Because a DBA is a registered trade name rather than a separate legal entity, the IRS taxes most DBA owners as sole proprietors. That means DBA tax write-offs flow through Schedule C onto your personal return, and every deductible dollar shaves both your income tax and your 15.3% self-employment tax. Write-offs are worth more to you than to a W-2 employee taking the same expense, which is why it pays to know exactly what qualifies.
The Rule Every Deduction Has to Pass
A business expense is deductible when it is “ordinary and necessary.” Ordinary means common in your line of work. Necessary means helpful and appropriate for running the business.1Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses The expense doesn’t have to be indispensable, but it does need a real connection to earning income. Printer ink for your home office passes. A kayak because you “think better on the water” does not.
Documentation is on you. Keep receipts, bank statements, and logs that link each expense to the business, and hold them for at least three years from the date you filed, longer if you substantially underreport income.2Internal Revenue Service. Topic No. 305, Recordkeeping Without records, a legitimate expense can still be thrown out in an audit.
Everyday Operating Expenses
These are the routine costs of keeping the business running, and they’re generally deducted in full in the year you pay them.
Supplies, software, and continuing education. Paper, postage, cleaning products for your workspace, business software, cloud storage, and professional databases all qualify. Workshops, seminars, and classes that maintain or sharpen the skills your business already uses are deductible too. The line is drawn at training that qualifies you for a completely new career, which does not.3Internal Revenue Service. Topic No. 513, Work-Related Education Expenses
Advertising. Website hosting, domain registration, social media ads, printed business cards, and campaigns with a freelance designer are all deductible as long as the spending is reasonable.
Travel and meals. When you travel away from your tax home overnight for business, airfare, hotels, rental cars, and rideshares are deductible. Same-day travel between two business locations counts; your normal commute doesn’t.4Internal Revenue Service. Topic No. 511, Business Travel Expenses Business meals are deductible at 50%, provided the meal isn’t lavish and you or an employee is present.5Office of the Law Revision Counsel. 26 USC 274 – Disallowance of Certain Entertainment, Etc., Expenses
Insurance and professional fees. Premiums for general liability, professional malpractice, business property, and workers’ compensation are fully deductible. Accountant fees for preparing your business return and attorney fees for business legal advice go on Schedule C, Line 17. Only the business portion of a tax preparer’s fee qualifies, not the part that covers your personal return.6Internal Revenue Service. 2025 Instructions for Schedule C (Form 1040) – Profit or Loss From Business
Rent, utilities, and communications. Rent on a commercial space and the utilities at that space are straightforward deductions. A phone line or internet connection used exclusively for business is fully deductible; a mixed-use line is deductible only for the business share, and you’ll need records to back the split.
Wages and contractor payments. Wages, salaries, and the employer share of payroll taxes are deductible. Payments to independent contractors are deductible whether or not they hit a reporting threshold, but starting in 2026 you must file Form 1099-NEC for any contractor you pay $2,000 or more during the calendar year (up from the old $600 threshold).7Internal Revenue Service. Form 1099 NEC and Independent Contractors
First-Year Startup Costs
Money you spent investigating or launching the DBA before it opened for business has its own rule. You can deduct up to $5,000 of qualifying startup costs in your first year. That $5,000 allowance shrinks dollar-for-dollar once total startup costs exceed $50,000, and disappears at $55,000. Anything not deducted the first year is amortized over 180 months.8Congressional Research Service. Selected Issues in Tax Reform: The Small Business Start-Up Deduction
Qualifying costs include market research, scouting locations, pre-opening advertising, and training employees before opening. The DBA registration fee itself, which usually runs between $10 and $150 depending on your state or county, falls in here as well.
Equipment, Furniture, and Vehicles
Assets with a useful life longer than a year are normally capitalized and deducted through depreciation over several years. Two provisions let you take the write-off up front instead.
Section 179 Expensing
Section 179 lets you deduct the full cost of qualifying equipment, furniture, and certain other tangible property in the year you put it in service. For 2026, the maximum deduction is $2,560,000, phasing out dollar-for-dollar once qualifying purchases exceed $4,090,000.9Office of the Law Revision Counsel. 26 USC 179 – Election to Expense Certain Depreciable Business Assets One catch: Section 179 can’t push the business into a loss. If your income before the deduction is $40,000 and you bought $60,000 of qualifying equipment, only $40,000 comes off this year and the rest carries forward.
