Business Tax Deduction Calculator
Estimate your total allowable business tax deductions for home office use, vehicle mileage, equipment purchases, and business meals. Designed for freelancers, sole proprietors, and small business owners preparing Schedule C.
Last updated: September 2026
Formula below · 1 source (IRS) · Updated Sep 2026
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About this calculator
Business tax deductions reduce your net profit and therefore the income subject to self-employment and income taxes. This calculator sums four common categories: Total Deductions = (homeOfficeSquareFeet / totalHomeSquareFeet × annual home expenses) + (businessMiles × mileage rate) + equipmentPurchases + (businessMeals × 0.5). The home office part uses the regular (actual-expense) method: the share of your home used regularly and exclusively for business times your annual home expenses (rent or mortgage interest, utilities, insurance, repairs; $12,000 is used if you leave that field blank). The simplified method is an alternative: $5 per square foot for up to 300 square feet (maximum $1,500). Vehicle costs use the IRS standard mileage rate: for 2026 it is 72.5 cents per mile for business miles driven January 1 to June 30 and 76 cents from July 1 to December 31 (the IRS raised it mid-year); the field defaults to 72.5 cents, so enter a blended rate if you drove in both halves. Equipment purchases are deducted in full, as Section 179 or bonus depreciation usually allows for qualifying equipment; otherwise the cost is depreciated over several years. Business meals are 50% deductible. The home office deduction for the regular method is limited to the business's net income, and depreciation on the home is not included here.
How to use
Assume: homeOfficeSquareFeet = 200, totalHomeSquareFeet = 2,000, annual home expenses = $12,000, businessMiles = 8,000 (all driven in the first half of 2026, so the mileage rate is $0.725), equipmentPurchases = $3,000, businessMeals = $1,200. Step 1: Home office = 200 / 2,000 × $12,000 = 0.10 × $12,000 = $1,200. Step 2: Mileage = 8,000 × $0.725 = $5,800. Step 3: Equipment = $3,000. Step 4: Meals = $1,200 × 0.5 = $600. Step 5: Total deductions = $1,200 + $5,800 + $3,000 + $600 = $10,600. This $10,600 reduces your net self-employment income dollar for dollar.
Frequently asked questions
How do I calculate the home office deduction using the regular method?
Under the regular method, divide the square footage of your dedicated home office by the total square footage of your home to get the business-use percentage. Apply that percentage to your actual home expenses — mortgage interest or rent, utilities, insurance, and repairs — to determine the deductible amount. Enter your real annual home expenses in the home-expenses field; if you leave it blank the calculator uses $12,000. The space must be used regularly and exclusively for business; a guest bedroom that doubles as an office generally does not qualify.
What is the IRS standard mileage rate and how does it work for business driving?
The IRS standard mileage rate allows you to deduct a fixed number of cents per business mile driven instead of tracking actual vehicle expenses like fuel, oil, and depreciation. For 2026 the business rate is 72.5 cents per mile from January 1 to June 30 and 76 cents per mile from July 1 to December 31; the IRS normally sets it once a year but raised it mid-2026 after a jump in fuel prices. To use this method you must track your business miles with a mileage log showing the date, destination, business purpose, and miles driven for each trip. Commuting miles between your home and a regular place of business are not deductible; only trips to client sites, business meetings, and supply runs qualify.
Why are business meals only 50% deductible on a tax return?
The 50% limitation on business meal deductions exists because the IRS assumes that at least half the value of a business meal is personal in nature — everyone has to eat regardless of whether business is discussed. To deduct any portion, the meal must have a legitimate business purpose, and you should document the date, location, attendees, and the business topic discussed. Entertainment expenses (sporting events, concerts) were eliminated entirely as deductions by the Tax Cuts and Jobs Act of 2017, so only the meal portion of a combined entertainment-and-dining outing remains partially deductible. Keeping itemized receipts is essential for surviving an audit.