Tax Deductions Every Freelancer Should Know About in 2025

Tax season feels a little more complicated than it used to if you work as a freelancer full-time or manage a side business. You are managing a business in addition to receiving a paycheck. The good news? The IRS lets you deduct a long list of expenses that can lower your taxable income.

What Counts as a Deductible Expense?

A business expense that can reduce your taxable income is called a tax deduction. According to the IRS, a cost must be both beneficial to your company (necessary) and typical in your industry (ordinary) in order to be considered a business expense. Remembering these two points will make tax time much easier.

1. Home Office Deduction

Many freelancers work from home, which means you may qualify for the home office deduction. If a portion of your home is used exclusively and regularly for business, you can claim it.

Two methods to claim:

• Simplified: $5 per square foot, up to 300 square feet
• Real costs: Determine what proportion of your house is used for business purposes, then apply that figure to rent, utilities, insurance, and other associated expenses.

For instance, you might be able to deduct 10% of eligible household expenses if your home office occupies 10% of the square footage of your house.

2. Office Supplies and Tools

If you bought a new printer, planner, or even a box of pens for your freelance work, those expenses are tax-deductible.

Common write-offs include:

• Paper, ink, pens
• External hard drives or storage devices
• Software subscriptions (e.g., Adobe, Canva, Microsoft Office)
• Web hosting or domain fees

3. Business Mileage and Travel

Do you drive to meet clients or attend business events? You can deduct those miles.

There are two main ways to calculate:

• Standard mileage rate (67 cents per mile in 2024)
• Actual vehicle expenses , including gas, insurance, repairs, and depreciation

For out-of-town business travel, expenses such as airfare, hotel, meals (typically 50% deductible), and transportation can also qualify.

Keep a mileage log or use a tracking app like MileIQ or Everlance.

4. Education and Courses

Not only is it wise to stay up to date in your field, but it may also qualify for tax deductions. The costs are typically deductible if you enroll in a class to keep up or advance your current business skills.

That includes:

• Online courses
• Industry conferences
• Certification programs
• Books or training materials

Just make sure it relates to your existing business. If you’re learning something completely new, the IRS may not allow the deduction.

5. Health Insurance Premiums

If you're paying for your health insurance (and not eligible for a plan through a spouse or employer), you might be able to deduct 100% of your monthly premiums. This includes medical, dental, and even vision coverage.

You can also include premiums for:

• Your spouse
• Dependent children under age 27

This is an 'above-the-line' deduction, which means you don’t need to itemize.

6. Marketing and Branding

Growing your freelance business often means spending on advertising. These costs are usually tax-deductible, including:

• Social media ads
• Google or YouTube ads
• Business cards
• Graphic design for branding
• Website development and hosting fees

Even the cost of hiring someone to help with your marketing (like a virtual assistant or agency) may qualify.

7. Self-Employment Tax Deduction

The self-employment tax paid by freelancers, which includes Social Security and Medicare, is 15.3%. When determining your federal income tax, the IRS permits you to deduct half of that sum from your taxable income.

It will lower your overall tax liability, but it won't lower the amount of self-employment tax you owe.

8. Equipment and Depreciation

If you purchased a laptop, camera, tablet, or other piece of equipment for your business, you may be able to claim a deduction. You can either deduct the full amount up front or use depreciation to pay it off over a number of years.

Additionally, you can write off the entire cost of eligible equipment in the year of purchase thanks to the IRS's Section 179 deductions.

9. Contract Labor and Outsourcing

If you paid a contractor, assistant, or freelance editor more than $600 this year, that’s a business expense. Just remember to issue a 1099-NEC at tax time.

Examples of deductible outsourced help:

• Virtual assistants
• Graphic designers
• Bookkeepers
• Copywriters
• Developers

10. Retirement Contributions

Freelancers can set up their retirement plans and deduct contributions!

Here are some common options:

• SEP IRA: Contribute up to 25% of your net earnings
• Solo 401(k): Ideal for high earners and those who want to contribute more
• Traditional IRA: Still a solid choice for smaller contributions

These plans not only secure your future but can reduce your current taxable income..

Bonus: The Qualified Business Income (QBI) Deduction

You may qualify for the Qualified Business Income Deduction if you are a sole proprietor, LLC, or S-corp. No itemizing is required, and you can deduct up to 20% of your net earnings.

It’s subject to income limits and business type qualifications, so talk to a professional before counting on this one.

Final Tips for a Smooth Tax Season

• Track your income and expenses all year (use tools like QuickBooks, Wave, or Zoho)
• Pay quarterly estimated taxes if you owe more than $1,000 for the year
• Use a separate business bank account to make things simpler
• Save receipts and invoices, digital or physical