Business deductions versus above-the-line deductions
Ordinary and necessary business expenses reduce the profit on Schedule C. Because they reduce profit, they cut both income tax and self-employment tax. In this calculator that group includes software, equipment, other expenses, the simplified home office deduction and business mileage.
Self-employed health insurance premiums and retirement plan contributions are adjustments to income. They reduce income tax, but not self-employment tax, so each dollar saves less. The tool treats them that way.
Mileage and home office rules for 2026
The IRS business standard mileage rate for 2026 was set at 72.5 cents per mile and was later raised to 76 cents per mile for business travel on or after July 1, 2026. The calculator has two mileage fields so each half of the year uses the correct rate. Commuting between home and a regular workplace does not count as business mileage, and you need records such as a mileage log.
The simplified home office method allows $5 per square foot for up to 300 square feet, a maximum of $1,500. The space must be used regularly and exclusively for your business. The regular method, based on actual expenses, can produce a larger deduction but requires more tracking.
Equipment and keeping records
Equipment such as computers and cameras may be deductible in the year you buy it or depreciated over several years, depending on the rules and elections that apply to you. This estimator treats the amount you enter as deductible in 2026. Keep receipts, invoices and mileage logs for at least three years, and ask a tax professional about larger purchases.
Keep records so deductions hold up
Save receipts, invoices and a mileage log, and use a bank account and card just for the business. If you deduct a home office with the simplified method, the rate is $5 per square foot for up to 300 square feet. Mileage rates for 2026 changed during the year, from 72.5 cents per mile before July 1 to 76 cents from July 1, so the estimator has a field for each period.
Deductions have rules and limits, and this tool is an estimate. Confirm anything unusual with a tax professional.