Hidden Tax Deductions for US Entrepreneurs You Might Be Missing

Many US entrepreneurs pay more taxes than they need by missing out on important deductions. In 2025, several business expenses qualify as deductions but get overlooked by founders focused on building and running their startups. Properly claimed deductions reduce your taxable income, saving you money that can be reinvested back into your business or personal finances.

I’m Riten, founder of Fueler, a platform that helps freelancers and professionals get hired through their work samples. In this article, I’ll explain key and often-missed tax deductions that entrepreneurs should know about this year. Alongside this, presenting your work and business progress clearly through a portfolio is just as vital because it builds trust and credibility with clients and investors.

1. Home Office Deduction: Claim Your Workspace

Many entrepreneurs work from home, but not everyone claims this simple yet valuable deduction. The IRS allows you to deduct expenses related to the part of your home used regularly and exclusively for business.

• You can deduct a percentage of your rent or mortgage interest, property taxes, homeowner’s insurance, maintenance, and utilities such as electricity and internet that directly relate to your home office.
• The IRS offers a simplified method, where you can deduct $5 per square foot of your dedicated office space, up to 300 square feet, making the calculation easier.
• Your workspace must be used exclusively and regularly for business, meaning no personal use is allowed in that area.
• This deduction can also apply to home studios, workshops, or areas used for client meetings.

Why it matters: Many new business owners avoid this deduction fearing audits, but as long as you meet IRS requirements and keep good records, this can significantly reduce your taxable income for expenses you are already paying.

2. Vehicle Expenses: Deduct Business Travel Costs

If you use your personal vehicle for business purposes, you can deduct either standard mileage or actual expenses related to the business use of your vehicle.

• The IRS standard mileage rate for 2025 is 70 cents per mile for business use, which simplifies tracking expenses.
• Alternatively, you can deduct actual expenses such as gas, oil, repairs, tires, insurance, registration fees, and depreciation proportional to business use.
• Keeping a detailed mileage log or digital record of business trips ensures you can substantiate the deductions.
• Parking fees and tolls paid while conducting business are also deductible.

Why it matters: Vehicle-related deductions add up quickly for entrepreneurs who travel extensively for meetings, deliveries, or client visits. Proper tracking ensures you do not leave money on the table.

3. Business Meals and Entertainment: Know the Limits

Business meals related to active business discussions are partially deductible, while entertainment deductions are limited.

• Meals with clients, customers, or business partners qualify for a 50% deduction if directly tied to business activities.
• Meals while traveling for business or meals provided for employees on-site may also be deductible at 50% or 100%, depending on the circumstances.
• Entertainment expenses such as tickets to events are generally no longer deductible since 2018, but meal portions during such events may qualify if separately stated.
• Always keep itemized receipts and notes about the business purpose and attendees to provide proof if audited.

Why it matters: Many entrepreneurs either overclaim or miss legitimate business meal deductions. Following the rules carefully allows claiming partial business meals without risking disallowed deductions.

4. Retirement Contributions: Lower Taxes and Save for the Future

Contributing to qualified retirement plans through your business helps you reduce taxable income while building long-term savings.

• Retirement plans like Solo 401(k)s, SEP IRAs, and SIMPLE IRAs allow significant tax-deductible contributions from the business and yourself.
• In 2025, Solo 401(k) contributions can be up to $23,500 from salary deferrals, with an additional $7,500 catch-up for those over 50.
• Employer contributions reduce the business’s taxable income dollar-for-dollar.
• Offering retirement benefits can also help attract and retain talent as the business grows.

Why it matters: Taxes paid today impact your cash flow; retirement contributions reduce current taxes while preparing you for financial security in the future, combining tax efficiency with personal finance benefits.

5. Qualified Business Income (QBI) Deduction: Up to 20% Off

Many small businesses can deduct a significant portion of their income thanks to the QBI deduction, yet some entrepreneurs overlook it.

• The QBI deduction allows eligible business owners, especially pass-through entities like LLCs, S-Corps, and sole proprietorships, to deduct up to 20% of qualifying business income.
• Income thresholds and types of business activities can affect eligibility, so it’s important to review the rules yearly.
• Proper tax planning can maximize this deduction, especially for individuals with combined income from multiple sources.
• This deduction is scheduled to continue beyond 2025 but requires careful qualification.

Why it matters: The QBI deduction directly lowers taxable income, sometimes by thousands of dollars, offering a powerful way to reduce taxes without extra spending or investments.

Final Thoughts

Many entrepreneurs miss out on valuable tax deductions simply because they don’t know them or fail to track their expenses properly. From home office to retirement contributions, understanding these deductions can significantly increase your take-home income and improve cash flow. Combine smart tax planning with a strong, trustworthy portfolio on platforms like Fueler, and you have a solid foundation for growing your business in 2025.

Frequently Asked Questions

1. What documentation do I need to claim business tax deductions?

Keep accurate receipts, mileage logs, bank statements, and clear notes explaining each expense’s business purpose.

2. Can I claim home office deductions if I occasionally work from home?

No. To qualify, the home office space must be used regularly and exclusively for business.

3. Are meals with business partners always deductible?

Only meals directly related to business discussions qualify, and the deduction is limited to 50% of the cost.

4. How do I balance personal and business use for vehicle deductions?

Maintain detailed records to separate business miles or expenses from personal use and only deduct the business portion.

5. How do retirement contributions reduce my tax bill?

Contributions to qualified plans lower your taxable business income and delay taxes on that money until retirement withdrawals.

What is Fueler Portfolio?

Fueler is a career portfolio platform that helps companies find the best talents for their organization based on their proof of work. You can create your portfolio on Fueler, thousands of freelancers around the world use Fueler to create their professional-looking portfolios and become financially independent. Discover inspiration for your portfolio

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