25 business tax deductions you can write off

Business tax deductions can dramatically reduce your tax bill and put money back in your pocket to use on expansion and innovation. The key is knowing which business expenses qualify as a write-off and how to properly document them for tax purposes.

In this article, we’ll explain what tax deductions are and how different types of businesses can claim them. We’ll also share a list of 25 business tax write-offs you can use to lower your company’s tax liability.

What is a business tax deduction?

A business tax deduction, also known as a tax write-off, is a business expense that reduces the taxable income on your business tax return. Tax deductions help reduce the amount of tax your business owes for a given tax year. The Internal Revenue Service (IRS) requires all business tax deductions to be ordinary and necessary, which means:

• The expenses are common or ordinary for businesses in your industry
• The expenses are necessary to operate in your industry (even if they’re not indispensable)

Office supplies such as paper, pens, and printer ink are considered ordinary and necessary expenses that qualify for business tax write-offs. Business travel expenses, including airfare, hotels, and meals while away on business trips, are also common examples of deductible ordinary and necessary costs.

The Tax Cuts and Jobs Act (TCJA) of 2017 changed several tax items that apply to businesses. Its provisions expire at the end of 2025, so a number of business-related deductions may change based on new IRS regulations.

Why business tax deductions matter

Business tax deductions directly impact your bottom line by reducing taxable income and creating opportunities for growth investments that strengthen your company's financial position.

Business tax deductions reduce your taxable income dollar for dollar. When you claim legitimate business expenses, you lower your tax bill, keeping more money in your business to reinvest in equipment, marketing, staff, or expansion efforts.

The benefits extend across all business types and sizes:

• Startups can maximize limited resources by capturing every eligible deduction
• Small businesses gain breathing room to invest in inventory, technology, or additional team members
• Established companies can optimize their tax strategy to fund larger initiatives, such as facility upgrades or market expansion

For example, a small consulting firm with $200,000 in annual revenue claims $40,000 in legitimate business deductions. Instead of paying taxes on the full $200,000, they only pay on $160,000 in taxable income. At a 25% tax rate, this saves them $10,000 annually, funds they can reinvest in new software, marketing campaigns, or hiring additional consultants.

Smart tax deduction strategies create a cycle of savings and reinvestment that strengthens your business finances and supports sustainable growth year after year.

Tax deductions vs. tax credits

Tax deductions lower your company’s taxable income, which is multiplied by the tax rate to calculate your tax liability. A tax credit is a dollar-for-dollar reduction in the actual amount of tax owed, directly lowering your tax bill rather than just reducing taxable income.

Tax deductions and tax credits work very differently. Tax deductions reduce your taxable income. They save you money based on your tax rate. For example, a $1,000 deduction at a 25% tax rate saves you $250 ($1,000 * 0.25).

Tax credits directly reduce your tax bill dollar-for-dollar. For example, a $1,000 credit reduces your taxes owed by the full $1,000. A $1,000 tax credit is always more valuable than a $1,000 tax deduction. The deduction saves you a percentage of that amount (based on your tax bracket), while the credit saves you the entire amount.

Think of it this way: Deductions lower the income you're taxed on, while credits lower the actual tax you pay. Types of tax credits include:

• Research and development credit: For businesses that invest in qualifying research activities and innovation
• Work opportunity tax credit: For hiring employees from certain targeted groups, such as veterans or individuals receiving government assistance
• Small business health care tax credit: For small businesses that provide health insurance coverage to their employees
• Disabled access credit: For businesses that make their facilities more accessible to individuals with disabilities
• Energy efficiency tax credits: For businesses that install qualifying energy-efficient equipment or renewable energy systems

Both deductions and credits offer valuable tax savings for your business. Explore all available options to maximize your benefits and keep more money in your company's pocket each year.

25 common business tax deductions

The IRS provides a number of business expense resources you can use to help identify eligible tax deductions you can write off. Frequent changes to tax law might impact your ability to deduct certain business expenses. For that reason, it’s a good idea to work with a CPA or tax preparer each year to ensure you comply with current tax laws.

While this list is not comprehensive, here are 25 common business tax write-offs to lower your tax liability:

1. Advertising and marketing

Advertising and marketing expenses are generally considered ordinary and necessary business expenses that can be deducted from taxable income in the year they are incurred. This includes costs for traditional advertising, digital marketing campaigns, promotional materials, trade shows, and other marketing activities that help promote your business and generate revenue.

2. Bad debt

You can deduct bad debt as a business expense when money owed to your business becomes uncollectible, but only if the debt was previously included in your taxable income or you used the accrual accounting method.

