2025 Self Employment Tax Deductions

Self-employed individuals in 2025 can utilize several key tax deductions to reduce their taxable income and self-employment tax liability.

Notable updates for 2025 include an increased standard mileage rate of 70 cents per mile and a Social Security tax cap of $176,100.

Self-Employed Business Deductions

Business Expenses: Ordinary and necessary business expenses can be subtracted from gross earnings.

Examples include:

• Home Office Deduction: If you use a portion of your home exclusively for business, you can deduct associated costs like rent, mortgage interest, utilities, and repairs.
• Vehicle Expenses: You can choose between the standard mileage rate of 70 cents per mile for 2025 or deducting actual expenses like gas, insurance, and maintenance.
• Supplies and equipment: Costs for office supplies, computers, furniture, and machinery. Section 179 expensing or depreciation may apply to larger purchases.
• Health Insurance Premiums: You may deduct 100% of health, dental, and long-term care insurance premiums for yourself, your spouse, and dependents, provided you aren’t eligible for a plan through an employer or your spouse’s employer.
• Qualified Business Income (QBI): Eligible filers may deduct up to 20% of their qualified business income.
• Retirement Contributions: Contributions to plans like a Solo 401(k), SEP IRA, or SIMPLE IRA are generally deductible. For 2025, Solo 401(k) contribution limits can reach up to $70,000 for those under age 50.
• Marketing and Advertising: Costs for websites, business cards, online ads, and other promotional efforts.
• Professional Fees: Fees for legal services, accounting, and tax preparation.
• Equipment and Depreciation: You can deduct the full cost of business assets in the year of purchase via Section 179 or use bonus depreciation, which has been restored to 100% for qualified assets acquired after January 19, 2025.
• Travel and Meals: Business travel expenses (lodging, airfare) and 50% of eligible business meals.
• Business Insurance: Premiums for general liability, professional indemnity, or workers’ compensation.

2025 Rates and Limits

• Self-Employment Tax Rate: 15.3% (12.4% for Social Security and 2.9% for Medicare).
• Social Security Tax Cap: Only the first $176,100 of net earnings is subject to the Social Security portion of the tax.
• Additional Medicare Tax: A 0.9% surtax applies to earnings exceeding $200,000 (single) or $250,000 (married filing jointly)

Find deductions as a self-employed 1099 contractor, freelancer, creator, or if you have a side gig, with our free self-employed tax calculator.