Complete List of Business Write Offs for 2026

Complete List of Business Write Offs for 2026

Understanding the complete list of business write offs can save you thousands in taxes for 2026. Business owners who strategically track and claim eligible deductions reduce their taxable income significantly. This guide covers equipment purchases, operational expenses, employee costs, and lesser-known write-offs that the IRS allows for the 2026 tax year.

Table of Contents

• Key Takeaways
• What Business Expenses Qualify as Write-Offs?
• What Equipment and Vehicle Deductions Can You Claim?
• What Operational Expenses Are Deductible?
• How Can You Write Off Employee and Contractor Costs?
• What Are Advanced Deduction Strategies for 2026?
• What Documentation Do You Need for Business Write-Offs?
• What Common Mistakes Should You Avoid?
• Uncle Kam in Action: How a Delaware Contractor Saved $47,000
• Next Steps
• Frequently Asked Questions
• Related Resources

Key Takeaways

• Business owners can deduct ordinary and necessary expenses for 2026.
• Section 179 allows immediate expensing up to estimated limits for equipment.
• The standard mileage rate for 2026 is approximately $0.70 per business mile.
• Proper documentation is essential for all deductions claimed on your return.
• Strategic planning maximizes write-offs while maintaining IRS compliance.

What Business Expenses Qualify as Write-Offs?

The foundation of any list of business write offs starts with understanding IRS requirements. For the 2026 tax year, expenses must meet two critical tests. First, they must be ordinary—common and accepted in your trade. Second, they must be necessary—helpful and appropriate for your business.

The IRS provides clear guidance on Publication 535 (Business Expenses), which outlines deductible expenses. Business owners should review this publication annually as rules evolve. Additionally, expenses must be reasonable in amount and directly connected to business activities.

The Ordinary and Necessary Test

Understanding what “ordinary and necessary” means prevents audit problems. Ordinary doesn’t mean frequent—it means customary in your field. A construction company buying heavy equipment is ordinary. However, a consultant buying the same equipment might raise questions.

Necessary expenses don’t have to be indispensable. They simply need to be helpful and appropriate. For example, advertising isn’t mandatory for survival. Nevertheless, it’s clearly helpful for growth. Therefore, advertising qualifies as a necessary expense. Strategic tax planning helps identify which expenses pass this test.

Categories of Deductible Expenses

The IRS organizes business write-offs into several major categories. Consequently, understanding these categories helps ensure you don’t miss valuable deductions:

• Cost of goods sold for product-based businesses
• Capital expenses including equipment and property improvements
• Operating expenses such as rent, utilities, and supplies
• Employee compensation and benefits
• Professional services including legal and accounting fees
• Marketing and advertising expenditures
• Vehicle and transportation costs

What Equipment and Vehicle Deductions Can You Claim?

Equipment purchases represent some of the largest deductions on any list of business write offs. For 2026, the IRS offers multiple methods to deduct these costs. Smart business owners choose the method that provides maximum tax benefits. Moreover, understanding timing rules helps optimize deductions across tax years.

Section 179 Immediate Expensing

Section 179 is a powerful tool for business owners investing in equipment. Rather than depreciating assets over several years, you can expense them immediately. For 2026, the deduction limit is estimated at approximately $1,220,000. However, this phases out once total equipment purchases exceed approximately $3,050,000.

Qualifying property includes machinery, equipment, computers, software, and vehicles over 6,000 pounds. Furthermore, certain building improvements now qualify. This expanded definition helps restaurants, retailers, and office-based businesses. Check IRS Publication 946 for complete details on qualifying property.

Bonus Depreciation for 2026

Bonus depreciation continues to phase down in 2026. Current law provides approximately 40% bonus depreciation for qualifying property. This decreases from previous years but still offers substantial first-year deductions. Bonus depreciation applies to new and used property placed in service during 2026.

Combining Section 179 with bonus depreciation creates powerful tax savings. For instance, purchase $500,000 in equipment. Expense $500,000 under Section 179. Any remaining eligible property could then claim bonus depreciation. This strategy maximizes first-year deductions.