Bonus Depreciation
Bonus depreciation picks up where Section 179 leaves off. Under 2025 legislation, qualified property acquired after January 19, 2025 is eligible for a permanent 100% first-year depreciation deduction.10Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One Big Beautiful Bill Unlike Section 179, bonus depreciation can create a net business loss that offsets other income on your personal return. Both provisions are elected on Form 4562 and attached to your Schedule C.11Internal Revenue Service. About Form 4562, Depreciation and Amortization
Vehicles
Two methods, and you generally pick one in the first year and stay with it for the life of the vehicle. The 2026 standard mileage rate is 72.5 cents per business mile, plus parking and tolls.12Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents The actual expense method tracks every cost of operating the vehicle (gas, repairs, insurance, registration) and deducts the business-use percentage.
Either way, keep a contemporaneous mileage log with date, destination, business purpose, and miles driven. Vehicle deductions are one of the most commonly audited items, and a missing or inconsistent log can wipe out the write-off entirely.
Home Office Deduction
You can deduct the business portion of your home expenses if the space is used regularly and exclusively for business and serves as your principal place of business or a place where you regularly meet clients. A kitchen table you also eat dinner at fails the exclusive-use test.
The simplified method gives you $5 per square foot of dedicated business space, capped at 300 square feet (so a $1,500 maximum), with no tracking of household bills required.13Internal Revenue Service. Simplified Option for Home Office Deduction
The regular method deducts a percentage of actual home expenses based on the share of the home used for business. A 200-square-foot office in a 2,000-square-foot home would pick up 10% of rent or mortgage interest, property taxes, utilities, insurance, and maintenance. You can also depreciate the business-use portion of the home. Be aware that any depreciation you take gets recaptured when you sell, taxed at up to 25%, even if the rest of your gain qualifies for a lower capital gains rate.
Self-Employed Health Insurance
If you pay for your own health coverage, premiums for you, your spouse, and your dependents are an adjustment to income on Schedule 1, claimed through Form 7206. The policy can be in your name or the business name, and eligible coverage includes medical, dental, vision, and qualifying long-term care.14Internal Revenue Service. Instructions for Form 7206
Two limits catch people. The deduction can’t exceed your net self-employment income, and you can’t claim it for any month you were eligible for a subsidized employer plan (yours or a spouse’s), even if you never enrolled. And because this sits above the line rather than on Schedule C, it lowers income tax but not self-employment tax.
Retirement Contributions
Two plans dominate for sole proprietors, and both are deducted as adjustments to income on your 1040 rather than on Schedule C.
A SEP IRA lets you contribute up to 25% of net self-employment earnings, capped at $72,000 for 2026. Contributions are all employer-side, so there are no employee deferrals and no catch-up.15Internal Revenue Service. Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits
A Solo 401(k) is more flexible. You can defer up to $24,500 as an employee, then add employer profit-sharing of up to 25% of net self-employment income, with the combined 2026 total capped at $72,000 for under-50s. Age 50 and up adds an $8,000 catch-up (ceiling $80,000), and ages 60 through 63 get an enhanced $11,250 catch-up (ceiling $83,250).15Internal Revenue Service. Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits
The 20% Qualified Business Income Deduction
As a sole proprietor, you may qualify for the Section 199A deduction, which lets you deduct up to 20% of qualified business income on your personal return without itemizing. On $80,000 of net profit, that’s up to $16,000 off taxable income before rates apply.16Internal Revenue Service. Instructions for Form 8995
If your taxable income before the QBI deduction stays under roughly $201,750 (single) or $403,500 (married filing jointly) for 2026, the calculation is straightforward and reported on Form 8995. Above those thresholds, the deduction begins phasing out, and it’s more restrictive for specified service businesses like consulting, law, accounting, and healthcare, disappearing entirely for those service fields at approximately $276,750 (single) or $553,500 (joint).
Where the Deductions Actually Land: Schedule C, SE Tax, and Estimates
Business income and most deductions flow through Schedule C, Profit or Loss from Business, filed with your Form 1040. Gross receipts go in Part I, operating expenses across the designated lines in Part II, and any depreciation or Section 179 calculated on Form 4562 transfers to its line on Schedule C.17Internal Revenue Service. About Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)
Net profit gets hit with both income tax and self-employment tax. For 2026, SE tax is 15.3%: 12.4% for Social Security on the first $184,500 of net self-employment income, and 2.9% for Medicare on all of it.18Social Security Administration. Contribution and Benefit Base19Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) You calculate it on Schedule SE and then deduct half of the SE tax as an adjustment to income.
Because nobody’s withholding for you, if you expect to owe $1,000 or more you’re generally required to pay estimated tax quarterly with Form 1040-ES. The 2026 due dates are April 15, June 15, September 15, and January 15, 2027.20Taxpayer Advocate Service. Making Estimated Payments You avoid the underpayment penalty by paying at least 90% of current-year tax or 100% of last year’s, whichever is smaller. If your prior-year AGI exceeded $150,000, the safe harbor rises to 110% of last year’s tax.21Internal Revenue Service. Topic No. 306, Penalty for Underpayment of Estimated Tax