22 business deductions you need to know for next year

The following content is for general informational purposes only and is not intended to provide tax, legal or other professional advice. Individuals should consult with their professional advisors for advice on their tax obligations.  

Taxes can’t be avoided, but there’s no reason to pay more than you have to. When you file your taxes next year, make sure you’re taking these deductions if they apply to you. Knowing what you can deduct will make tax time easier next year.

1. Mileage. Taxes can’t be avoided, but there’s no reason to pay more than you have to. When you file your taxes next year, make sure you’re taking these deductions if they apply to you. Knowing what you can deduct will make tax time easier next year.

2. Business travel. Going out of town to meet with a client or complete a project? Your travel expenses may be deductible. 

3. Meals. The IRS rules for meals changed for 2021 and 2022 due to COVID, but changed it back for 2023. This year, you can deduct 50% of the cost of meals when doing business.

4. Self-employment tax. When you work for an employer, you each pay half of the FICA tax that covers Social Security and Medicare. When you’re self-employed, you are the employer and the employee, so you are responsible for both portions. The tax includes 12.4% for Social Security and 2.9% for Medicare. The good news is, half of this amount is deductible as a business expense. 

5. Home office. If you use part of your home as your office, you may be able to deduct a portion of your home expenses such as mortgage interest and utilities. 

6. Office rent. If you don’t work out of your home but rent your office space, that expense is generally deductible. 

7. Internet, phone, and utilities. Deduct the cost of your internet service, cell phone and landline, and utilities. Note that, if you work from a home office, this may be part of your home office deduction. 

8. Retirement contributions. If you make contributions to employee retirement accounts (even your own), this company match is deductible.

Related: Choosing a retirement plan for your business

9. Consultants. If you hire a consultant for a project or to help you with your business, the amount you pay them is a deductible expense. 

10. Contractors. If you hire workers on a contract basis, you can deduct the amount you pay them. 

11. Employees. You can generally deduct the amount you pay your staff from your business income. 

12. Equipment. If you purchase business equipment, like computers, printers, copiers, etc., you may be able to deduct their costs. 

13. Depreciation. If you have business equipment, machinery, vehicles etc., that you expect to have for more than a year, you may be able to claim the depreciation of these assets as a deduction. 

14. Supplies. The supplies you need to run your business, like paper, pens, printer toner, etc., can be deducted. 

15. Insurance. You can deduct the amount you pay for your liability insurance, workers compensation insurance, etc. (You do have liability insurance, right? If not, get a quote today.)

16. Professional services. You can deduct the amount you pay your attorney, accountant, and other professionals whose services you use for your business. 

17. Interest. Whether you borrow money for working capital or to purchase equipment, machinery, or supplies, you may be able to deduct the finance charges or interest you pay. 

18. Website. The money you pay to have your website hosted is a deduction. If you paid someone to design the site, you can deduct that too. 

19. Software. You may be able to deduct any software you purchased as well as subscriptions you may pay monthly. Don’t forget your cloud storage costs, office software, accounting software, customer relationship manager, project management software, etc. 

20. Courses. If you paid for classes, for yourself or for an employee, you may be able to deduct the cost of those. 

21. Marketing and advertising. Deduct the amount you paid for social media boosting, as well as print, radio, TV, or billboard ads. If you paid someone to design or place those ads, that’s a deduction too. 

22. Licenses. The cost of business licenses required by your state or municipality is generally deductible. 

When you take a tax deduction, it reduces the amount of income you have to pay taxes on. A deduction is different from a credit, which is a reduction in the amount of tax you have to pay. 

Some of these deductions have changed since 2022, and it’s possible they may change again. Keep abreast of tax changes in the IRS website, and stay on top of your deadlines with our handy 2023 Small Business Tax Deadlines Calendar.

Keeping impeccable records of everything you spend will help you take advantage of all these deductions at tax time. After all, no one wants to pay more than they have to.