Vehicle Deductions

Vehicles used for business offer two deduction methods. The standard mileage rate for 2026 is approximately $0.70 per business mile. Alternatively, you can deduct actual expenses including gas, maintenance, insurance, and depreciation. Most business owners find the standard mileage rate simpler and equally beneficial.

For vehicles over 6,000 pounds gross vehicle weight, Section 179 provides immediate expensing. SUVs, pickups, and vans often qualify. However, luxury vehicle limits may apply. Therefore, consult a tax professional before making large vehicle purchases.

Deduction Method	2026 Amount	Best For
Section 179	Up to ~$1,220,000	Equipment, machinery, heavy vehicles
Bonus Depreciation	~40% first year	New and used qualifying property
Standard Mileage	~$0.70 per mile	Lighter vehicles, multiple vehicles

What Operational Expenses Are Deductible?

Operational expenses form the backbone of your list of business write offs. These recurring costs keep your business running. Fortunately, nearly all legitimate operating expenses are fully deductible. Tracking these expenses throughout the year ensures you capture every dollar.

Office and Facility Costs

Rent payments for business facilities are 100% deductible. This includes office space, retail locations, warehouses, and storage units. If you own your building, you can deduct mortgage interest, property taxes, insurance, and depreciation. Additionally, maintenance and repairs qualify as immediate deductions.

Utilities represent another significant operational expense. Electricity, water, gas, internet, and phone services are fully deductible. For home-based businesses, the home office deduction allows you to claim a portion of these costs. The simplified method allows $5 per square foot for up to 300 square feet.

Supplies and Materials

Office supplies, shipping materials, cleaning supplies, and small tools are immediately deductible. These items are consumed within the year. Therefore, they don’t require capitalization. However, items lasting more than one year may need different treatment. The IRS provides guidance on deducting business expenses through their Small Business portal.

Insurance Premiums

Business insurance premiums are fully deductible expenses. This includes general liability, professional liability, property insurance, and business interruption coverage. Workers’ compensation insurance also qualifies. However, life insurance premiums for key person policies where the business is beneficiary are generally not deductible.

Professional Services

Fees paid to lawyers, accountants, consultants, and other professionals are deductible. This includes tax preparation fees for business returns. Similarly, bookkeeping services, payroll processing, and business coaching all qualify. These services help you operate effectively and remain compliant.

Marketing and Advertising

All marketing and advertising expenses are deductible. This encompasses digital ads, print advertising, website costs, social media marketing, and promotional materials. Business cards, brochures, and branded merchandise qualify. Even sponsorships and charitable contributions may be deductible if they provide business exposure.

How Can You Write Off Employee and Contractor Costs?

Labor costs typically represent the largest expense for most businesses. Fortunately, compensation is one of the most straightforward items on any list of business write offs. All reasonable compensation paid to employees and contractors is deductible. Moreover, associated costs like payroll taxes and benefits qualify as well.

Employee Wages and Salaries

All wages, salaries, and bonuses paid to employees are deductible. However, the compensation must be reasonable for the services performed. The IRS scrutinizes excessive compensation, particularly in closely held corporations. For S corporations, owner-employees must take reasonable salaries before distributions. This prevents payroll tax avoidance.

Payroll taxes including Social Security, Medicare, and unemployment taxes are fully deductible. These taxes represent real business costs. Additionally, state and local payroll taxes qualify. Working with professional bookkeeping services ensures accurate payroll tax calculations and compliance.

Employee Benefits

Health insurance premiums paid for employees are 100% deductible. This includes medical, dental, and vision coverage. Retirement plan contributions are also deductible. For 2026, employer matching contributions to 401(k) plans provide both employee benefits and tax deductions. Furthermore, contributions to SEP IRAs and SIMPLE IRAs qualify.