The bad debt expense deduction is typically taken in the year the debt becomes worthless, and you must be able to demonstrate that you made reasonable efforts to collect the debt before writing it off.

3. Cost of goods sold

Cost of goods sold (COGS) represents the direct costs of producing or purchasing the products a business sells, including materials, labor, and manufacturing overhead, and is deducted from gross revenue to determine gross profit.

COGS is not technically a separate deduction but rather a fundamental calculation that reduces taxable income by accounting for the actual cost of inventory that was sold during the tax year.

4. Depreciation, amortization, and depletion

Depreciation, amortization, and depletion each account for the decline in an asset's value over its useful life. You can write off all of these expenses on your business tax returns:

• Depreciation expenses: Depreciation expenses account for the decline in value of a tangible asset, such as a vehicle, machinery, or equipment
• Amortization expenses: This expense accounts for the decline in the value of an intangible asset, including licenses, copyrights, and patents
• Depletion expenses: When natural resources such as oil or timber are extracted from a piece of property, it declines in value. Depletion expenses account for this decline.

5. Home office expenses

Business use of your home may entitle you to a business tax write-off. Your use of the business part of your home must be exclusive, regular, and for your business.

To qualify for this tax deduction, the business part of your home must meet one of these criteria:

• It’s your principal place of business
• It’s a place where you meet or deal with patients, clients, or customers in the normal course of your business
• It’s a separate structure (not attached to your home) that you use in connection with your business

Here's a simple example:

Scenario: You use 200 square feet of your 2,000-square-foot home exclusively for business.

Business percentage: 200 / 2,000 = 10% of your home

Annual expenses:

• Rent: $24,000
• Utilities: $3,600
• Total: $27,600

Deductible amount: $27,600 * 10% = $2,760

You can deduct $2,760 for your home office expenses. This reduces your taxable income by $2,760, which, at a 25% tax rate, would save you $690 in taxes.

The IRS lists specific rules for deducting home office expenses. Home office deductions require careful documentation, so it’s a good idea to work with a CPA or tax professional to document these business expense write-offs.

6. Insurance premiums

Business insurance premiums are generally deductible as ordinary and necessary business expenses, including coverage for general liability, professional liability, property, workers' compensation, and business interruption insurance.

Premiums for life insurance policies where the business is the beneficiary are typically not deductible, and certain other restrictions may apply depending on the type of coverage and policy structure.

7. Interest expenses and bank fees

Interest expenses on business loans, lines of credit, and other business-related debt are generally deductible as ordinary business expenses, including interest on equipment financing, business credit cards, and mortgages for business property.

Bank fees and service charges related to business accounts, such as monthly maintenance fees, overdraft fees, and transaction fees, are also typically deductible as necessary business operating expenses.

8. Meals and entertainment

The TCJA eliminated the deduction related to entertainment, amusement, or recreation expenses. Its provisions expire at the end of 2025, so this may change depending on new acts of Congress or IRS rules.

However, you can continue to deduct 50% of the cost of business meals if you (or your employee) are present, and the food or beverages aren't extravagant. There are some exceptions to the entertainment rule. For example, recreational expenses for employees, such as a holiday party or a summer picnic, are deductible.

9. Mileage and vehicle expenses

You can deduct vehicle costs using the actual expenses or standard mileage rate method. The standard mileage rate for 2025 is 70 cents per mile. Actual business vehicle expenses include depreciation, license and registration fees, lease payments, fuel, insurance, repairs, oil, garage rent, tires, tolls, and parking fees.

Here's a simple example for how you’d calculate a mileage deduction:

Scenario: You drive 15,000 miles annually, with 6,000 miles for business purposes

Standard mileage rate:

• Business miles: 6,000
• IRS standard rate: $0.70 per mile (2023 rate)
• Deduction: 6,000 * $0.70 = $4,200

Actual expense method:

• Total annual vehicle costs: $8,000 (gas, insurance, maintenance, depreciation)
• Business percentage: 6,000 / 15,000 = 40%
• Deduction: $8,000 * 40% = $3,200

In this example, the standard mileage method gives you a higher deduction ($4,20 vs. $3,200), so you'd choose that option. Regardless of the method you choose, you’ll need to keep a detailed mileage log that lists the details of every business trip, including dates, destinations, and business purposes for each trip if you plan to deduct business mileage.

10. Mortgage expenses

Mortgage interest on property used for business purposes is generally deductible as a business expense, whether you own the property outright for business use or use part of your home exclusively for business under the home office deduction.

