16 amazing 1099 tax deductions for independent contractors

Unlike a full-time employee whose taxes are deducted from their paycheck, if you’re an independent contractor, it’s your job to manage your own taxes — and you’ll want as many 1099 tax deductions as you can take.

You can claim numerous deductions when you file your taxes on tax day. Your 1099 independent contractor deductions lower the amount you’ll ultimately have to pay in taxes as a self-employed contractor.

“Not keeping good track of their business expenses is one of the biggest mistakes a freelancer can make,” says Matthieu Silberstein, VP of Creative Marketing at Lili, a banking app designed for freelancers.

“You can save hundreds — if not thousands — of dollars by separating and writing off purchases you make for your business. On average, it takes our customers less than 30 minutes per month to sort their business expenses and Lili auto-generates a report every quarter – so 30 minutes of ‘work’ to keep an extra $500 in the bank makes a pretty decent hourly rate!”

Below are the most common tax deductions for independent contractors — the kinds of write-offs self-employed workers use to lower taxable income and keep more of what they earn.

1. Home office costs
2. Educational expenses
3. Business insurance premiums
4. Depreciation of property and equipmentM
5. Car expenses
6. Business travel
7. Cell phone and internet bills
8. Health insurance premiums
9. Retirement savings
10. Bank fees and business interest
11. Startup costs
12. Advertising fees
13. Consulting and professional service fees
14. Self-employment taxes
15. The qualified business income (QBI) deduction
16. Tax advice service expenses

1. Home office deduction for independent contractors

Depending on your profession, you may have significant home office expenses. For example, maybe you use your home as an office, a yoga studio, a place to store expensive equipment or something else altogether.

To qualify for a tax deduction, the IRS requires that your home office meet two key criteria:

• Regular and exclusive use: The space must be used only for your business. A room or area that doubles as a guest room, playroom or other personal space usually doesn’t qualify.
• Principal place of business: It must be your main location for conducting business, meeting clients or performing administrative tasks.

If your home office meets these tests, there are multiple options for calculating your independent contractor tax deductions.

There are direct expenses to consider, like renovations and a paint job, and indirect expenses, like insurance, utilities, and home repairs. Homeowners can also write off portions of their property taxes and mortgage interest.

So, how much can you write off for a home office? The most straightforward calculation with the IRS is $5 per square foot up to 300 square feet, which would be a maximum write-off of $1,500.

Don’t forget to write off office supplies as part of your home office deductions. These include computers, printers, work-related software, pens, paper, postage, shipping and more. You can deduct these as long as you used them for business purposes the year you purchased them.

2. Educational expenses

Continuing education can be an important factor in growing a business and attracting new clients. Educational expenses may be tax-deductible, but the IRS has specific rules about what qualifies.

To claim this deduction, the education must maintain or improve the skills you need in your current line of work or be required by your profession to keep your existing salary, status or license. Education does not qualify if it trains you for a new career or helps you meet the minimum requirements of your job.

Certain expenses — such as webinars, virtual conferences, business-related books and subscriptions to professional publications — may be eligible deductions when you file your taxes.

3. Business insurance premiums

Business insurance for the self-employed provides important coverage to protect you from unexpected expenses related to accidents or business mistakes. For example, a professional liability policy can help cover expenses if a client accuses you of missing a deadline or making a mistake that costs them money.

According to the IRS, you can deduct business insurance if it’s “ordinary” and “necessary” for your business and industry. These aren’t just insurance types that are legally required, either. Here are some examples of types of business insurance that you can deduct from your tax return:

• General liability insurance: This can help protect your business if you are legally responsible for bodily injuries or property damage.
• Workers’ comp insurance: This coverage can help cover medical expenses for employees injured on the job and lost wages.
• Professional liability insurance: Also known as errors and omissions insurance, this type protects you from professional accusations of negligence from business errors.
• Commercial property insurance protects your store or office space from damage caused by fire, theft, and other perils. It also includes inventory and equipment.
• Business income or business interruption insurance: This covers you if your business operations are interrupted by a natural disaster.
• Commercial auto insurance: Getting separate insurance for a commercial vehicle is tax deductible, but you can only claim commercial auto or gas mileage as a deduction. (So you may want to do the math.)

These deductions will vary based on your industry. For example, a personal trainer may have professional liability insurance to cover injury-related damages. In many states, there is no legal requirement to have this policy, but the IRS still considers it ordinary and normal to have this insurance in the fitness industry.

