The short answer
The deductions small business owners miss most are the home office, business vehicle use (72.5 cents a mile in 2026), self-employed health insurance, retirement contributions, the QBI deduction, and full expensing of equipment. Each depends on good records, so the real fix is bookkeeping that captures them as they happen.
Deductions that are often missed
Home office
If part of your home is used regularly and exclusively for business, you can deduct it. The simplified method is $5 per square foot up to 300 square feet. The regular method uses actual expenses (rent or mortgage interest, utilities, insurance, depreciation) in proportion to the space.
Vehicle
Business miles are deductible at the standard rate of 72.5 cents per mile for 2026, or you can deduct the business share of actual costs. Commuting doesn't count. A contemporaneous mileage log is essential.
Self-employed health insurance
Premiums for you, your spouse and dependents are deductible above the line if you're self-employed and not eligible for an employer plan. S corp owners with more than 2% ownership need the premiums on their W-2 to claim it.
Retirement contributions
Solo 401(k) and SEP-IRA contributions can shelter large amounts: up to $72,000 of total additions in 2026, plus catch-up contributions. This is often the single biggest deduction available to a profitable owner.
The QBI deduction
Up to 20% of qualified business income, now permanent. Above $201,750 of taxable income ($403,500 joint) it becomes limited by wages paid and by specified service business rules.
Equipment and property
100% bonus depreciation was permanently restored for qualifying property acquired after January 19, 2025, and the Section 179 limit rose to $2.5 million (indexed for inflation). Most business equipment, furniture and software can be deducted in the year it's placed in service.
The rest of the list
- Business share of phone and internet
- Software subscriptions and professional dues
- Education that maintains or improves skills in your current business
- Business meals (50%) with a documented business purpose
- Bank fees, merchant fees and interest on business debt
- Hiring your children at a reasonable wage for real work
- An accountable plan for S corp owners to reimburse home office and phone costs tax-free
What the IRS expects you to keep
Every deduction depends on records: receipts, mileage logs, calendars and a clear business purpose. Keep them for at least three years after filing, and longer for property and depreciation records.
General information based on federal law for tax year 2026, not tax advice for your situation. State rules vary.