Tax season can be stressful for gig workers, especially when income comes from multiple sources and taxes aren’t withheld automatically. That often means a larger tax bill, unless you know which expenses you can deduct.
Everyday costs like mileage, home office space, or software subscriptions can reduce your taxable income and save you hundreds, even thousands, of dollars a year.
This guide covers the most important IRS-approved deductions for gig workers, along with examples, organization tips, and common mistakes to avoid.
Why Tax Deductions Matter for Gig Workers
When you’re self-employed, every dollar matters. Unlike W-2 employees, gig workers must pay both income tax and the self-employment tax, which covers Social Security and Medicare. That self-employment tax is 15.3%, on top of your regular income tax rate. Without deductions, your tax bill can rise quickly.
Here’s why deductions make such a big impact:
- They lower the taxable income. If you earn $40,000 but claim $5,000 in business deductions, you’re only taxed on $35,000.
- The savings add up. In a 24% bracket, $5,000 in deductions could save you about $1,200 once income and self-employment taxes are factored in.
- You keep more of what you earn. Everyday business expenses become real money back in your pocket.
Example: An Uber driver who logs 10,000 miles in a year can deduct about $6,700 using the 2025 IRS mileage rate (67 cents per mile). That single deduction could reduce their tax bill by more than $1,500.
Takeaway: Knowing which expenses qualify and tracking them correctly is essential to keeping more of your hard-earned income.
Common Tax Deductions for Gig Workers
Many everyday costs can be written off if you’re a freelancer, independent contractor, or gig worker. Below are two of the most common IRS-approved deductions that can significantly reduce taxable income.
1. Vehicle & Travel Deductions
For many gig workers, a car is one of the most important tools for earning income. The IRS allows you to deduct vehicle costs that reflect business use.
Mileage Deduction
The standard mileage rate is 67 cents per mile in 2025. Every mile you drive for work — whether it’s picking up passengers, delivering groceries, or heading to a client meeting — reduces your taxable income.
Example: A rideshare driver logging 12,000 business miles can deduct $8,040. At a 24% tax rate, that’s about $1,900 saved.
Actual Expense Method
Instead of mileage, you can deduct a percentage of actual costs such as gas, insurance, repairs, depreciation, and car washes. If 70% of your driving is for business, you can deduct 70% of those expenses.
Tip: Most gig workers find the mileage method simpler and more valuable, but the actual expense method may be better if you have a newer car with higher costs.
- What Counts as Deductible Travel
- Trips to pick up or drop off passengers
- Driving to client meetings or job sites
- Travel between gigs (e.g., delivering food after a rideshare drop-off)
What Doesn’t Count
- Personal errands
- Commuting from home to a regular, permanent workplace
- Common Mistakes
Not keeping a mileage log (the IRS requires one, but apps like MileIQ or Everlance can help).
Mixing personal and business trips. Only miles driven for work qualify.
Takeaway: Vehicle deductions are often the largest tax break for gig workers. With accurate records, everyday driving can translate into significant tax savings.
2. Home Office Deduction
For many freelancers and contractors, working from home means some household expenses can count as business expenses. The IRS allows a home office deduction if your workspace meets specific requirements.
What Qualifies
The space must be used regularly and exclusively for business. A spare bedroom converted into an office qualifies, but a kitchen table you occasionally work at does not.
Simplified Method
Deduct $5 per square foot of office space, up to 300 square feet. For example, a 150-square-foot office gives you a $750 deduction without complicated calculations.
Actual Expense Method
Deduct a percentage of household costs such as rent or mortgage interest, utilities, internet, and repairs.
Example: A freelancer with a 200-square-foot office in a 2,000-square-foot home can deduct 10% of housing costs. If annual rent, electricity, and internet total $24,000, the deduction comes to $2,400.
Common Mistakes to Avoid
One of the most frequent errors is overstating the size of the office or claiming spaces that don’t meet the “exclusive use” rule. This is a known IRS audit trigger. Honest measurements and accurate records ensure the deduction is safe to claim.
Takeaway: The home office deduction can make working from home more affordable, but it’s only safe to claim when the rules are followed and records are accurate.
