Top Tax Deductions Every Small Business Owner Should Know in 2025

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Top Tax Deductions Every Small Business Owner Should Know in 2025

Running a small business means keeping track of a million moving parts—and taxes are usually one of the last things you want to think about. But the right deductions can make a serious difference when it comes time to file.

If you’re not taking full advantage of what’s available, you could be leaving money on the table. Here’s a breakdown of the top tax deductions for small business owners in 2025, along with tips on how to document them properly.

1. Home Office Deduction

If you use part of your home exclusively for business, the IRS may let you deduct a portion of your mortgage, rent, utilities, and insurance.

You can calculate this using either the simplified method ($5 per square foot, up to 300 sq. ft.) or the actual expense method (based on the percentage of your home used for business).

Just make sure the space is truly dedicated to business activity—it can’t double as your guest room or workout space.

2. Business Vehicle Use

Whether you’re delivering products, meeting clients, or heading to a job site, using your personal vehicle for business can be a valuable deduction.

In 2025, you can choose between:

  • Standard mileage rate (updated annually by the IRS)
  • Actual expenses (including gas, repairs, maintenance, and depreciation)

Make sure to track your mileage with a logbook or mileage app—it’s one of the most commonly disallowed deductions due to poor documentation.

3. Equipment, Technology, and Software

Under Section 179, you can deduct the full cost of qualifying equipment and technology in the year you place it in service. This includes:

  • Computers and tablets
  • Software subscriptions
  • Office equipment
  • Business machinery

With so many small businesses relying on tech tools, this can be a game-changer for cash flow.

Need help applying Section 179 correctly? Our small business tax experts can walk you through it.

4. Professional Services (Like CPAs, Legal, & Consulting)

The fees you pay for accounting, legal advice, and consulting are all tax-deductible business expenses. That includes:

  • Tax preparation and filing
  • Bookkeeping or payroll services
  • Business advisors and coaches

If you’re working with a firm like Hogan CPA throughout the year, those services aren’t just an investment—they’re also a write-off.

5. Employee Wages and Contractor Payments

Wages, salaries, and even bonuses paid to employees are fully deductible. That includes:

  • Full-time and part-time workers
  • Payroll taxes you pay as an employer
  • Health insurance and retirement contributions

Paying independent contractors? You can deduct those payments too—just be sure you’ve issued 1099-NECs for nonemployees earning $600 or more.

Need help managing payroll and contractor compliance? Check out our bookkeeping and accounting services.

6. Meals and Entertainment (With Limits)

You can deduct 50% of qualifying business meals—think lunches with clients, team meals, or meals while traveling for work. Keep records of:

  • Who you were with
  • The business purpose
  • Receipts or credit card statements

Entertainment expenses, however, are no longer deductible—so keep the dinner and show separate if you’re hoping to write anything off.

7. Rent or Lease of Office Space and Equipment

If you rent office space, retail space, or storage for your business, you can deduct the full cost. The same applies to leased equipment like copiers, printers, and tools.

This is especially relevant for industries with high overhead—like restaurants or medical professionals.

8. Marketing and Advertising

All reasonable advertising and promotional costs are deductible, including:

  • Website hosting and design
  • Digital ad campaigns
  • Social media and influencer partnerships
  • Print, radio, or local sponsorships

9. Travel for Business

Business-related travel—including airfare, hotel, transportation, and 50% of meals—is deductible if:

  • The trip has a clear business purpose
  • You were traveling away from your tax home
  • You kept receipts and logs

That trade show in Vegas or vendor meeting in Chicago? It may help reduce your tax bill if handled correctly.

10. Retirement Contributions

Contributing to a retirement plan (like a SEP IRA or solo 401(k)) isn’t just a smart move for your future—it can also lower your taxable income.

These deductions can be especially useful in high-earning years where you want to shrink your tax liability.

Not sure which plan fits your setup? Our business advisors in Columbus can help you make the right call.

Final Thoughts: Maximize Your Deductions, Minimize Your Stress

If there’s one thing we see every tax season, it’s small business owners missing out on valuable deductions simply because they didn’t know what to track. Staying organized and working with a CPA can help you take full advantage of what the tax code allows—and avoid red flags at the same time.

At Hogan CPA Financial Services, we work with businesses of all sizes across Columbus and surrounding areas, helping owners navigate tax season with clarity and confidence.

Want help getting the most out of your deductions this year?
 Contact us today to schedule a consultation and make 2025 your most tax-savvy year yet.