Tax season is one of the most stressful times for business owners, but it doesn’t have to be. Every year, entrepreneurs miss out on thousands of dollars in savings simply because they’re unaware of available deductions.
The tax code is complex, and while some deductions are well-known, others are frequently overlooked. Whether you’re a sole proprietor, LLC owner, or corporation, staying informed about deductible expenses is essential for keeping more money in your business.
To help you maximize your savings in 2025, our tax professionals at Anderson Bradshaw Tax Consulting are breaking down eight major tax deductions business owners frequently overlook—and how you can take full advantage of them.
1. Home Office Deduction
If you regularly conduct business from home, you may qualify for the home office deduction. This applies whether you’re running an e-commerce store, offering consulting services, or managing a small team remotely. The key requirement is that your home office space must be used exclusively for business purposes, even a designated desk or room counts.
The IRS offers two methods for calculating this deduction:
- Simplified Method: Deduct $5 per square foot of home office space, up to 300 square feet. This allows for a maximum deduction of $1,500.
- Actual Expense Method: Deduct a percentage of your home-related expenses (rent, mortgage interest, utilities, property taxes, insurance, and maintenance) based on the portion of your home used for business.
For example, if your office takes up 10% of your home’s total square footage, you can deduct 10% of your qualifying expenses. Keeping detailed records and receipts is crucial to ensure compliance with IRS guidelines.
2. Startup Costs
New business owners often miss out on the startup cost deduction, which allows you to write off expenses incurred before your business officially opens. The IRS permits a first-year deduction of up to $5,000 for startup expenses, including:
- Business registration and legal fees
- Market research and competitor analysis
- Website development and branding
- Professional consulting and training costs
- Employee recruitment and training
If your startup costs exceed $50,000, the deduction begins to phase out. Any additional expenses must be amortized over time, meaning you deduct them gradually over several years instead of all at once.
3. Business Meals
Although entertainment expenses are no longer deductible, business-related meals remain a valuable deduction, as long as, they meet IRS requirements. You can deduct 50% of the cost of meals where business is discussed, whether with clients, employees, or potential partners. This includes:
- Client lunches and dinner meetings
- Team meals during travel or training events
- Coffee shop meetings with partners or contractors
To ensure compliance, always keep detailed records, including the date, location, attendees, total cost, and the business purpose. If the meal is part of a conference or event fee, the deduction may be included in the total expense.
4. Vehicle Expenses
If you use your vehicle for business, you can deduct mileage or actual expenses, depending on which method saves you more.
- Standard Mileage Deduction: In 2025, the IRS standard mileage rate is 70 cents per mile. If you drive 10,000 miles for business, this equals a $7,000 deduction.
- Actual Expense Method: Deduct a percentage of gas, insurance, maintenance, repairs, lease payments, and depreciation based on the portion of time your car is used for business.
For example, if you use your car 60% for business, you can deduct 60% of qualifying expenses. Be sure to log your miles and keep receipts for all business-related vehicle expenses.
5. Professional Development & Education
Investing in education isn’t just good for your business, it’s also a tax write-off. Any educational expenses related to improving your skills or advancing your current business are deductible.
This includes:
- Online courses and business certifications
- Seminars, conferences, and networking events
- Books, trade journals, and digital publications
- Continuing education required to maintain industry certifications
To qualify, the education must be directly related to your current business or industry. General personal development courses don’t count unless they enhance your professional expertise.
6. Software & Subscriptions
Many business owners forget to deduct the cost of software, apps, and online services that keep their operations running smoothly. These expenses are 100% deductible, including:
- Accounting Software: QuickBooks, FreshBooks, Wave, Xero
- Project Management Tools: Asana, Trello, ClickUp, Monday.com
- CRM Systems: Salesforce, HubSpot, Zoho
- Marketing & SEO Tools: SEMrush, Ahrefs, Canva, Adobe Creative Cloud
- Cloud Storage & Security Services: Google Drive, Dropbox, OneDrive, VPN subscriptions
Whether you pay monthly or annually, these costs qualify for deduction in the year they are incurred.
7. Interest on Business Loans & Credit Cards
If you’ve taken out a business loan, used a business credit card, or financed equipment, the interest you pay on these accounts is tax-deductible. This includes:
- Business loan interest
- Credit card interest (if the card is used exclusively for business)
- Interest on lines of credit or business financing
The key is separating business and personal expenses. If you mix them on the same account, you cannot deduct the interest on personal purchases. Keeping separate business bank accounts and credit cards makes tax filing easier and ensures you capture every deductible expense.
8. Retirement Plan Contributions
Business owners who contribute to retirement plans not only secure their future but also receive significant tax deductions. Contributions to tax-advantaged plans like a SEP IRA, Solo 401(k), or SIMPLE IRA can be deducted, reducing taxable income while building long-term financial stability.
For 2025, the IRS has increased contribution limits:
- SEP IRA: Up to 25% of net earnings or $69,000, whichever is lower
- Solo 401(k): Up to $23,000 in employee contributions plus 25% of business profits, with a maximum total of $69,000
- SIMPLE IRA: Up to $16,000 in employee contributions plus employer matching
If you’re self-employed, contributing to a retirement account is one of the best ways to lower your tax burden while growing wealth.
Maximize Your Tax Deductions with Anderson Bradshaw
Every year, business owners leave money on the table by missing out on valuable tax deductions. Whether it’s failing to track mileage, overlooking software expenses, or forgetting to deduct interest payments, these overlooked deductions could mean paying more taxes than necessary.
To ensure you maximize your deductions, partner with an experienced tax consultant. At Anderson Bradshaw Tax Consulting, we specialize in maximizing tax savings for business owners.
Our team of tax experts can help you identify every deduction you qualify for while ensuring full compliance with IRS regulations. Schedule a consultation with AB Tax Consulting today and keep more of your hard-earned money in 2025.
Call us at 877.550.3911 or visit www.AndersonBradshawTax.com to learn more.
