Tax deductions for self-employed contractors and home service operators
Most operators overpay tax for one reason: they don’t keep the records that would let them claim what they’re already entitled to. The deductions themselves are not exotic. The mileage log is.
This is general information, not tax advice. Figures are from IRS publications as of 14 September 2026. Tax law changes, and your situation depends on your structure, state and income — confirm with a CPA or enrolled agent before you file.
First, the tax you’re trying to reduce
When you’re self-employed, nobody withholds for you, and you owe two things on profit:
- Income tax, at your normal rates
- Self-employment tax: 15.3% — 12.4% Social Security plus 2.9% Medicare — on net earnings of $400 or more for the year
Every legitimate deduction lowers profit, which lowers both. That’s why a $1,000 expense saves a sole proprietor more than it would save an employee.
The deductions that matter most
1. Vehicle: mileage or actual expenses
For most home service operators, this is the biggest deduction there is.
Standard mileage rate (IRS):
| Period | Rate |
|---|---|
| 2025 | 70¢ per mile |
| 1 Jan – 30 Jun 2026 | 72.5¢ per mile |
| 1 Jul – 31 Dec 2026 | 76¢ per mile |
Alternatively, deduct actual expenses — fuel, repairs, tires, insurance, registration, depreciation — multiplied by business-use percentage. You pick one method per vehicle.
Driving from job to job, to the supply house, and to the dump is business mileage. Record date, destination, purpose and miles. A log you rebuild in April from memory is the one that fails an audit.
2. Equipment and tools
Mowers, pressure washers, ladders, vacuums, trailers. Two routes:
- Depreciate over the asset’s useful life, or
- Expense it in the year you buy it under Section 179, which for 2025 onward has a $2.5 million base limit, indexed for inflation — far above anything a small crew spends. Bonus depreciation is another route.
Which is better depends on whether you want the deduction this year or spread across future years when your income may be higher. Ask your preparer.
3. Half of your self-employment tax
You can deduct half of your self-employment tax when calculating adjusted gross income. Tax software does this automatically; it’s worth knowing it’s there.
4. Qualified business income (QBI) deduction
Many sole proprietors, LLC owners and S corporation shareholders can deduct up to 20% of qualified business income. It’s now a permanent part of the code, and from 2026 there’s a minimum deduction of $400 for taxpayers with at least $1,000 of qualified business income from businesses they materially participate in. Income limits apply.
5. Supplies and materials
Chemicals, cleaning products, fuel for equipment, trash bags, fertilizer, lumber you bill to jobs. Ordinary and necessary — deductible in the year you use them.
6. Software and phone
Scheduling, invoicing and accounting software; the business-use share of your phone and data plan. QuoteIQ at $29.99/mo is a business expense like any other tool.
7. Insurance
General liability, commercial auto, tools and equipment coverage, and workers’ compensation premiums. Self-employed health insurance premiums can also be deductible, subject to rules.
8. Home office
If part of your home is used regularly and exclusively for the business — where you quote, invoice and do the books — you may qualify. There’s a simplified method based on square footage. Your kitchen table does not qualify.
9. Pay to helpers
Wages to employees are deductible, as are payments to genuine independent contractors. From 2026, you file Form 1099-NEC for anyone you pay at least $2,000 in the year for services (the threshold was $600 through 2025). Classification matters — see subcontractor vs employee.
10. Marketing, licenses and professional fees
Yard signs, door hangers, Google Ads, website hosting, business and trade licenses, and what you pay your accountant.
What doesn’t count
- Clothing you could wear off the job (branded uniforms and safety gear are different)
- Commuting from home to a regular fixed workplace
- Fines and penalties, including parking tickets
- Personal meals on a normal workday
The record-keeping that makes it all work
- Separate bank account and card for the business. Nothing personal through it.
- Mileage log — an app that tracks trips automatically is fine.
- Receipts stored digitally the day you get them.
- Invoices that tie income to jobs.
Job software handles the fourth. Jobber and Housecall Pro both sync invoices and payments to QuickBooks Online, which gives your preparer a clean income record instead of a shoebox.
If you haven’t set up the structure yet, read handyman LLC — an LLC doesn’t change these deductions, but an S corporation election changes how self-employment tax is calculated.
Questions operators actually ask
What is the IRS mileage rate for 2026?
The IRS set the business standard mileage rate at 72.5 cents per mile for January 1 to June 30, 2026, and 76 cents per mile for July 1 to December 31, 2026. The 2025 rate was 70 cents per mile.
Can I deduct my truck and my mileage?
Not both for the same vehicle. You either use the standard mileage rate or deduct actual expenses — fuel, repairs, insurance, depreciation — based on business-use percentage. Whichever method you choose, keep a mileage log.
How much is self-employment tax?
15.3% — 12.4% for Social Security and 2.9% for Medicare — on net self-employment earnings once they reach $400 for the year. You can deduct half of it when working out your adjusted gross income.
Is software for my business tax deductible?
Generally yes. Subscription software you use to run the business — scheduling, invoicing, accounting — is an ordinary and necessary business expense for most operators. Keep the receipts.
What is the QBI deduction?
The qualified business income deduction lets many sole proprietors, partners and S corporation owners deduct up to 20% of qualified business income. Income limits and other rules apply, so check with a tax professional or the IRS guidance for your situation.