Mileage, home office, and the deductions people get wrong

Deductions are where self-employment stops feeling punitive — but only the ones you can actually substantiate. Here is what holds up.

Mileage, and why 2026 is unusual

The standard mileage rate changed mid-year in 2026, which is rare. Business miles driven January 1 through June 30 are deducted at 72.5 cents; miles from July 1 through December 31 are deducted at 76 cents. Charitable mileage stayed at 14 cents all year, because that rate is set by statute rather than adjusted for costs.

That mid-year split means your log needs dates, not just a total. Ten thousand miles is worth $7,250 or $7,600 depending on when you drove them.

What counts: travel between job sites, to clients, to the bank for business, to buy supplies. What doesn't: your commute from home to a regular place of work. Though if your home *is* your principal place of business, that first trip of the day becomes deductible — which is one of the quieter benefits of a legitimate home office.

The home office, done correctly

Two conditions, both required. The space must be used regularly and exclusively for business. A desk in the corner of a bedroom qualifies if nothing else happens at that desk. A dining table where you also eat dinner does not.

Two methods:

• Simplified — $5 per square foot, up to 300 square feet, so $1,500 maximum. No receipts, no depreciation.
• Actual expenses — your business-use percentage of rent or mortgage interest, utilities, insurance and repairs. More work, usually more money.

Run both. On a larger home or a higher rent, actual expenses often wins by a wide margin.

Retirement, the largest one nobody uses

A SEP-IRA lets a self-employed person contribute roughly 20% of net self-employment income, far above an IRA limit. A solo 401(k) can allow more still at moderate income levels. This is the single biggest lever most self-employed filers have, and it is available right up until the filing deadline — meaning it is the rare deduction you can still act on after the year has ended.

The three that disappoint

• Clothing — deductible only if it's unsuitable for everyday wear. A uniform or branded workwear, yes. A suit you bought for client meetings, no.
• Meals — 50% deductible, and only with a business purpose and a person on the other side of the table. Lunch alone between jobs isn't deductible.
• The whole phone bill — only the business-use percentage, and claiming 100% on your only phone invites a question you'd rather not answer.

What actually decides it

Records. A deduction you can't substantiate is a deduction you'll lose if anyone asks, and the ones people lose are almost never the ones that were wrong in principle — they're the ones where the log was never kept.

A spreadsheet updated monthly takes about fifteen minutes and is worth more than any clever strategy.