3. Equipment & Supplies
Running a gig or freelance business often means investing in tools to get the job done. The IRS lets you deduct many of these costs, reducing your taxable income.
Larger Equipment Purchases
Computers, cameras, phones, printers, and office furniture all qualify if they’re used primarily for business. A laptop for design work, a smartphone for client calls, or a camera for photography are all deductible.
Typically, these purchases are written off gradually through depreciation. However, under Section 179, you may deduct the full cost in the year of purchase if it’s used more than 50% for business.
Example: Buying a $1,500 laptop for freelance design work usually allows you to deduct the entire amount in the year you buy it.
Everyday Supplies & Subscriptions
Smaller essentials such as paper, pens, or printer ink also qualify. Software and online services can be fully deducted if they directly support your business. Examples include Zoom, Canva, QuickBooks, Dropbox, and Google Workspace.
What to Watch For
The IRS requires deductions to be “ordinary and necessary” for your line of work. Personal purchases — like a TV mainly used for family entertainment — don’t qualify. Always separate business from personal use and keep receipts in case of an audit.
Takeaway: From laptops to software, the cost of your tools can usually be written off. Keeping clear records ensures you maximize deductions while staying IRS-compliant.
4. Insurance & Retirement Contributions
Insurance and retirement savings can be powerful tax tools for gig workers. They reduce taxable income and provide protection and long-term financial stability.
Health Insurance Premiums
Self-employed workers who don’t have access to coverage through an employer or spouse can deduct 100% of health insurance premiums. This includes medical, dental, and qualified long-term care for yourself, your spouse, and dependents.
Example: If you paid $4,800 in premiums during the year, the full amount is deductible, which could save you over $1,000 depending on your tax bracket.
Business Insurance
Policies that directly protect your work are deductible. Examples include consultant liability insurance, equipment insurance for photographers, or commercial auto insurance for rideshare drivers.
Retirement Contributions
Self-employed workers can also save on taxes by contributing to dedicated retirement accounts:
- SEP IRA: Deduct up to 25% of net self-employment income, up to annual limits.
- Solo 401(k): Allows employer and employee contributions, offering higher maximums than a SEP IRA.
Example: A $5,000 SEP IRA contribution reduces taxable income by the same amount. In a 22% bracket, that equals about $1,100 saved, while also building retirement savings.
Takeaway: Insurance and retirement contributions give gig workers a double benefit: lower taxes today and greater security for the future.
5. Professional Services, Subscriptions & Fees
Gig workers often depend on outside experts and digital tools to run their businesses. The IRS allows you to deduct these costs as long as they directly support your work.
Professional Services
Fees paid to accountants, bookkeepers, tax preparers, or consultants are deductible. Legal advice tied to your business also qualifies.
Example: Paying a tax professional $600 to prepare your return can be entirely written off.
Software & Subscriptions
Digital tools used for business count as deductible expenses. Examples include:
- Bookkeeping: QuickBooks, FreshBooks
- Design: Canva, Adobe Creative Cloud
- Meetings: Zoom, Microsoft Teams
If you spend $30 a month on QuickBooks, you can deduct $360 for the year.
Platform & Payment Processing Fees
Freelancers often pay platform fees on sites like Upwork, Fiverr, or Etsy. Transaction fees from PayPal, Stripe, or Square also qualify.
Example: Earning $20,000 through PayPal with $600 in transaction fees means you can deduct the full $600.
Takeaway: These recurring costs may look small, but they add up quickly. Writing them off ensures you aren’t taxed on money that never reached your pocket.
Record-Keeping & Audit Triggers
Every deduction you claim needs proof. A mileage log, a receipt for your laptop, or a bank statement showing software payments can make the difference between an accepted deduction and one the IRS denies. Good records also save you from the April scramble; instead of digging through emails and bank statements, you’ll have everything ready to go.
How to Keep Track the Right Way
- Use separate accounts. Open a dedicated bank account or credit card for your gig work. This will prevent business and personal expenses from blending together and make your tax records much clearer.
- Keep receipts organized. Store paper receipts in labeled folders or use apps to scan them. The IRS recommends keeping them for at least three years since that’s how long they can be retrieved in an audit.
