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Schedule C Deductions List 2025

If you operate a business as a sole proprietor or single-member LLC, you report your income and expenses on Schedule C (Form 1040). The IRS allows you to deduct ordinary and necessary business expenses under IRC §162. Here is a comprehensive list of deductions available on Schedule C, with the IRS authority for each.

Advertising and Marketing

Costs to promote your business, including online ads, print materials, website hosting, social media advertising, and business cards. These are deductible under IRC §162 as ordinary business expenses. The cost of a business website, including domain registration and hosting fees, is also deductible.

Car and Truck Expenses

You can deduct the business-use portion of your vehicle expenses using either the standard mileage rate or actual expenses. For 2025, the IRS standard mileage rate is 70 cents per mile (Revenue Procedure 2024-48). You must track mileage contemporaneously per IRS requirements.

  • Standard mileage rate: 70 cents per business mile
  • Actual expenses: gas, insurance, repairs, depreciation (prorated by business use %)
  • Parking and tolls are deductible regardless of which method you choose
  • Commuting between home and regular office is never deductible (Treas. Reg. §1.162-2(e))

Contract Labor and Commissions

Payments to independent contractors, freelancers, and subcontractors are deductible on Schedule C Line 11. You must issue Form 1099-NEC to any contractor paid $600 or more during the tax year (IRC §6041A). Commissions paid to non-employees are reported on Line 10.

Depreciation

Business assets with a useful life of more than one year are depreciated rather than expensed immediately, unless you elect IRC §179 expensing or bonus depreciation. For 2025, the §179 limit is $1,250,000 (indexed for inflation). Bonus depreciation under IRC §168(k) is 40% for property placed in service in 2025. Depreciation is calculated on Form 4562.

Home Office Deduction

If you use a portion of your home regularly and exclusively for business (IRC §280A(c)), you can claim the home office deduction using one of two methods:

  • Simplified method: $5 per square foot, up to 300 sq ft ($1,500 maximum) — Revenue Procedure 2013-13
  • Regular method: Actual expenses (mortgage interest/rent, utilities, insurance, repairs) prorated by the percentage of your home used for business
  • The space must be your principal place of business or used regularly to meet clients

Insurance

Business insurance premiums are deductible, including general liability, professional liability (errors and omissions), workers compensation, and commercial property insurance. Self-employed health insurance premiums are deductible on Form 1040 Line 17 (not Schedule C) under IRC §162(l) — this includes medical, dental, and qualifying long-term care insurance for you, your spouse, and dependents.

Interest on Business Loans

Interest paid on loans used for business purposes is deductible under IRC §163. This includes business credit card interest, equipment financing, and business lines of credit. The key requirement is that the borrowed funds must be used for business purposes — personal portions are not deductible.

Legal and Professional Fees

Fees paid to attorneys, accountants, bookkeepers, and other professionals for business-related services are deductible. Tax preparation fees attributable to the business portion of your return are also deductible. These fall under the ordinary and necessary standard of IRC §162.

Office Expenses

Office supplies, postage, software subscriptions, printer ink, paper, and similar items used in the normal course of business. Items costing less than $2,500 may be expensed immediately under the de minimis safe harbor election (Treas. Reg. §1.263(a)-1(f)).

Rent or Lease Payments

Rent paid for business property — office space, warehouse, equipment leases — is deductible on Schedule C Line 20. If you rent property partly for business and partly for personal use, only the business portion is deductible. Equipment lease payments are reported on Line 20b.

Supplies and Materials

Materials and supplies consumed during the tax year in the operation of your business. This includes items like raw materials for products you make, cleaning supplies, packaging, and shipping materials. These are separate from office supplies and appear on Schedule C Line 22.

Travel and Meals

Business travel expenses are deductible when you travel away from your tax home overnight for business purposes (IRC §162(a)(2)). Deductible travel costs include:

  • Airfare, train, and bus tickets
  • Hotel and lodging (reasonable and necessary for business purpose)
  • Rental car or taxi/rideshare for business travel
  • Business meals at 50% deductibility (IRC §274(n)) — you or an employee must be present, and the meal must have a clear business purpose
  • Tips, baggage fees, and business-related phone charges while traveling

Utilities and Phone

If you have a dedicated business phone line or internet service, the full cost is deductible. For a shared home internet connection, you may deduct the business-use percentage. The same rule applies to cell phone plans used partly for business — track and document the business-use portion.

Self-Employment Tax Deduction

While not a Schedule C deduction itself, self-employed individuals can deduct the employer-equivalent portion of self-employment tax (50% of the SE tax amount) on Form 1040 Schedule 1 Line 15. Self-employment tax is calculated on Schedule SE at 15.3% on the first $176,100 of net earnings (2025) and 2.9% on earnings above that threshold (IRC §1401, as adjusted by Rev. Proc. 2024-40).

How CirclesTax Handles Schedule C

CirclesTax walks you through each Schedule C expense category in a guided interview. Every deduction you enter is automatically linked to its IRS legal authority — the specific IRC section, Treasury Regulation, or Revenue Procedure that authorizes it. Your Audit Defense Report includes a complete citation chain for every business expense, so you have documentation ready if the IRS questions any position.