Other benefits like life insurance, disability insurance, and education assistance may be deductible. Certain fringe benefits are excluded from employee income while remaining deductible to the employer. This creates win-win scenarios. The IRS provides detailed guidance in Publication 15-B (Employer’s Tax Guide to Fringe Benefits).

Independent Contractor Payments

Payments to independent contractors are fully deductible. You must issue Form 1099-NEC for payments exceeding $600 annually. Proper classification is critical. Misclassifying employees as contractors can result in penalties, back taxes, and interest. Therefore, understand the difference between employees and contractors.

For self-employed individuals and contractors, understanding deductions is equally important. Contractors can deduct their own business expenses. This reduces their taxable income and overall tax burden.

Labor Cost Type	Deductibility	Special Rules
Employee Wages	100%	Must be reasonable compensation
Payroll Taxes	100%	Employer portion only
Health Insurance	100%	Employee premiums deductible
Retirement Contributions	100%	Subject to annual limits
Contractor Payments	100%	Must issue Form 1099-NEC

What Are Advanced Deduction Strategies for 2026?

Beyond basic deductions, sophisticated business owners employ advanced strategies. These techniques maximize the value of your list of business write offs. Strategic planning throughout the year amplifies tax savings. Furthermore, working with tax professionals helps identify opportunities specific to your business.

Timing Income and Expenses

Cash-basis taxpayers can control taxable income through timing strategies. Accelerate expenses into the current year to increase deductions. Delay income until the following year to defer taxes. For example, make equipment purchases before December 31st. Similarly, delay invoicing until January if beneficial.

However, this strategy requires careful planning. Consider your expected tax rate in future years. If rates increase, deferring income may cost more. Conversely, if rates decrease, deferral saves money. Professional tax advisory helps optimize timing decisions.

Qualified Business Income Deduction

The Section 199A qualified business income (QBI) deduction remains available for 2026. Eligible business owners can deduct up to 20% of qualified business income. This powerful deduction reduces taxable income significantly. However, income thresholds and business type restrictions apply.

For 2026, the phase-out begins at approximately $191,950 for single filers and $383,900 for married filing jointly. Specified service trade or businesses (SSTBs) face additional limitations above these thresholds. Nevertheless, proper planning maximizes this deduction. Structuring compensation and managing taxable income helps optimize QBI benefits.

Retirement Plan Contributions

Maximizing retirement contributions provides substantial deductions. For 2026, 401(k) contributions are estimated at $23,500 with catch-up contributions for those over 50. SEP IRA contributions allow up to 25% of compensation or approximately $69,000. Solo 401(k) plans offer even greater contribution potential for self-employed individuals.

These contributions reduce current-year taxable income while building retirement wealth. Moreover, defined benefit plans allow even larger deductions for high-income business owners. The IRS provides comprehensive information in their Retirement Plans portal.

Cost Segregation Studies

Real estate investors and property owners benefit from cost segregation. This engineering study identifies building components that can be depreciated faster than the building itself. Instead of 39-year depreciation, certain components qualify for 5, 7, or 15-year schedules. This accelerates deductions and improves cash flow.

Cost segregation works particularly well for real estate investors with commercial properties, rental properties, or business facilities. The upfront cost of the study typically pays for itself through increased deductions. Additionally, bonus depreciation amplifies first-year benefits.

What Documentation Do You Need for Business Write-Offs?

Proper documentation transforms your list of business write offs from theoretical savings to actual tax benefits. The IRS requires substantiation for all deductions. Without documentation, you risk losing deductions during an audit. Therefore, implementing systematic record-keeping is essential.

Required Records

For each business expense, maintain the following documentation:

• Receipts showing the amount, date, and vendor
• Invoices detailing goods or services purchased
• Cancelled checks or credit card statements proving payment
• Business purpose documentation explaining the expense
• Mileage logs for vehicle deductions
• Time records for home office deductions

Digital record-keeping simplifies documentation. Smartphone apps can photograph receipts instantly. Cloud-based accounting software organizes expenses automatically. Many business owners find these tools indispensable for maintaining compliant records.

