An LLC can write off any expense that is ordinary and necessary for running the business. That covers rent, utilities, payroll, insurance, professional fees, advertising, vehicle costs, travel, equipment, a portion of your home if you work from it, and much more. The tax write-offs available to an LLC are the same regardless of how the LLC is taxed; only the form the deductions land on changes. Below is what most LLC owners can actually claim, with the rules and dollar limits that matter in practice.1Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses
Everyday Operating Expenses
The recurring costs of keeping the business running are generally fully deductible, provided you have records to back each one up.
Commercial rent, utilities for that space, and co-working fees are deductible in full. A dedicated business phone line and business internet qualify too; if a plan is mixed-use, only the business portion counts. You cannot deduct the base cost of the first landline into your home even if you take business calls on it, though a second line used only for business is fully deductible.
Supplies, postage, software subscriptions, cloud services, and accounting platforms are expensed in the year you pay for them. Premiums for general liability, professional liability, property coverage on business assets, and commercial auto insurance are deductible. Life insurance premiums paid by the LLC on a key employee or owner are not deductible when the LLC is the beneficiary.2eCFR. 26 CFR 1.264-1 – Premiums on Life Insurance Taken Out in a Trade or Business
Fees paid to attorneys, accountants, bookkeepers, and business consultants are deductible when the services relate to operations. Legal fees paid to acquire a business asset get added to that asset’s cost basis instead of expensed. Advertising and marketing spending, including digital campaigns, website hosting and development, print materials, and PR, all qualify as long as the spending is aimed at generating current or future revenue.
Interest on business loans, business credit cards, and lines of credit is generally deductible for smaller LLCs. Education and training expenses are deductible if they maintain or improve skills you already use in your business, or if a licensing body requires them; coursework that qualifies you for a new profession does not count.3Internal Revenue Service. Work-Related Education Expenses State and local business licenses, professional registration fees, permits, and the annual LLC filing or franchise fee your state charges are all deductible.
If a customer stiffs you on money you’ve already reported as income, you can write it off as a business bad debt once it’s clearly uncollectible.4Internal Revenue Service. Topic No. 453, Bad Debt Deduction Cash-method LLCs generally can’t take this deduction for unpaid invoices, since the income was never booked in the first place. And if your LLC sells physical products, the direct costs of producing or purchasing inventory come off through cost of goods sold rather than as a separate operating expense.
The Home Office Deduction
If you use part of your home regularly and exclusively for the business, you can deduct a portion of your housing costs. The space has to be your principal place of business or a place where you regularly meet clients. A spare bedroom that doubles as a guest room fails the exclusive-use test.5Internal Revenue Service. How Small Business Owners Can Deduct Their Home Office From Their Taxes
Two calculation methods are available. The simplified method uses $5 per square foot up to 300 square feet, for a maximum $1,500 deduction.6Internal Revenue Service. FAQs – Simplified Method for Home Office Deduction The regular method tracks actual costs — mortgage interest or rent, property taxes, utilities, insurance, and repairs — and deducts the office’s percentage share of total square footage. More record-keeping, usually a bigger number.
Under either method, the deduction can’t exceed the business’s gross income for the year. The regular method allows the excess to carry forward. The simplified method does not, so anything unused disappears.7Internal Revenue Service. Topic No. 509, Business Use of Home
Start-Up and Organizational Costs
Money spent before the LLC actually opens for business gets a different set of rules. Filing fees, market research, pre-launch advertising, and training employees before opening day count as start-up costs. Legal fees for drafting your operating agreement and the state fee to form the LLC are organizational costs.
You can deduct up to $5,000 in start-up costs and $5,000 in organizational costs in the year the business begins operating. Each allowance shrinks dollar-for-dollar once total costs in that category exceed $50,000. Anything left over is amortized evenly over 180 months, starting with the month the business opens.8Office of the Law Revision Counsel. 26 US Code 195 – Start-up Expenditures Skip the election and the tax benefit is essentially locked up until you sell or close the business.
Paying Employees, Contractors, and Yourself
Wages, salaries, and bonuses paid to W-2 employees are fully deductible. So is the employer’s share of Social Security and Medicare tax on those wages, on top of the wages themselves.9Internal Revenue Service. FICA Tip Credit for Employers Employer contributions to a 401(k), SEP-IRA, or health insurance for employees are deductible as compensation costs.
Payments to independent contractors are fully deductible. For 2026, you must issue Form 1099-NEC to any non-employee you pay $2,000 or more during the calendar year, up from the old $600 threshold, effective for payments made after December 31, 2025.10Internal Revenue Service. 2026 Publication 1099 The higher threshold changes reporting, not classification: treating an actual employee as a contractor still triggers penalties.
