With the rise of freelancing, self-employment, and gig economy jobs, knowing which deductions are available can help you keep more of your hard-earned money. Whether you’re a full-time freelancer, part-time gig worker, or just earning extra income on the side, this guide outlines the top tax deductions you can claim on your 2025 return to reduce your taxable income and maximize your refund.
💼 Who Qualifies as a Freelancer or Gig Worker?
If you receive Form 1099-NEC or Form 1099-K for income, or earn money independently without an employer, you’re generally considered self-employed in the eyes of the IRS. Common examples include:
- Graphic designers, consultants, and virtual assistants
- Rideshare and delivery drivers (Uber, Lyft, DoorDash)
- Online sellers (Etsy, eBay, Amazon)
- Tutors, writers, photographers, and fitness coaches
You report income and deductions on Schedule C (Form 1040). Here are the most valuable deductions you can take in 2025.
🏠 1. Home Office Deduction
If you use a portion of your home regularly and exclusively for business, you may qualify for the home office deduction.
- Regular Method: Deduct a percentage of rent/mortgage, utilities, insurance, property taxes, and maintenance based on square footage.
- Simplified Method: Deduct $5 per square foot, up to 300 sq ft (max $1,500).
Note: The space must be used exclusively for business, not shared with personal use.
🚗 2. Business Mileage Deduction
If you use your personal vehicle for business (e.g., client meetings, deliveries), you can deduct mileage.
- 2025 Standard Mileage Rate (estimate): $0.67 per mile (subject to IRS updates)
- Alternatively, deduct actual vehicle expenses (gas, insurance, maintenance, lease, etc.)
- Keep a logbook or mileage-tracking app for accuracy
📶 3. Internet and Phone Expenses
If you use your internet connection or phone line for business, a portion of those bills may be deductible.
- Deduct only the business-use percentage
- Track call records or internet usage to estimate your business portion
- Cell phone plan costs can also be prorated if used for client communication
🛒 4. Office Supplies and Equipment
Anything you buy for your business can generally be deducted, including:
- Printers, desks, chairs, and lighting
- Paper, pens, ink, and software subscriptions
- Laptops and monitors (may require depreciation if expensive)
📚 5. Education and Training
You can deduct costs for courses, webinars, certifications, or workshops that maintain or improve your business skills.
- Online learning platforms (e.g., Coursera, Skillshare)
- Industry-specific certifications or licenses
- Professional books and trade publications
💼 6. Business Insurance
If you pay for insurance to protect your business (e.g., liability, errors and omissions, or renter’s insurance for your home office), those premiums are deductible.
🧾 7. Marketing and Advertising
Expenses to promote your business qualify for deductions, including:
- Google Ads and Facebook campaigns
- Website hosting, design, and domain fees
- Business cards, flyers, and logos
💳 8. Banking and Payment Processing Fees
You can deduct fees associated with business banking or payment platforms:
- PayPal, Stripe, or Square transaction fees
- Bank account monthly fees or wire transfer charges
- Credit card interest only if the card is used exclusively for business
👨⚕️ 9. Health Insurance Premiums (Self-Employed)
If you are self-employed and not eligible for an employer’s plan, you can deduct premiums paid for:
- Your health insurance
- Your spouse and dependents
This deduction applies even if you don’t itemize—it’s an above-the-line deduction on Schedule 1.
👨💼 10. Retirement Contributions
Self-employed workers can contribute to retirement plans and deduct the contributions:
- SEP IRA: Up to 25% of net earnings or $66,000 (2025 limit)
- Solo 401(k): Up to $66,000 + catch-up if age 50+
- Traditional IRA: Up to $7,000 ($8,000 if age 50+)
🛠️ Bonus: Other Deductions to Explore
- Software and apps (e.g., Zoom, Canva, QuickBooks)
- Subscriptions (newsletters, professional journals)
- Travel for business (hotels, airfare, per diem meals)
- Client meals (50% deduction rule)
- Contract labor (payments to virtual assistants or subcontractors)
⚠️ Don’t Forget to Keep Records!
The IRS requires documentation for all deductions. Keep receipts, mileage logs, bank statements, and detailed records to support your deductions in case of an audit.
✅ Final Thoughts
As a freelancer or gig worker, the IRS offers a wide range of deductions that can reduce your taxable income—if you know how to use them. These deductions not only help you lower your tax bill but also make your business more financially efficient. When filing your 2025 tax return, make sure you capture all allowable expenses and file Schedule C accurately to avoid overpaying the IRS.