It's important to note that the principal portion of mortgage payments is not deductible, and if you're using part of your home for business, you can only deduct the percentage of mortgage interest that corresponds to the business use of your home.

11. Moving costs

Moving costs for relocating a business are generally deductible as ordinary and necessary business expenses, including costs for packing, transporting equipment and inventory, and other relocation expenses directly related to the business move.

Personal moving expenses for employees or business owners are typically not deductible under current tax law, as the TCJA suspended the moving expense deduction for most taxpayers through 2025.

12. Office supplies and equipment

Office supplies are consumable items used in daily business operations that typically cost less than $2,500 and have a useful life of one year or less. These can be fully deducted in the year you purchase them. Examples include paper, pens, folders, filing supplies, printer ink and toner cartridges, and cleaning supplies for your office.

Office equipment consists of durable items that cost $2,500 or more and last longer than one year. This includes computers, printers, furniture, machinery, and vehicles used for business.

Normally, equipment must be depreciated over several years rather than deducted immediately. However, Section 179 of IRS Publication 946 allows you to deduct the full purchase price of qualifying equipment in the year you buy it (up to $1.25M for 2025), rather than depreciating it over time.

13. Professional services and fees

Professional services and fees paid to attorneys, accountants, consultants, and other business advisors are fully deductible as ordinary business expenses. This includes costs for tax preparation, legal advice, business consulting, financial planning, and other professional services directly related to operating your business.

14. Rent

Rent paid for business premises, equipment, or other property used in your operations is generally deductible as an ordinary and necessary business expense in the year it's paid. This includes office rent, warehouse space, retail locations, and equipment leases, but the property must be used exclusively or primarily for business purposes to qualify for the full deduction.

If you rent your home and use part of it exclusively for business as a home office, you can deduct the percentage of your total rent that corresponds to the business use of your home.

15. Repairs and maintenance

Repairs and maintenance expenses that keep business property in good working condition are generally deductible as ordinary business expenses in the year they are incurred, including costs for fixing equipment, maintaining facilities, and routine upkeep.

Major improvements or renovations that add value or extend the useful life of property must typically be capitalized and depreciated over time rather than deducted immediately as current expenses.

16. Taxes and licenses

Taxes and licenses required for operating your business are generally deductible as ordinary and necessary expenses, including state and local business taxes, professional licenses, permits, and regulatory fees.

Federal income taxes paid by your business are not deductible, and certain other taxes, such as penalties and fines imposed by government agencies, typically aren’t deductible.

17. Education and training

Education and training expenses are deductible when they maintain or improve skills required for your current business or meet legal requirements for your profession. This includes costs for workshops, seminars, online courses, professional certifications, and business-related conferences, along with associated travel expenses.

18. Travel expenses

Business travel expenses are generally a tax write-off for business when the travel is ordinary, necessary, and directly related to your business activities. Deductible travel costs include airfare, hotel accommodations, car rentals, taxi fares, and 50% of meal expenses during business travel, provided you keep detailed records and receipts.

Commuting costs between your home and regular workplace are non-deductible business expenses, and personal portions of mixed business and personal trips must be separated, with only the business portion being deductible. The IRS requires that business travel expenses be reasonable and not lavish or extravagant under the circumstances to qualify for the deduction.

19. Utilities

Utilities for business locations, including electricity, gas, water, trash removal, and heating/cooling costs, are fully deductible as ordinary business expenses. For home-based businesses, you can deduct the business percentage of utility costs based on the square footage of your dedicated office space compared to your total home size.

20. Wage and salary expenses

Wages and salaries paid to employees for services performed in your business are generally fully deductible as ordinary and necessary payroll expenses, including regular pay, overtime, bonuses, and commissions.

You can also deduct the employer-paid portion of FICA taxes, along with your business’s payments to federal and state unemployment programs.

21. Employee benefits

Employee benefits such as health insurance premiums, retirement plan contributions, life insurance, and disability insurance are generally fully deductible business expenses. These deductions apply to benefits provided to employees, though special rules may limit deductions for benefits provided to business owners, particularly in sole proprietorships and partnerships.

22. Contract labor

Contract labor costs are fully deductible business expenses when you pay independent contractors, freelancers, or consultants for legitimate business services. You'll need to issue Form 1099-NEC to any contractor you pay $600 or more during the tax year, and keep detailed records of the work performed and payments made.

23. Charitable contributions

Charitable contributions made by your business to qualified nonprofit organizations are generally deductible up to 10% of your taxable income for C corporations. Pass-through entities such as LLCs and S corporations typically pass the deduction through to individual owners rather than the business.

