The average independent contractor overpays by $3,000–$8,000 per year in taxes simply because they don't track — or don't know about — legitimate deductions. Here are 15 deductions you should be claiming on your Schedule C.
If you use a dedicated space in your home for business — even if it's where you do paperwork and scheduling — you can deduct a portion of your rent/mortgage, utilities, and insurance. The simplified method lets you deduct $5 per square foot, up to 300 sq ft ($1,500).
Driving to job sites, supply stores, and client meetings is deductible. The 2026 IRS standard mileage rate is 70 cents per mile. Track every trip — a contractor driving 20,000 business miles saves $14,000 in deductions.
Everything from power tools to safety gear to your work truck is deductible. Items under $2,500 can be expensed immediately under the de minimis safe harbor rule. Larger purchases can use Section 179 depreciation.
You can deduct 50% of your self-employment tax (the employer-equivalent portion). This is an above-the-line deduction — you get it even if you don't itemize.
If you're self-employed and not eligible for an employer plan, you can deduct 100% of your health, dental, and vision insurance premiums for yourself, your spouse, and dependents.
A Solo 401(k) or SEP-IRA lets you contribute up to $69,000 in 2026. These contributions reduce your taxable income dollar-for-dollar.
The business-use percentage of your cell phone bill and home internet is deductible. If you use your phone 70% for business, you can deduct 70% of the bill.
Invoicing software (like PayStream Pro), accounting tools, project management apps, cloud storage, and even Spotify if you play it on job sites for productivity — all deductible.
General liability insurance, professional liability (E&O), workers' comp, and commercial auto insurance are fully deductible business expenses.
Trade certifications, licensing renewals, workshops, online courses, and industry conferences — if they maintain or improve your skills, they're deductible.
Website hosting, Google Ads, business cards, vehicle wraps, yard signs, and social media ads are all deductible marketing expenses.
Credit card processing fees, Stripe/PayPal fees, and business bank account fees are deductible. These add up quickly when you process a lot of payments.
Business meals with clients, subcontractors, or prospects are 50% deductible. Keep the receipt and note who you met with and the business purpose.
Anything consumed on the job — from PVC pipe to drywall screws to printer paper — is a direct business expense. Track every trip to the supply store.
Most contractors qualify for the 20% QBI deduction under Section 199A. This means you may only pay income tax on 80% of your net business income. There are income thresholds, so check with your tax professional.
The key to maximizing deductions is tracking expenses in real time. If you wait until tax season to dig through bank statements, you'll miss hundreds of deductible expenses.
PayStream Pro categorizes your expenses as you go, so nothing slips through the cracks at tax time. Snap receipt photos, track mileage, and export tax-ready reports.
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