Understanding Key Tax Deductions for Small Business Owners in 2025

Understanding which business expenses are tax-deductible can save you thousands—and keep you out of trouble come tax season. Whether you work from home, drive for business, or manage a team, knowing what you can write off is key to maximizing your savings and filing accurately.

Here’s a breakdown of the top deductions small business owners should track for 2025, plus practical tips to make tax time easier.

1. Deductible Daily Operating Expenses

Everyday business costs—like office supplies, subscriptions, maintenance, and professional services—are usually deductible. These are considered ordinary and necessary expenses for running your business.

Be sure to:

• Keep detailed records of receipts, invoices, and bank statements
• Document any service fees, such as online banking costs (e.g. Bluevine)
• Categorize expenses clearly in your bookkeeping software

Accurate records help reduce disputes during audits and ensure smooth, stress-free filing.

2. Home Office and Utility Deductions

If you regularly work from a dedicated space in your home, you may be eligible for the home office deduction—a valuable write-off for solopreneurs and remote teams.

What you can typically deduct:

• A portion of your rent or mortgage interest
• Utilities like electricity, internet, and water
• Repairs or maintenance in the home office space

Tip: Keep all utility bills and workspace documentation organized. Using a separate bank or savings account for business expenses can make tracking easier.

3. Vehicle and Mileage Expenses

If you use your car for business purposes, you can deduct:

• Fuel
• Repairs and maintenance
• Insurance
• Mileage (tracked at the IRS standard rate)

You can use either the actual expense method or the standard mileage rate—just pick the one that gives you the biggest benefit (and stick with it). Make sure to log trips consistently, and use tools like a bookkeeping app or credit card to document transactions.

4. Employee Wages and Payroll Taxes

Paying employees? You can deduct:

• Wages and salaries
• Bonuses and commissions
• Employer-paid payroll taxes
• Benefits like health insurance or retirement contributions

Accurate payroll records are not only essential for filing taxes correctly, but also for securing business loans, credit lines, or funding platforms like Kabbage.

Tip: Use reputable payroll software like Square Payroll to simplify tracking and ensure IRS compliance.

5. Insurance Premiums

Many insurance premiums qualify as deductions, including:

• General liability
• Property insurance
• Professional liability
• Health and employee benefit plans

Work with your accountant to confirm what qualifies. Consistently reviewing your policies also helps with budgeting and ensures you're not missing out on eligible write-offs.

6. Depreciation of Business Assets

If you’ve purchased property, equipment, or large assets for your business, you may be eligible to deduct depreciation over time.

What to know:

• Depreciation reduces your taxable income gradually
• You’ll need to track purchase dates, asset value, and usage
• A CPA can help apply the appropriate depreciation method for your industry

Using tools like a tax deduction calculator or QuickBooks depreciation tracker can simplify the process and ensure you're capturing every eligible deduction.

Final Thoughts

Maximizing your tax deductions starts with smart record-keeping and a clear understanding of what expenses qualify. By staying organized and seeking help when needed—especially from a trusted CPA or bookkeeping professional—you can save money, reduce stress, and keep your business financially healthy.

Need help sorting through your deductions or getting ready to file? Our team offers year-round support for small business owners who want confidence and clarity in their bookkeeping and taxes.