You can include your expenses for business insurance coverage in your 1099 tax deductions.

Get a quick estimate on how much business insurance could cost your business with NEXT’s insurance calculators:

• Professional liability calculator
• General liability calculator
• Commercial property insurance calculator

4. Depreciation of property and equipment

As an independent contractor, you likely purchased property and equipment for your business. Over time, those items lose value. For example, a printer you bought three years ago is worth less now than when you bought it. That’s called depreciation.

According to the IRS, if business purchases will last you more than a year, you can write off the depreciation of their value on your tax return. You can potentially deduct repairs on property used for your business as well.

5. Car and mileage deductions for 1099 workers

If you spend time going from job to job, making deliveries or other business tasks, sometimes your vehicle can feel like your office. Luckily, car expenses and mileage can be one of the largest tax write-offs for entrepreneurs.

The IRS standard mileage rate for tax deductions is 70 cents per mile in 2025. The rules for calculating the rate are updated every tax year, so it’s good to stay current.

Tolls and parking expenses are also deductible. For extended meetings or projects, these can add up to a significant out-of-pocket expense for an independent contractor. Keep your receipts, and add them to your 1099.

At this point, you might be asking, “Can I write off my car payment?” The IRS doesn’t allow you to deduct the principal portion of a car loan as a business expense, so you can’t write off the payment itself.

However, if you use the actual expense method, you may be able to deduct other costs associated with a business vehicle, including:

• Depreciation on the business-use portion of the vehicle
• Interest on the auto loan related to business use
• Lease payments, if you lease rather than own, based on the percentage used for business

If you are purchasing a car exclusively for business use, you can potentially deduct some expenses. Just be prepared for extra IRS scrutiny since 1099 workers rarely have a vehicle that is used 100% for business.

Note: A new 2025 deduction allows taxpayers to deduct interest on certain personal-use vehicle loans, but this does not apply to business vehicles or car expenses claimed for self-employment purposes.

6. Business travel deductions for independent contractors

Do you have client meetings out of state or attend industry conferences? When it comes to business trips, your airfare, hotel costs, taxis (including rideshare services like Uber) and 50% of your business meal costs can be written off if the travel is primarily for business.

However, if you extend your trip for personal vacation days, you can only deduct the expenses directly related to the business portion of the trip. Personal days’ meals, lodging, transportation, and other costs are not deductible, even if they occur before or after a business event.

For example, if you fly from California to Paris for a three-day photography conference and then add two extra days of sightseeing, your airfare may still be fully deductible because the primary purpose of the trip was business. But the meals and accommodations for the two personal sightseeing days cannot be written off — only the expenses from the three conference days (and necessary travel days) are deductible.

7. Cell phone and internet bills

Do you have a cell phone or an internet connection that you use for both personal use and business? If so, you can write off a portion of your monthly internet and cell phone bill. Similar to your home office, you’ll want to determine what percentage of your phone and online usage is business vs. personal. You can then deduct that percentage of your bills at tax time.

8. Health insurance premiums for independent contractors

Many independent contractors can deduct 100% of their health, dental and vision insurance premiums for themselves, their spouse and their dependents.

However, this deduction is not a business expense and it isn’t taken on your 1099 or Schedule C. Instead, it’s claimed as an adjustment to income on your Form 1040 (often using Form 7206).

You may qualify for this deduction as long as:

• You have net self-employment income, and
• You were not eligible for an employer-sponsored health plan (your own or your spouse’s) during that month.

This deduction can significantly lower your taxable income, even if you don’t itemize.

9. Retirement savings

If you contribute to an individual retirement account (IRA), you may be able to make a tax deduction on those contributions. There are some caveats though.

First, you may need to reduce or eliminate the deduction if you or your spouse contributes to an employee-sponsored retirement plan such as a  401(k) or 403(b).

You also can’t take the deduction if your Modified Adjusted Gross Income (MAGI) exceeds yearly limits.

10. Bank fees and business interest

If you got a loan from a bank to fund your business, you may deduct the interest as a business expense. If your loan was used for both business and personal expenses, you need to track how much of it went to your business and only deduct the interest from that portion.

You can also deduct business-related banking fees and charges. For example, paying for replacement checks, monthly service charges, and lost card fees. These charges add up as many traditional banking institutions often nickel and dime you.