Cash donations, donated inventory, and volunteer expenses (like mileage) can qualify, but you must keep proper documentation, including receipts and acknowledgment letters from the charitable organizations.

24. Internet and phone expenses

Internet and phone expenses used for business purposes are deductible, with the amount based on the percentage of business use versus personal use. If you use a dedicated business line or internet connection exclusively for work, you can deduct 100% of the cost, while mixed-use services require you to calculate and deduct only the business portion.

25. Software and subscriptions

Software and subscription costs for business purposes are fully deductible as operating expenses, including accounting software, project management tools, cloud storage, and industry-specific applications.

Monthly or annual subscription fees can be deducted in the year they're paid, while permanent software licenses may need to be depreciated over several years, depending on the cost and type.

How to stay organized with your deductions

Good recordkeeping makes tax season smoother and helps maximize your business expense deductions. Stay organized throughout the year to avoid scrambling for receipts later.

Keep every receipt and document your expenses

Maintaining detailed records is the foundation of successful tax deduction management. Save all receipts related to business expenses, no matter how small they might seem. A $5 coffee meeting or parking meter fee can add up over time. Create a habit of collecting expense receipts immediately after each purchase.

Log your expenses regularly rather than waiting until year-end. Include details such as the date, amount, business purpose, and people involved. This practice protects you during audits and ensures you don't miss legitimate deductions.

Use financial tools and automated solutions

Business expense tracking software can significantly reduce the overhead of managing your tax write-offs. These tools can automatically categorize transactions and flag deductible expenses.

Mobile apps allow you to photograph receipts on the spot and store them digitally. Many solutions offer mileage tracking, time logging, and integration with popular accounting platforms. Automation reduces manual work and minimizes the chance of losing important documentation.

Implement practical organization strategies

Beyond choosing the right tools, specific organizational habits will keep your business expenses properly documented and easily accessible.

• Digital receipt storage: Scan or photograph all paper receipts and store them in organized digital folders. Create folders by month, expense category, or project. Cloud storage ensures your records are accessible from anywhere and protected from loss.
• Regular expense reviews: Set aside time monthly to review and categorize your expenses. This regular maintenance prevents overwhelming backlogs and helps you spot spending patterns or missed deductions.
• Separate business and personal accounts: Open dedicated business bank accounts and credit cards. This separation makes expense tracking cleaner and provides clear documentation for the IRS. Avoid mixing personal and business transactions as much as possible.
• Paper storage: Create a simple filing system for physical documents you need to keep, using labeled folders or binders organized by tax year and expense type. Store important documents in a secure, easily accessible location.

These organizational strategies work best when implemented consistently throughout the year rather than as a last-minute scramble. Organized recordkeeping takes minimal effort but pays dividends during tax preparation.

How to claim business expense deductions

Claiming tax write-offs for your business requires filing the correct forms and following IRS guidelines. The process varies depending on your business structure and entity type.

The basic process for claiming deductions

Start by gathering all your documented deductible expenses and organizing them by category. Review each expense to confirm it meets IRS requirements for business deductions. The expense must be ordinary, necessary, and directly related to your business operations.

Calculate the total amount for each deduction category, such as office supplies, travel expenses, professional services, or equipment purchases. Double-check your math and ensure you have proper documentation supporting each claimed amount.

Report your business deductions on the appropriate tax forms based on your business structure. The IRS requires specific forms depending on whether you operate as a sole proprietorship, partnership, corporation, or LLC.

Relevant IRS forms for business deductions

The form you use to deduct business expense write-offs depends on your business entity type and its structure.

• Schedule C (Form 1040): Sole proprietors and single-member LLCs use Schedule C to report business income and expenses. This form includes sections for common business deductions such as advertising, car expenses, insurance, legal fees, and office expenses.
• Form 1120: C corporations file Form 1120 to report corporate income and claim business deductions. The form allows corporations to deduct ordinary business expenses against their taxable income.
• Form 1120-S: S corporations use Form 1120-S to report income, losses, and deductions. Business expenses flow through to individual shareholders' tax returns.
• Form 1065: Partnerships file Form 1065 to report partnership income and expenses. Individual partners receive Schedule K-1 forms showing their share of partnership deductions.

Each form has specific line items for different types of business expenses. Follow the form instructions carefully and attach any required supporting schedules or documentation.

When to consult a tax professional

Consider working with a qualified tax professional if your business has complex deduction scenarios or significant dollar amounts at stake. Tax laws change frequently, and professionals stay current with the latest regulations and requirements.

