Can I write off my car?

Yes — the business-use portion. If you use your car 60% for business, you can deduct 60% of actual vehicle expenses (gas, insurance, repairs, depreciation) or take the IRS standard mileage rate (72.5 cents/mile in 2026). You must track business vs. personal miles to substantiate the deduction. Commuting miles (home to office) don't count.

Can I write off business meals?

50% of qualifying business meals are deductible — meals where business is discussed with a client, employee, or business contact, with a clear business purpose. The Tax Cuts and Jobs Act eliminated the entertainment deduction (tickets, golf), but kept the 50% meal deduction. Keep records: who attended, what was discussed, and the business purpose.

Can I write off clothes for work?

Only specialized clothing not suitable for everyday wear: a nurse's scrubs, a construction worker's safety gear, a performer's costume. Regular business clothing — suits, dress shirts, shoes — even if you wear them exclusively for work, is generally not deductible because it can be worn outside of work. The IRS has consistently disallowed it.

What about home office, phone, and internet?

All three can be deductible, but require allocation. Home office: you must have a space used regularly and exclusively for business (see our home office deduction guide). Phone: if used for both personal and business, only the business-use percentage is deductible. Internet: same allocation rule, or fully deductible if it's a dedicated business line.

I paid for something from my personal account by mistake. Is it still deductible?

Yes — which account you used doesn't determine deductibility. What matters is whether the expense was an ordinary and necessary business expense. Keep the receipt, reimburse yourself from the business account, and record it as a business expense. Mixing personal and business accounts is a bookkeeping problem, not a tax disqualifier.

What's the difference between a deduction and a credit?

A deduction reduces taxable income; a credit directly reduces the tax you owe. A $1,000 deduction saves you $220 in tax if you're in the 22% bracket. A $1,000 tax credit saves you exactly $1,000 in tax. Credits are more powerful dollar-for-dollar, but there are far fewer of them and most have strict eligibility rules.

Tax deductions

What Counts as a Business Write-Off?

The ordinary-and-necessary standard explained, common deductible expenses by category, the write-offs most business owners miss, and why personal charges don't become deductions just because they clear the business account.

Written by Matt Reese, CPA · 5 min read · Published April 2026·Share on LinkedIn

Key Takeaways

The IRS standard: ordinary (common in your industry) and necessary (helpful for your business). Both must be true.
A write-off reduces taxable income — it doesn't mean the government pays for the item. A $1,000 deduction saves $200–$400 in tax, not $1,000.
Personal expenses run through the business account are not deductible and are a common audit trigger.
Mixed-use expenses (phone, vehicle, home office) must be allocated — only the business portion is deductible.

What makes something deductible

The IRS applies a two-part test: a business expense must be ordinary (common and accepted in your trade or business) and necessary (helpful and appropriate, though not strictly required). Both must be true.

A personal trainer buying resistance bands: ordinary and necessary. A personal trainer buying a second home as a vacation property and calling it a “client retreat”: neither ordinary nor necessary without much stronger documentation.

A write-off reduces taxable income. At a 30% effective rate, a $1,000 deduction saves $300 — not $1,000.

Common deductible expenses by category

Category	Typical deductible items	Common mistakes
Advertising & marketing	Website hosting, ads, SEO, business cards, signage	Sponsorships with no clear business tie-in
Professional services	CPA, attorney, bookkeeper, consultant fees	Personal legal fees (divorce, estate) run through the business
Software & subscriptions	Accounting software, project management, cloud storage	Personal streaming services paid from business account
Vehicle & travel	Business mileage, flights, hotels for business trips	Commuting miles, personal travel tagged as 'business'
Meals	50% of client/employee business meals with documented purpose	100% deduction claimed; entertainment costs (tickets, events)
Home office	Prorated rent/mortgage interest, utilities, insurance	Space that isn't used exclusively for business
Equipment & tools	Computers, phones, cameras, industry-specific tools	Full deduction on personal-use items
Education & training	Industry certifications, professional development	General education unrelated to current work
Insurance	Business liability, professional liability, business auto	Personal life insurance, personal health (separate rules)
Retirement contributions	Solo 401(k), SEP-IRA contributions	Missing this category entirely — it's one of the largest deductions available

The deductions most business owners miss

Retirement contributionsare the most underused deduction for self-employed owners. A sole prop at $120k in net profit can contribute up to ~$46,000 to a Solo 401(k) and deduct the full amount — reducing taxable income by nearly 40%. Most owners who know about it don’t maximize it.

Self-employed health insurancepremiums are also frequently missed or misclaimed. They’re deductible on Schedule 1 (reducing AGI), not on Schedule C. S-corp owners have a separate additional step through W-2 reporting.

Home office deduction is taken by fewer owners who qualify than those who actually do qualify. If you have a dedicated workspace used exclusively for business, the deduction is legitimate — and at California rent levels, it can be worth $3,000–6,000 per year.