Similarly, you may write-off the interest from a business credit card, and any associated costs  like annual fees. By the way, you don’t need to have a business credit card to deduct qualifying interest. If you have a personal card used exclusively for business expenses, you can still deduct.

11. Startup costs

If you got your business up and running this year, you can claim deductions for many of the associated expenses — up to $5,000. These related expenses include, registering for a website domain, travel for scouting business locations, market research, and training staff.

If you set up an LLC or corporation for your business, you can deduct an additional $5,000 in organizational costs.

Keep in mind that both of these first-year deductions begin to phase out once your total startup or organizational costs exceed $50,000. Any remaining amount beyond what you can deduct upfront must be spread out (amortized) over 15 years.

However, buying equipment or vehicles aren’t considered startup costs. You can deduct them in a few years as they depreciate in value.

12. Advertising fees

Spending money to advertise your business can mean more write-offs. Expenses include both digital and physical advertising costs.

For example, a freelance designer might run Instagram ads to attract new clients, while a landscaper may print yard signs or door hangers to promote seasonal services.

From business cards to flyers. Facebook or LinkedIn ads. A billboard, a TV commercial, or radio spot. Website design and maintenance. They all qualify as advertising expenses.

13. Consulting and professional service fees

When you’re a business owner, you may need extra help from people who specialize in different areas.

For example, you may need to consult with a lawyer to get a legal question answered. You may ask an accountant for help in managing your books or a financial advisor to help you define long term goals.

Whatever the case, if the fees are a necessary expense related to operating your business, write them off.

14. Self employment taxes for 1099 workers

When filling out your tax form as a self-employed worker, self-employment taxes can be something of a shock. That’s because you’re paying both the employer and employee sides of Social Security tax and Medicare taxes—that’s a tax rate of 15.3% of net earnings.

The IRS knows this isn’t fair, so they allow you to deduct half of your self-employment tax.

While it won’t reduce the actual amount of self-employment tax you need to pay, it can reduce your income tax. (Self-employment tax and income tax aren’t the same thing.)

15. The qualified business income (QBI) deduction

Good news: The qualified business income (QBI) deduction allows many self-employed people to deduct a portion of their business income. QBI applies to owners of pass-through businesses — such as sole proprietors, LLCs, partnerships, S corporations — whose business income is reported on their personal tax return.

Under QBI, eligible taxpayers may deduct up to 20% of their qualified business income, which can significantly reduce taxable income.

As of 2025, the QBI deduction is now permanent. That means this deduction is no longer scheduled to expire — giving you longer-term stability for tax planning.

There are still limitations though. The deduction is subject to income thresholds, business type (some specified service trades or businesses — “SSTBs” — face stricter rules), and W-2 wage or property-value tests for higher-income filers. Because these thresholds and rules may shift slightly from year to year, it’s wise to check the latest IRS guidance or consult a tax professional.

16. Tax advice service expenses

There are many benefits to being a self-employed contractor, and a qualified tax advisor can help you optimize your strategy when filing your 1099 independent contractor income tax deductions.

While hiring a tax advisor may seem like an unnecessary cost, the tax preparation they provide may save you valuable time. Preparers can help you with your itemized deductions, figure out your actual expenses, and ensure you’re claiming all the available tax breaks you can.

Remember though, fees for tax advice and preparation related to your business returns can be deductible; purely personal tax prep fees usually are not.

Tax deductions vs. tax credits

There’s a difference between tax deductions and tax credits.

• Tax deductions. A tax deduction lowers how much of your income is taxable. How much a tax deduction saves you depends on your federal income tax bracket.
• Tax credits: A tax credit directly decreases the amount of tax you owe. It gives you a dollar-for-dollar reduction of the income tax you owe.

Both will reduce your tax bill, but the tax credit is slightly better due to the dollar-for-dollar reduction.

How NEXT helps support independent contractors

NEXT helps thousands of independent contractors protect their business with customized business insurance.

We’re 100% dedicated to self-employed professionals with general liability insurance, professional liability insurance, commercial auto insurance and other coverage options.

Get a quote, review our options, buy insurance online and get your certificate of insurance in about 10 minutes. Manage your policy 24/7 via web or mobile app.

If you have questions, our licensed, U.S.-based insurance professionals are available to help.

Start a free quote with NEXT.

NEXT Insurance does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors for personalized guidance.