Retention Requirements

The IRS generally requires maintaining records for three years from the filing date. However, certain circumstances extend this period. Keep records for six years if you underreport income by more than 25%. Maintain employment tax records for at least four years. For property and equipment, retain records throughout the asset’s life plus seven years.

Electronic records are acceptable if they’re readable and accessible. Therefore, scanning paper documents and storing them digitally satisfies IRS requirements. Nevertheless, ensure backups exist to prevent data loss. The IRS recordkeeping guidelines provide comprehensive details.

Special Documentation Situations

Certain deductions require extra documentation. Vehicle expenses need detailed mileage logs showing date, destination, business purpose, and miles driven. Meal and entertainment expenses require receipts plus documentation of business discussions. Home office deductions need measurements and calculations of business-use percentage.

Travel expenses require itineraries, boarding passes, hotel receipts, and business purpose documentation. The more detailed your records, the stronger your position during an audit. Consequently, over-documenting is better than under-documenting.

What Common Mistakes Should You Avoid?

Even with a comprehensive list of business write offs, mistakes can undermine tax benefits. Understanding common pitfalls helps you avoid them. Moreover, these errors often trigger IRS audits. Prevention is significantly easier than correction after examination.

Mixing Personal and Business

The most common mistake is claiming personal expenses as business deductions. Personal clothing, commuting miles, and family meals never qualify. Even if you discuss business briefly, the expense must be primarily business-related. The IRS scrutinizes excessive or unusual deductions carefully.

Maintain separate credit cards and bank accounts for business. This separation simplifies record-keeping and proves business intent. Furthermore, it demonstrates professionalism to the IRS. Commingling funds invites questions about which expenses are truly business-related.

Inadequate Record-Keeping

Claiming deductions without documentation is risky. During an audit, the burden of proof rests on you. Without records, the IRS disallows deductions. This results in additional taxes, penalties, and interest. Therefore, maintain contemporaneous records throughout the year.

Missing Valuable Deductions

Conversely, many business owners overlook legitimate deductions. Startup costs, education expenses, business use of home, and small purchases add up. Missing these deductions costs you money. Working with tax professionals ensures you capture all available write-offs.

Incorrect Depreciation Methods

Choosing the wrong depreciation method reduces tax benefits. Section 179, bonus depreciation, and regular MACRS depreciation each have advantages. The optimal choice depends on your specific situation. Once elected, changing methods requires IRS permission. Therefore, careful planning is essential.

Common Mistake	Consequence	Prevention Strategy
Personal/Business Mix	Disallowed deductions, penalties	Separate accounts and cards
Poor Documentation	Lost deductions in audit	Digital receipt tracking system
Missing Deductions	Overpaying taxes	Professional tax review
Wrong Depreciation	Reduced tax benefits	Strategic tax planning

 

 

Uncle Kam in Action: How a Delaware Contractor Saved $47,000

Marcus owned a successful construction company in Wilmington, Delaware. His business generated $850,000 in annual revenue. However, Marcus felt frustrated by his tax bill. He was paying over $120,000 in federal and state taxes annually. Moreover, he suspected he was missing valuable deductions.

Marcus came to Uncle Kam seeking a comprehensive tax strategy. Our team immediately identified several problems. First, Marcus wasn’t maximizing equipment deductions. He was using standard depreciation instead of Section 179. Second, he lacked proper documentation for many legitimate expenses. Third, his entity structure wasn’t optimized for tax efficiency.

We implemented a multi-faceted strategy. We restructured Marcus as an S corporation with proper salary allocation. This saved $18,000 in self-employment taxes. Next, we identified $200,000 in equipment purchases qualifying for Section 179. This created an immediate $47,000 deduction in the first year. Additionally, we implemented cost segregation for his recently purchased commercial building.

Furthermore, we established systems for tracking mileage, meals, and other operational expenses. These previously undocumented expenses added another $15,000 in deductions. We also maximized his retirement contributions through a solo 401(k), adding $69,000 in deductible contributions. The home office deduction provided an additional $8,000 in savings.

