We previously wrote about 6 Business Tax Deductions You May Not Know and want to continue the advice for those of you who are self-employed. Did you know there is a huge difference between being self-employed and owning your own business? Read this bookkeeper’s guide to self-employment tax deductions to learn it all.

1. A Short Definition of Self-Employment Tax

As a business owner, you still must pay taxes such as income tax, Social Security, Medicare, and many others. The current self-employment tax rate for 2026 is 15.3%, which is 12.4% for social security and another 2.9% for Medicare. There are also income max outs of up to $200,000 for single filers and $250,000 for those married filing jointly – which ultimately affect the total amount of tax liability owed. You may still eligible for many common tax deductions on Schedule C, such as the Earned Income Tax Credit, home office deduction, and more.

Did you know? Approximately 16.8 million Americans identified as self-employed in the year 2025, which accounts for about 10.3% of the total workforce. Source: Carry Institute

2. Gig Work Versus Self-Employment

There is a difference between being self-employed and performing what is known as “gig work.” Gig work generally includes making a profile and finding work on your own schedule for another company, such as:

  • Ride share services such as Uber or Lyft.
  • Food delivery such as Door Dash or Postmates.
  • House sharing such as AirBNB or VRBO.
  • Pet sitting services such as Rover.
  • Handyman, chore, or lawn services.

Many times these companies will report your earnings via Form 1099. This will report how much income you earned from that gig, including any tips, overtime pay, etc. It will also show how much federal income tax was withheld, if any. Keep any and all of these forms you receive to prepare your tax return. Those of you who are self-employed are generally payed directly by clients and/or customers. It is up to you to keep track of all of these payments and claim them as income.

3. Common Self-Employment Tax Deductions

Home office is one of the most common tax deductions for the self-employed. This can include the room you use as your office, your garage if you do work in it, and even a shed where you perform your work. You may also be eligible to deduct the cost of your health insurance, as well as that of your spouse and dependents. Most miles you put on your car to get to and from work can also be tax deductible. You can also deduct contributions to eligible IRA accounts just as you would a full time job.

4. TOP TIP: Consider Incorporation

Filing your taxes as a corporation can greatly minimize your tax liability. Did you know that filing as a corporation allows you to divide your income between your salary, which is taxed, and your expenses, which are not taxed? Getting incorporation documents varies from state to state, but is well worth it here in Texas. Consult with your bookkeeper to decide which type of corporation is best for you. This is a better choice than logging onto a site and navigating all the choices yourself.

Bookkeeper’s Guide to Self-Employment Tax Deductions in Houston

Are you self-employed and looking to find out what avenue is best for you? Feel free to set up an appointment to get the best option to minimize your tax liability.