance to your employees, these costs are deductible.
34. Equipment repairs
35. Health Reimbursem*nt Arrangement – Article and Video
36. Health Savings Account – Article and Video
37. Home office – Article and Video: If you use part of your home exclusively for your business, you may qualify for a home office deduction. This includes a portion of your rent or mortgage, utilities and home insurance.
38. Interest
39. Internet hosting and services
40. Investment advice and fees
41. Legal fees: In the normal course of doing business, you may incur legal fees. These costs are usually deductible, but specific cases like acquiring business assets or defending business claims require special treatment under the tax law.
42. Leased Vehicle or equipment: If you lease a vehicle, equipment or even software for your business use, you can typically deduct the lease payments. If your lease includes an option to purchase, certain tax rules might apply.
43. License fees: Any costs for business licenses, permits or regulatory fees are tax-deductible.
44. Losses due to theft: Theft losses from income-producing property are tax-deductible. However, there are specific IRS rules around the timing and amount of the deduction, so make sure to consult a tax professional or tax law guide.
45. Materials: The cost of raw materials and supplies necessary for running your business are tax-deductible. This includes things like office supplies and inventory.
46. Maintenance and janitorial: Expenses related to maintaining and cleaning your business premises are deductible. This can include both in-house staff costs and external janitorial services.
47. Mortgage interest on business property: If your business owns real estate and carries a mortgage, the mortgage interest is a deductible business expense.
48. Moving: If you relocate your business, the moving costs are typically deductible. This could range from moving equipment and furniture to costs associated with establishing your new business location.
49. Newspapers and magazines: Subscriptions to trade or professional publications that keep you informed about your industry are deductible.
50. Office supplies and expenses
51. Outside services
52. Payroll taxes for employees, including Social Security, Medicare taxes and unemployment taxes: If you have employees, you're required to withhold certain taxes from their wages and pay them to the government. These taxes, including Social Security, Medicare taxes and unemployment taxes, are deductible business expenses.
53. Parking and tolls: Any parking fees and tolls related to business travel can be deducted. If these expenses are lumped in with general auto expenses, they should be separated and documented.
54. Pass-Through 199A Deduction: This is a tax break for small business owners, allowing them to deduct up to 20% of their business income. It applies to "pass-through" entities like S corporations, LLCs, partnerships and sole proprietorships.
55. Pension plans: Contributions your business makes to employees' pension plans are usually deductible. Remember that retirement plans, such as a 401(k) or a Simplified Employee Pension (SEP) IRA, are also included in this category.
56. Postage: Basic as it may seem, postage is often an overlooked deduction. Any costs related to mailing items for your business are deductible.
57. Prizes for contests
58. Real estate-related expenses: In addition to mortgage interest, other real estate-related expenses, such as property taxes, are also deductible. However, local taxes, like those on personal property, should be separated.
59. Rebates on sales
60. Rent: Rent on business properties is fully deductible. If your business is home-based, a portion of your home's rent may be deductible as a home office expense.
61. Research and development: Businesses often overlook the R&D tax credit, assuming it's only for large companies or certain industries. However, many small businesses developing new products or software may qualify for this credit.
62. Rental Property – Article and Video
63. Retirement plans – Article and Video: Contributions to retirement accounts, such as a Simplified Employee Pension (SEP) IRA or a 401(k) plan for you and your employees, are typically deductible.
64. Royalties: If your business pays royalties for things like franchising rights or intellectual property, these payments are typically deductible.
65. Safe-deposit box
66. Safe
67. Spouse on Payroll – Article
68. Social media advertising: As digital marketing grows, the costs associated with social media advertising have become a significant business expense and are fully deductible.
69. Software and online services
70. Storage rental
71. Subcontractors
72. Taxes (Personal and Real Property)
73. Telephone
74. Utilities
75. Video equipment for business YouTube channel
76. Website design: The costs involved in designing and maintaining your business website are tax-deductible. These can include web hosting fees, design costs and the purchase of a domain name.
77. Workers' compensation insuranc

Surprisingly, there isn't some master list included in the Internal Revenue Code or provided by the Internal Revenue Service. There is simply the tax principle, set forth in Code Section 62, which states a valid write-off is any expense incurred in the production of income. Each deduction then has its own rules.

A good CPA should be teaching their clients to think above the line -- that is, your Adjusted Gross Income (AGI) line. Your AGI is the number in the bottom right-hand corner on the front page of your tax return. Any tax return. And what I mean by thinking above this line is constantly trying to think of any and all personal expenses that may have a business purpose. With a small-business venture in your life and on your tax return, you may be able to convert some personal expenses to business expenses, as long as you have the proper business purpose for that expense.

Seasoned business owners become proficient over the years at keeping good records and realizing when expenses have a legitimate business purpose. For some, this thought process becomes so ingrained that it becomes almost impossible to buy something without first considering a tax purpose for that item or service.

In sum, try to track every single expense related to your business and comb over them with your CPA at the end of the year to ensure you only take legitimate deductions. Good record keeping and thoughtful consideration will minimize your risk of an audit if the IRS ever comes knocking.