8 Tax Deductions Small Business Owners Often Miss in 2026

Oct 8

2 min read

Every dollar you legally deduct is a dollar you don't pay tax on. The IRS allows businesses to deduct expenses that are ordinary and necessary. Here are eight that small business owners often overlook.

1. Business miles: 72.5 cents per mile

For 2026, the IRS standard mileage rate is 72.5 cents per business mile, up 2.5 cents from 2025 (IRS). Trips to clients, the bank, the post office and supply stores count. Your commute from home to a regular workplace does not.

Tip: Keep a log with the date, miles and purpose of each trip. A free mileage-tracking app makes this automatic.

2. Your home office

If you use part of your home regularly and exclusively for business, you can deduct it. The simplified method is $5 per square foot, up to 300 square feet, or a maximum of $1,500 (IRS). The regular method uses a share of your actual rent, utilities and insurance, which can be larger but takes more records.

3. Equipment, computers and furniture — all at once

Thanks to the 2025 tax law, 100% bonus depreciation is permanent for qualifying property acquired after January 19, 2025, and the Section 179 limit is now $2.5 million (IRS). A new laptop, printer or work truck may be fully deductible the year you buy it.

4. Business meals (50%)

Meals with clients, customers or business contacts are generally 50% deductible when there's a clear business purpose. The temporary 100% restaurant deduction ended after 2022 (IRS). Entertainment, like concert or game tickets, is not deductible. Write who you met and what you discussed on the receipt.

5. Health insurance if you're self-employed

Self-employed owners can often deduct health, dental and long-term care premiums for themselves, their spouse and dependents, using Form 7206.

6. Retirement contributions

A SEP-IRA, SIMPLE IRA or solo 401(k) lets you save for retirement and lower your taxable income at the same time. Some plans can still be opened and funded after year-end.

7. Software, subscriptions and phone

Accounting software, website hosting, design tools and the business share of your phone and internet bill are all deductible business expenses.

8. The qualified business income (QBI) deduction

Many owners of sole proprietorships, LLCs, partnerships and S corporations can deduct up to 20% of their qualified business income. The 2025 law made this deduction permanent. Income limits and rules for certain service businesses apply, so check with your tax preparer (IRS).