Use this 2025 checklist to keep more of what you earn—legally. Below are 12 deductions most small businesses overlook, with quick examples and what records to keep. Educational only; talk with a tax pro for your facts.
Table of Contents
1) Home Office Deduction (2025)
Eligibility: Regular and exclusive business use is generally required, along with a qualifying use such as a principal place of business, client meetings or a separate structure. Special exceptions apply to storage and daycare. Working from home as an employee does not itself qualify for this deduction in 2025. See IRS home-office eligibility.
Two methods: Simplified = $5/sq ft up to 300 sq ft (max $1,500). Actual expenses may include the eligible business share of rent, mortgage interest, utilities, insurance, repairs and depreciation, subject to deduction limits. Mortgage principal is not a deductible home-office expense.
What to track: Square footage + bills (if using actual).
Example: 200 sq ft × $5 = $1,000 deduction (simplified).
2) Vehicle Expenses & Mileage (2025)
Vehicle methods: The 2025 business standard mileage rate is 70 cents per eligible business mile. Actual expenses allocate qualifying costs to business use. Commuting is generally personal, and prior depreciation elections, first-year choices and leased-vehicle rules can limit which method is available. Do not claim both methods for the same expenses. See IRS Publication 463.
What to track: Date, miles, origin/destination, business purpose (keep a log/app).
Example: 2,000 miles × $0.70 = $1,400 deduction.
3) Section 179 Expensing (2025)
What it is: Expense qualifying equipment/software placed in service this year.
2025 limits: Up to $2,500,000, phasing out after $4,000,000 of purchases. Many SUVs (6,001–14,000 lbs GVWR) have a $31,300 §179 cap.
Example: $40,000 qualifying equipment used 100% for business → generally expense the full $40,000 (subject to income/other limits).
4) Bonus Depreciation (First-Year “Special” Depreciation)
Bonus depreciation: Certain qualifying property acquired and placed in service after January 19, 2025 is eligible for 100% bonus depreciation. Earlier acquisitions can follow different rules; binding contracts, property type and elections matter. Check IRS Publication 946 before applying a percentage.
What to track: Purchase docs, placed-in-service date, business-use %.
5) Retirement Contributions (SEP IRA / Solo 401(k))
Solo 401(k) (2025): Employee deferral up to $23,500 (+ catch-up if eligible). Overall employee+employer limit up to **$70,000** (plan rules apply).
SEP IRA (2025): Contributions are subject to compensation and plan limits, up to $70,000. Self-employed owners must use the special net-earnings calculation; do not simply multiply business profit by 25%. See IRS Publication 560.
What to track: Payroll/comp, plan docs, deposit dates. Ask us which plan fits best.
6) Self-Employed Health Insurance
Self-employed health insurance: Eligible premiums may qualify, subject to earned-income and plan rules. You cannot deduct premiums for months when you were eligible for subsidized employer coverage through your own or your spouse’s employment. Marketplace credits and long-term-care limits also affect the calculation. See Form 7206 instructions.
What to track: Premium invoices, months covered, marketplace subsidies (if any).
7) Meals & Travel
Meals and travel: Qualifying business meals are generally 50% deductible, subject to the business purpose, presence and documentation rules; entertainment is generally nondeductible. Travel deductions depend on your tax home and qualifying business travel away from home, rather than any overnight trip. Separate personal costs. See IRS Publication 463.
What to track: Who/what/why for meals; receipts + trip purpose/itinerary for travel.
8) Education & Professional Development
Education that maintains or improves skills for your current work may qualify. Education meeting minimum requirements or qualifying you for a new trade or business does not qualify as work-related education, even if useful in your current role. See IRS Publication 970.
What to track: Course receipts, agendas/syllabi, CPE/CE credits.
9) Business Insurance & State/Local Taxes
General liability, professional liability (E&O), workers’ comp, and business property insurance—plus state/local business taxes and fees—are typically deductible.
What to track: Policy invoices, state filings.
10) Advertising, Marketing & Website
Ads, printing, sponsorships, directory listings, domain/hosting, design, SEO, stock photos, and content creation.
Keep invoices and evidence of the business purpose for advertising and website costs. Discuss whether development or other long-lived costs must be capitalized rather than immediately deducted. Discuss business tax preparation.
11) Software, Subscriptions & Supplies
Accounting, CRM, payroll, project tools, e-signature, cloud storage, office supplies, and small equipment may be deductible.
De minimis safe harbor: For a taxpayer without an applicable financial statement, the threshold is $2,500 per invoice or substantiated item. A qualifying accounting procedure must exist at the start of the tax year, the amount must be expensed in the books, and an annual election is required. Inventory and land are excluded. See IRS tangible-property rules.
12) Startup & Organizational Costs
New business? You can generally deduct up to $5,000 of startup costs and $5,000 of organizational costs in the first year (reduced as total costs exceed $50,000); the rest is amortized.
What to track: Entity filing fees, legal/accounting, market research, training, advertising before opening.
Frequently Asked Questions (FAQs)
What’s the best way to track mileage?
Use a mileage app that logs date, distance, and business purpose—export a report at year-end. Keep repair receipts showing odometer readings.
Can I take both Section 179 and bonus depreciation?
Often yes—§179 is applied first, then bonus depreciation on the remaining basis (subject to current-year rules and limits). We’ll optimize this for cash-flow and documentation.
Do all meals qualify?
No. Meals must be ordinary, necessary, not lavish, and tied to business. Keep the receipt and who/what/why. Most client/business meals are 50% deductible.
What is the 20% QBI deduction?
Eligible pass-through owners may deduct up to 20% of qualified business income, subject to income thresholds, W-2 wage/property tests, and SSTB limits.
Get More Deductions — Legally
Talk with Pedro Henriquez, EA. We’ll review your 2025 deductions, set up clean records, and file with confidence.