Owner Pay in a Pass-Through LLC
If your LLC is a disregarded entity or taxed as a partnership, you are not an employee. What you take out of the business as a distribution or a guaranteed payment is not a deductible business expense. Instead, you pay self-employment tax on your share of the LLC’s net income, and you can deduct half of that self-employment tax on your personal return. That deduction is the counterpart to the employer FICA share a regular employer would have paid.11Internal Revenue Service. Schedule SE (Form 1040) – Self-Employment Tax
Self-Employed Health Insurance
LLC owners who aren’t eligible for coverage through a spouse’s employer can deduct 100% of health, dental, and vision insurance premiums for themselves, their spouse, and their dependents. This isn’t on Schedule C. It’s an above-the-line deduction reported on Form 7206, so it reduces adjusted gross income whether you itemize or not.12Internal Revenue Service. Instructions for Form 7206 (2025) The deduction can’t exceed net profit from the business under which the insurance is established. For any month you were eligible for a subsidized plan through an employer or a spouse’s employer, that month’s premiums don’t qualify.
Vehicles, Travel, Meals, and Gifts
These categories get scrutinized because personal and business costs mix so easily. Documentation of date, amount, location, and business purpose is required for every claim.
Vehicles
Two methods are available for a personal vehicle used for business. The 2026 standard mileage rate is 72.5 cents per mile, covering fuel, maintenance, insurance, and depreciation in one figure.13Internal Revenue Service. Internal Revenue Service Notice 2026-10 – 2026 Standard Mileage Rates The actual expense method deducts real operating costs — gas, oil, repairs, insurance, registration, depreciation — multiplied by the documented business-use percentage. Either way, keep a mileage log with date, destination, purpose, and miles. Commuting between home and a regular workplace is personal, even if you take business calls on the drive.
Travel Away From Home
Overnight business travel outside the general area of your tax home makes airfare, hotel, rental cars, taxis, and baggage fees deductible.14Internal Revenue Service. Topic No. 511 – Business Travel Expenses If you tack personal days onto a business trip, only the business portion is deductible.
Meals
Business meals are 50% deductible. The meal needs a clear business purpose, you or an employee must be present, and the cost can’t be lavish.15Internal Revenue Service. Income and Expenses FAQs Instead of receipts for every meal on the road, you can use IRS per diem rates. From October 2025 through September 2026, the meals-and-incidentals per diem is $86 per day in high-cost areas and $74 per day elsewhere. The 50% limit still applies.
Business Gifts
Gifts to clients, vendors, or business contacts are deductible up to $25 per recipient per year. Packaging, engraving, and shipping don’t count against the $25 cap. A gift to a company rather than a specific person is typically deductible in full. The $25 ceiling hasn’t been adjusted for inflation since it was enacted, so it doesn’t stretch far, but it’s worth tracking.
Equipment and Accelerated Deductions
Equipment, machinery, vehicles, computers, and other property with a useful life beyond a single year are, by default, depreciated over the asset’s recovery period under MACRS. A computer is five years; office furniture is seven.16Internal Revenue Service. Publication 946 (2025) – How to Depreciate Property Two provisions let you skip the wait.
Section 179 lets you expense the full purchase price of qualifying property in the year you place it in service. The 2026 maximum is $2,560,000, phasing out dollar-for-dollar once qualifying property placed in service exceeds $4,090,000. The Section 179 deduction can’t create a net loss; it’s capped at your business’s taxable income for the year.17Internal Revenue Service. Depreciation and Recapture
Bonus depreciation lets you deduct 100% of the cost of qualifying new or used property in the first year. The One Big Beautiful Bill Act restored 100% bonus depreciation, reversing the phase-down that had been scheduled to drop the rate to 20% in 2026. Unlike Section 179, bonus depreciation can create or increase a net operating loss, which makes it useful in a heavy investment year. Bonus depreciation applies after any Section 179 election, absorbing the remaining basis before standard MACRS. Both are claimed on Form 4562.18Internal Revenue Service. About Form 4562, Depreciation and Amortization
The 20% Qualified Business Income Deduction
Technically not a business expense, and it doesn’t appear on Schedule C or Form 1065. But under Section 199A, owners of pass-through businesses — which covers most LLCs — can deduct up to 20% of qualified business income on their personal return.19Office of the Law Revision Counsel. 26 US Code 199A – Qualified Business Income
For 2026, the full 20% is available without restriction if total taxable income is below roughly $201,750 for single filers or $403,500 for joint filers. Above those numbers, limitations phase in over a range of $75,000 (single) or $150,000 (joint). Two things happen inside and above that phase-in: the deduction becomes limited by W-2 wages the business pays and its depreciable property, and certain service-based businesses lose the deduction entirely.
Those service restrictions apply to “specified service trades or businesses” — law, medicine, accounting, consulting, financial services, athletics, and similar fields. Above the phase-in ceiling, an SSTB gets no QBI deduction. Non-service businesses like manufacturing, retail, or construction face the wage-and-property cap but are never fully excluded. The QBI deduction was originally set to expire after 2025 and has since been extended. For owners below the income thresholds, it effectively cuts the tax rate on business income by a fifth with no additional paperwork beyond the standard return.
Documentation That Backs the Deductions
Every write-off above depends on proof. The IRS can disallow anything you can’t substantiate, and memory does not count. Keep receipts, invoices, bank and card statements, and mileage logs sorted by category and year; digital copies are fine as long as they’re legible. For vehicle, travel, and meal expenses, notes made at or near the time of the expense carry far more weight than logs reconstructed during an audit. The simplest habit that holds up: write the business purpose on each receipt before you file it away.