- Rely on smart tools. Apps like QuickBooks Self-Employed, Everlance, or MileIQ automatically log mileage, categorize expenses, and generate reports — cutting down on manual work and mistakes.
Audit Triggers to Watch Out For
Most gig workers won’t face an audit, but certain claims can raise red flags:
- Unrealistic mileage claims without a proper log.
- Oversized home office deductions for spaces not used exclusively for work.
- Mixing personal and business expenses, like trying to write off vacations or family electronics.
The IRS also compares your deductions to those of others in your industry. If your write-offs seem out of proportion, for example, claiming 90% of your home for a side gig, you’re more likely to be flagged.
The Payoff of Good Habits
Organized records do more than keep you audit-safe. They help you spot extra savings. Many gig workers miss smaller deductions (like subscriptions, parking, or supplies) simply because they weren’t tracked. Consistent habits mean you’ll capture those expenses, reduce stress at tax time, and keep more of what you earn.
Checklist of Deductions
When it comes to filing taxes, having a clear list of potential write-offs helps ensure you don’t miss valuable savings. Here’s a quick checklist of common deductions gig workers, freelancers, and independent contractors should consider:
- Vehicle & Mileage: Miles driven for work, gas, maintenance, or actual vehicle expenses.
- Home Office: A dedicated space used exclusively for business.
- Equipment & Supplies: Computers, phones, cameras, office furniture, and smaller items like paper or printer ink.
- Software & Subscriptions: Zoom, Canva, QuickBooks, Adobe, or cloud storage services.
- Insurance: Health insurance premiums, liability insurance, or equipment coverage.
- Retirement Contributions: SEP IRA or Solo 401(k) contributions.
- Professional Services: Accountants, legal consultations, or tax prep fees.
- Platform & Processing Fees: Charges from Fiverr, Upwork, Etsy, PayPal, or Stripe.
- Education & Training: Courses or certifications directly tied to your gig work.
This checklist serves as a starting point. Not every deduction will apply to every worker, but knowing what’s available helps maximize savings while staying compliant.
Final Thoughts
Taxes can feel intimidating for gig workers, but the right approach turns them into an opportunity to save money. By knowing which expenses are deductible, from mileage and home office space to insurance, subscriptions, and retirement contributions, you can cut your tax bill and keep more of what you earn.
The key is accuracy. Honest reporting, good record-keeping, and a clear understanding of IRS rules can reduce stress and avoid problems down the road. Even small deductions, like software fees or mileage logs, can add up to hundreds of dollars in savings each year.
While this guide highlights the most common deductions, every worker’s situation is different. When in doubt, consulting a tax professional can help you maximize deductions without crossing any lines.
References
- IRS – Self-Employed Individuals Tax Center
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center - IRS – Topic No. 510 Business Use of Car
https://www.irs.gov/taxtopics/tc510 - IRS – Standard Mileage Rates 2025
https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2025 - IRS – Home Office Deduction (Publication 587)
https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction - IRS – Simplified Option for Home Office Deduction https://www.irs.gov/newsroom/irs-announces-simpler-option-for-calculating-the-home-office-deduction-starting-this-tax-season
- IRS – Publication 946: How to Depreciate Property (Section 179)
https://www.irs.gov/publications/p946 - IRS – Deducting Business Insurance Premiums
https://www.irs.gov/taxtopics/tc502 - IRS – SEP Plans (Publication 560)
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps - IRS – Recordkeeping for Business Deductions
https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping
- TurboTax – Common Tax Deductions for the Self-Employed https://turbotax.intuit.com/tax-tips/small-business-taxes/common-tax-deductions-for-the-self-employed/L5o4FWsU7
- H&R Block – Self-Employed Tax Deductions
https://www.hrblock.com/tax-center/filing/adjustments-and-deductions/self-employed-tax-deductions/ - Bankrate – Tax Deductions for the Self-Employed
https://www.bankrate.com/taxes/self-employed-tax-deductions/ - Investopedia – Top Tax Deductions for Freelancers
https://www.investopedia.com/articles/taxes/09/top-tax-deductions-for-freelancers.asp