Stay on Top of 2025's Tax Deductions
When's time for you to claim deductions on your federal tax return, remember this: If you under-report income or claim too many deductions, you may face serious financial—and possibly criminal—consequences. But if you cheat yourself by claiming too few deductions, you run the risk of leaving money on the table.
For this reason, having an accountant for your business is a wise move. A CPA can help you determine all the appropriate tax deductions for your line of business. And in the best-case scenario, you'll have enough deductions to put you into a lower tax bracket.
If you've been putting off your taxes thus far, we hope our list of both typical and lesser-known federal-tax deductions taxes will get you into gear.
Matter-of-Fact Deductions: Review the Tried and True
Make sure you're not forgetting any of these basic tax deductions:
Mortgage interest and rent. Businesses operating on commercial premises can deduct rent and mortgage interest. For 2025, shared workspaces (such as co-working spaces) are eligible for partial rent deductions.
Home office. Per IRS rules, you must use the space for business purposes only—no family rooms, bedrooms, or kitchen nooks allowed. If you have an eligible space, you can deduct a percentage of your rent or mortgage interest, home insurance, and utilities. Too complicated? You can opt to take the flat $5.00-per-square-foot deduction, with a maximum deduction of deduction of 300 square feet, or $1,500.
Home-office Internet and phone. You may deduct a portion of your household phone and internet bills, based on the percentage you use for business. If you buy a phone solely for business purposes, you can write off any depreciation on the hardware. Online communication tools, such as a Zoom subscription or a Skype number, are 100 percent deductible, as are wi-fi expenses when traveling.
Business insurance. Deductions may apply for fire, theft, and liability policy premiums. You may also be able to claim against worker's compensation coverage and industry- or peril-specific policies (such as a publication taking out liable insurance). For 2025, the IRS has included cybersecurity insurance premiums as a deduction.
Bank fees and interest. Eligible deductions include account startup and monthly maintenance fees, overdraft fees, and costs for additional services, such as lines of credit.
Startup costs. New businesses often incur large upfront expenses. These may include research, recruiting, training, or travel costs associated with developing a business plan and establishing a company, among other line items. For 2025, the maximum deduction for startup costs remains at $5,000; in cases where costs exceed $50,000, you can amortize that expense over 15 years.
Individual Retirement Account (IRA) contributions. You can contribute a maximum of $7,000 per year to a traditional IRA. (The catch-up IRA contribution limit remains at $7,500.)
Auto expenses. Only a business owner can deduct automobile expenses. If you use the car for business purposes only, you may deduct gas, maintenance, leasing, and insurance costs. If you're using a vehicle for business and personal reasons, you can deduct only the work-related use, at the increased mileage rate of 67 cents per mile (up 1.5 cents from 2023's rate). Equipment and vehicle leases considered necessary for the business are also deductible.
Business Travel, Meals, and Entertainment. You can deduct the expense of transportation, accommodations, and car rentals for business trips. If you treat their client or employees to a meal, party, or other entertainment, you may deduct all or part of the related expense. You'll want to track these expenses carefully, since the tax rules around them are nuanced. Here are some examples:
Small businesses can claim the entire cost of providing employees with free work lunches.
Food and beverages for free promotional events are completely deductible.
In general, meals are 50 percent deductible. However, client entertainment expenses remain 0 percent deductible for 2025.
Charitable donations. Charitable donations can include pro-bono services, volunteer hours, cash, or goods with a monetary value.
Education. Courses or programs that are either required by law or improve your business are typically deductible. If you're a home inspector, for example, you can claim professional development courses that can improve upon and/or expand your services.
Catch up on these lesser-known deductions.
Don't miss out on some lesser-known deductions for which your business may be eligible.
Accounting Fees. Thankfully, the IRS recognizes accounting fees (whether that's software-based advice or the wisdom of an accountant) as necessary expenses.
Marketing, advertising, or other professional services. You may hire an agency or a consultant to help you create and distribute social media ads, print ads, and commercials.
Health insurance premiums. Small business owners often pay out-of-pocket for their health coverage. If this applies to you, you're covered for your policy premiums.
Licensing fees. Businesses in a regulated profession—for example, a liquor store or a spa—may need to pay for a state, county or city license. Note that claiming deductions for business license fees is less straightforward than other expenses. Talk with a licensed tax preparer before writing off these costs.
Moving expenses. Deductible moving expenses are strictly limited to the cost of an office relocation.
Though this is not an exhaustive list of federal tax deductions, it gives you a better idea of the broad range of deductions possible. As you prepare your return or work with a tax professional on it, be sure to consult the IRS's Small Business Tax Guide for more granular information on deductions and much more.
Did You Know?
The IRS offers businesses direct access to their tax records online through its Business Tax Account pages. Learn more about this convenient service and the IRS Small Business and Self-Employed Tax Center in this YouTube video from the IRS.
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