Itemized vs Standard Deductions as a Self-Employed Person

When filing federal taxes as a self-employed or sole proprietor, you must choose between standard and itemized deductions. 

Itemized deductions can, in some circumstances, reduce your tax burden to a greater extent, but it’s required that your itemized expenses are higher than the standard deduction amounts stipulated by the IRS.

Learn about the different amounts dependent on your filing status and the common itemized deductions you might be able to claim, to help you make the decision at tax time. 

Choosing between the standard vs itemized deductions

Generally speaking, taking the standard deductions route will be preferable if your itemized deduction estimate is smaller than the standard amounts. The standard method is also significantly easier, as it doesn’t require tracking expenses and maintaining relevant documentation. 

There are a few types of self-employed people who should probably choose a standard deduction. Low-income single filers, moderate-income heads of households, and those without a mortgage will usually save more with a standardized deduction. But ultimately, you’d need to track and calculate your itemizable expenses to know for sure.

Choosing an itemized deduction will require you to track and tally each expense you want to claim. The IRS will scrutinize your reports, so you need to have a strong paper trail proving your claims. The exact standard of proof necessary will vary from one expense to another.

Also read: Deductions you Can Claim Without Receipts

Claiming the standard deduction and self-employment tax deduction

Unlike most deductions, you can combine the self-employment tax deduction and standard deduction. Self-employment income is subject to a 15.3% self-employment tax to cover Social Security and Medicare contributions, which is twice what wage-earners pay. However, the self-employment tax deduction allows you to write off half of it from your taxable income.

If the self-employment tax deduction was only available via an itemized deduction, then it would be rare for self-employed people to choose a standard deduction. This means that standard deductions are viable even if you report income on the IRS Form 1099.

Switching between the two methods

If your expenses or filing status change, you can switch between the two approaches year by year.

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Standard deduction amounts in 2025

There are three deduction amounts available depending on your filing status:

$15,000: Single or Married Filing Separately
$22,500: Head of Household
$30,000: Married Filing Jointly or Qualifying Surviving Spouse

Standard deduction amounts in 2024

$14,600: Single or Married Filing Separately
$21,900: Head of Household
$29,200: Married Filing Jointly or Qualifying Surviving Spouse

Common 1099 itemized deductions

If you’re self-employed or an independent contractor, itemized deductions you might be able to use include, but aren’t limited to:

• Interest on a mortgage
• Home office expenses
• Business-related motor vehicle expenses
• Health and business insurance deduction 
• Startup costs, advertising, and other business expenses

Read on for an extensive list of tax deductions for self-employed.

Mortgage interest and home office-related deductions

If you have an outstanding $500,000 home loan with 4.5% annual interest, you would pay over $20,000 in annual interest. In this scenario, you could include all the interest you paid as a deductible expense, removing $20,000 from your taxable income.

A sizable mortgage is often enough to warrant itemizing. Self-employed people with home offices can also claim some home expenses as deductible. Eligible expenses include a portion of your utilities and other household costs.

Business vehicle expense deductions

The IRS offers a standard $0.70 per mile deduction in 2025 and a $0.67 per mile deduction in 2024 for every eligible mile of business travel, but you may also claim actual expenses for your car-related costs, such as depreciation or maintenance. After determining how much of your driving is for business, you can deduct that part of your expenses.

Either approach requires tracking your miles accurately and separating business from non-business travel. A mileage tracking app can make it easier with automatic tracking, and the option to quickly browse through your trips and categorize them accordingly as either personal or business.

Also read: Self-Employed Mileage Deduction Rules

Which method is better?

The savings from a well-filed tax return can make all the difference for your small business. However, knowing the deductions you’re eligible for is only half the process; you must also document your expenses before you can file an itemized deduction. Ultimately, the best deduction for your business will depend on your filing status and the amount of expenses you’ve incurred in a tax year.