The personal-expense trap

The most common audit trigger for small businesses: personal expenses run through the business account and deducted as business expenses. This includes:

Groceries labeled as “office supplies”
Family vacations with a brief business meeting attached
Clothing and personal care labeled as “marketing”
Personal vehicle use deducted at 100%
Family member payroll for minimal or no actual work

These aren’t aggressive tax strategies — they’re disallowances that create penalties and interest if examined.

The business account doesn't make it deductible

Running a personal expense through a business account doesn’t make it deductible — it just makes the bookkeeping messy and creates records the IRS can use against you. The test is the business purpose, not the account used.

Mixed-use expenses: the allocation rule

Expenses that serve both business and personal purposes must be allocated. Common examples:

Vehicle: Actual business miles ÷ total miles = business-use percentage.
Phone: Estimate the percentage used for business calls and data. Keep it reasonable and consistent.
Internet: Prorated by business use — or fully deductible if it’s a dedicated business line.
Home office: Business square footage ÷ total home square footage = deductible percentage.

Documentation: what the IRS actually wants

For most deductions, the IRS wants: what was purchased, when, from whom, how much, and why it was business-related. For meals and travel, also: who was present, what business was discussed.

You don’t need a perfect paper trail for every $20 purchase. You do need substantiation for any deduction that’s unusual, large, or involves expenses that have personal overlap (vehicle, meals, home office). The mileage log requirement is real — apps like MileIQ or Everlance make it easy.

Tax value of common deductions at a 30% effective rate

Solo 401(k) contribution ($46,000)$13,800 in tax savings

Home office deduction — actual method ($4,000)$1,200 in tax savings

Vehicle: 10,000 business miles (× $0.725)$7,250 deduction → $2,175 in tax savings

Self-employed health insurance ($12,000)$3,600 in tax savings

Business software and subscriptions ($3,000)$900 in tax savings

The biggest deductions — retirement contributions, health insurance, home office — are worth multiples of the paperwork involved. The small deductions (supplies, subscriptions) matter but shouldn't drive decisions.

You might also read

Tax deductions

The Home Office Deduction: Who Qualifies, How to Calculate It, and Which Method Saves More

Self-employed business owners can deduct the business-use portion of their home — but only if it meets the exclusive-use test. Simplified vs actual method, S-corp Accountable Plan, and what the IRS looks for.

Tax planning

How to Pay Quarterly Taxes as a Small Business Owner

What estimated taxes are, when they're due, and how to avoid surprise bills by saving the right amount throughout the year.

Tax planning

Solo 401(k), SEP-IRA, and SIMPLE IRA: Which Retirement Plan Is Right for Your Business?

The three main retirement plans for self-employed business owners compared — contribution limits, who qualifies, deadline rules, and when each one makes sense. With 2025 limits.

Sources & References

Frequently asked

Questions owners actually ask

Can I write off my car?: Yes — the business-use portion. If you use your car 60% for business, you can deduct 60% of actual vehicle expenses (gas, insurance, repairs, depreciation) or take the IRS standard mileage rate (72.5 cents/mile in 2026). You must track business vs. personal miles to substantiate the deduction. Commuting miles (home to office) don't count.
Can I write off business meals?: 50% of qualifying business meals are deductible — meals where business is discussed with a client, employee, or business contact, with a clear business purpose. The Tax Cuts and Jobs Act eliminated the entertainment deduction (tickets, golf), but kept the 50% meal deduction. Keep records: who attended, what was discussed, and the business purpose.
Can I write off clothes for work?: Only specialized clothing not suitable for everyday wear: a nurse's scrubs, a construction worker's safety gear, a performer's costume. Regular business clothing — suits, dress shirts, shoes — even if you wear them exclusively for work, is generally not deductible because it can be worn outside of work. The IRS has consistently disallowed it.
What about home office, phone, and internet?: All three can be deductible, but require allocation. Home office: you must have a space used regularly and exclusively for business (see our home office deduction guide). Phone: if used for both personal and business, only the business-use percentage is deductible. Internet: same allocation rule, or fully deductible if it's a dedicated business line.
I paid for something from my personal account by mistake. Is it still deductible?: Yes — which account you used doesn't determine deductibility. What matters is whether the expense was an ordinary and necessary business expense. Keep the receipt, reimburse yourself from the business account, and record it as a business expense. Mixing personal and business accounts is a bookkeeping problem, not a tax disqualifier.
What's the difference between a deduction and a credit?: A deduction reduces taxable income; a credit directly reduces the tax you owe. A $1,000 deduction saves you $220 in tax if you're in the 22% bracket. A $1,000 tax credit saves you exactly $1,000 in tax. Credits are more powerful dollar-for-dollar, but there are far fewer of them and most have strict eligibility rules.

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Educational content only.This article is for informational purposes and does not constitute tax, legal, or investment advice. Every owner’s facts are different; consult a qualified CPA and advisor before acting. Tax and accounting services are provided through Matt Reese, CPA; investment advisory services are provided through Measured Risk Portfolios, a registered investment adviser. Matt Reese, CPA and Measured Risk Portfolios are separate entities; clients are not required to engage both.