Seek professional help if you operate multiple businesses, have international operations, or deal with specialized industries that have unique tax considerations. A tax professional can identify deductions you might miss and ensure you're taking advantage of all available opportunities.

Consult a professional before making major business decisions that could affect your tax situation, such as purchasing expensive equipment or expanding operations. They can advise on timing strategies and help structure transactions to maximize tax benefits.

If you face an IRS audit or have received correspondence about your business deductions, professional representation becomes particularly valuable. Tax professionals can communicate with the IRS on your behalf and help resolve any issues.

Tax deductions and business structure

The process for deducting business expenses depends on your company’s business structure: Sole proprietorship, LLC, partnership, S corporation, or C corporation.

Sole proprietorship

Sole proprietors deduct business expenses on Schedule C of the 1040 personal tax return. The business profit is added to other sources of income on Form 1040. IRS Publication 334 lists some deductions that apply to self-employed workers:

Pension plans

If you’re self-employed, you don’t have the ability to participate in a corporate retirement plan, such as a 401(k) plan. Self-employed individuals can set up these types of pension plans to contribute to traditional retirement plans such as IRAs:

• Simplified Employee Pension (SEP)
• Savings Incentive Match Plan for Employees (SIMPLE)
• Qualified plans (including Keogh or H.R. 10 plans)

SEP, SIMPLE, and qualified plans offer you and your employees a tax-favored way to save for retirement. You can deduct contributions you make to the plan for your employees on Schedule C. If you’re a sole proprietor, you can also deduct contributions you make for yourself.

Self-employment tax

Self-employed individuals don’t pay Social Security or Medicare taxes through FICA tax withholdings on wages. The self-employment (SE) tax is a system for collecting these taxes.

The 2025 SE tax rate is 15.3%, and self-employed taxpayers compute the tax on Schedule SE of their personal tax return. Fifty percent of the tax is deducted from income on Form 1040.

Limited liability company (LLC)

An LLC is a business structure allowed by state statute. Members are the owners. Depending on how the business is formed, an LLC may file a tax return as a partnership, a corporation, or as part of the owner’s personal tax return.

Partnership

A partnership must file an annual information return to report the income and deductions from its operations, but it doesn’t pay income tax. Instead, it "passes through" profits or losses to its partners.

Each partner reports their share of the partnership's income or loss on their personal tax return. The partnership must furnish copies of Schedule K-1 to the partner, and the K-1 data is reported on the partner’s personal tax return.

S corporation

The S corporation business structure is similar to a partnership for tax purposes. S corporations elect to pass corporate income and losses through to their shareholders. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates.

C corporation

A C corporation is a separate business entity that pays taxes at the corporate level. If the C corporation generates income and elects to pay a cash dividend to shareholders, the dividend income is taxable on the shareholder’s personal return. C corporations are subject to taxation at both the corporate and shareholder levels.

Best practices for maximizing deductions

Smart deduction strategies can significantly reduce your tax burden while keeping you compliant with IRS requirements. Follow these proven practices for optimal results.

• Track every business expense: Document all business-related purchases throughout the year, no matter how small. Use expense tracking apps or accounting software to capture transactions immediately and categorize them properly.
• Stay current with IRS rules and regulations: Tax laws change regularly, and new deductions may become available while others get modified or eliminated. Subscribe to IRS updates and review annual tax code changes that could affect your business.
• Review your deductions annually: Conduct a comprehensive review of your deduction categories each year to identify missed opportunities. Ensure you're maximizing existing categories such as home office, vehicle use, or professional development costs.
• Consult professional tax advisors: Work with a qualified CPA or tax advisor when dealing with complex business situations or unfamiliar deduction categories. Professional guidance helps you navigate intricate tax rules and identify deductions you might overlook.
• Plan proactively before tax season: Start your deduction planning early in the tax year rather than scrambling at filing time. Make strategic purchases before year-end and consider timing large equipment purchases to optimize your tax position.

Maximizing deductions requires consistent effort and strategic planning throughout the year. These practices help ensure you capture every legitimate tax benefit available.

Track your deductible business expenses with Ramp

As a small business owner or startup founder, navigating your business tax deductions can be a thorny process. But it doesn’t have to be that way.

Ramp’s best-in-class expense management software automates business expense tracking and reporting. Ramp uses AI to categorize your business expenses as soon as you incur them, making it easy to identify which expenses are tax-deductible.

Our modern finance platform saves time, reduces errors, and helps simplify the process of writing off business expenses. We can even offer intelligent recommendations for where you can reduce spend to improve your bottom line.

Watch a demo video to see how customers who use Ramp save an average of 5% a year.