The results were remarkable. Marcus’s total tax savings for 2026 reached $47,000. His investment in Uncle Kam’s services was $8,500. This represented a 5.5x return on investment in the first year alone. Moreover, the implemented systems continue generating savings annually. Marcus now has confidence his tax strategy is optimized and compliant.

See how other business owners have benefited from strategic tax planning at our client results page. Every business has unique opportunities for optimization.

Next Steps

Maximizing your list of business write offs requires action. Consider these immediate steps:

• Review your current expense tracking system and implement improvements
• Identify equipment purchases that qualify for Section 179 expensing
• Schedule a comprehensive tax strategy consultation to identify missed deductions
• Implement digital receipt tracking for all business expenses
• Evaluate your entity structure for optimal tax efficiency

Don’t leave money on the table. Proactive tax planning delivers measurable results. Contact Uncle Kam today to discover how much you could save.

This information is current as of 2/18/2026. Tax laws change frequently. Verify updates with the IRS if reading this later.

Frequently Asked Questions

What business expenses are 100% deductible?

Most ordinary and necessary business expenses are 100% deductible. This includes rent, utilities, supplies, insurance premiums, professional fees, advertising, and employee wages. However, certain expenses like meals and entertainment are limited to 50% deductibility. Vehicle expenses follow either the standard mileage rate or actual expense method. Understanding these distinctions ensures accurate deduction claims.

Can I deduct business expenses without receipts?

The IRS requires documentation for all deductions. Without receipts, you risk losing deductions during an audit. However, bank statements and credit card records can sometimes substitute for lost receipts. For expenses under $75, documentation requirements are less stringent. Nevertheless, maintaining contemporaneous records is always best practice. Digital apps make receipt tracking simple and reliable.

What is the difference between Section 179 and bonus depreciation?

Section 179 allows immediate expensing of qualifying property up to annual limits. For 2026, this limit is approximately $1,220,000. Bonus depreciation provides a percentage first-year deduction without dollar limits. Currently at approximately 40% for 2026, it continues phasing down. You can use both methods together. Section 179 applies first, then bonus depreciation on remaining basis. Strategic selection maximizes first-year deductions.

How do I calculate the home office deduction?

Two methods exist for calculating the home office deduction. The simplified method allows $5 per square foot for up to 300 square feet. This provides up to $1,500 in deductions without detailed tracking. The regular method calculates the business-use percentage of your home. Multiply this percentage by eligible expenses like mortgage interest, property taxes, utilities, and maintenance. The regular method typically provides larger deductions but requires more documentation.

Are startup costs deductible?

Startup costs are deductible with special rules. You can deduct up to $5,000 in startup costs in the first year. This deduction phases out dollar-for-dollar once startup costs exceed $50,000. Remaining startup costs are amortized over 180 months. Qualifying startup costs include investigation expenses, professional fees, advertising, and employee training before opening. Organizational costs for forming corporations or partnerships follow similar rules.

What happens if I claim deductions incorrectly?

Incorrect deductions can result in several consequences. The IRS may disallow the deduction during an audit. This results in additional taxes owed. Furthermore, penalties apply for substantial understatement of income. Interest accrues on unpaid taxes from the original due date. However, reasonable cause exceptions exist for good-faith mistakes. Working with qualified tax professionals minimizes these risks. The IRS penalty information page provides detailed guidance.

When should I expense equipment versus depreciating it?

Immediate expensing through Section 179 makes sense when you need maximum current-year deductions. This reduces current tax liability significantly. However, consider your future income expectations. If you anticipate higher income in future years, spreading depreciation may be beneficial. Additionally, Section 179 cannot create a loss. If your deductions already exceed income, regular depreciation may be preferable. Strategic planning optimizes the timing of equipment deductions.

Related Resources

• Comprehensive Tax Strategy Services
• The MERNA Method for Tax Optimization
• Complete Tax Planning Guides
• Business Financial Solutions

Last updated: February, 2026