As a self-employed professional—whether you’re a realtor, contractor, or other 1099 worker—you have powerful tax deduction tools at your disposal. Two of the most valuable are the home office deduction and the mileage deduction.
While the One Big Beautiful Bill (OBBB) didn’t overhaul the rules for these deductions, it’s a perfect time to revisit them—especially with the 2025 mileage rate change—so you can claim them correctly and maximize your savings.
Home Office Deduction: What Still Applies in 2025
If you’re self-employed (Schedule C, partnership, or S corp owner), the home office deduction can reduce your taxable income when you use part of your home exclusively for business.
Note: W-2 employees still do not qualify for the home office deduction—a change that’s been in place since the 2017 Tax Cuts and Jobs Act. This rule continues under the OBBB.
Who Qualifies?
To claim the home office deduction, you must meet both of these tests:
- Exclusive & Regular Use Test
- The space must be used only for your business—no personal use.
- It must be used on a regular basis for your business operations.
- Principal Place of Business Test
- Your home office must be your main place of business, or
- The space must be where you regularly meet or deal with clients/customers.
Two Ways to Calculate Your Deduction
- Simplified Method
- Deduct $5 per square foot, up to 300 sq. ft.
- Maximum deduction: $1,500 per year.
- No need to track individual expenses.
- Actual Expense Method
- Deduct a percentage of actual home expenses (rent, mortgage interest, utilities, property taxes, insurance, maintenance, and depreciation).
- The percentage is based on the square footage of your office vs. your entire home.
- Requires detailed recordkeeping.
2024–2025 Key Considerations
- No major IRS rule changes, but audit scrutiny remains high—especially for large claims or “flexible” spaces like dining rooms or guest rooms.
- The home office must relate to self-employed or 1099 work—you can’t claim it for hybrid W-2 remote work.
- Document your office space with photos, floor plans, and expense records in case of IRS inquiry.
Mileage Deduction: Bigger Rate for 2025
If you drive for business purposes, the IRS allows you to deduct either actual vehicle expenses or use the standard mileage rate. Most self-employed professionals choose the standard rate for simplicity.
2023–2025 Standard Mileage Rates
|
Year |
Business Use Rate (per mile) |
|
2023 |
$0.655 |
|
2024 |
$0.67 |
|
2025 |
$0.70 |
The jump to $0.70 per mile in 2025 means bigger potential deductions—especially if you drive a lot for client meetings, property showings, or job sites.
What Counts as Business Mileage?
- Driving to meet clients or customers
- Traveling to show properties or job sites
- Trips to purchase business supplies or attend business-related training
- Mileage between two business locations
Important: Commuting from your home to a regular office location is not deductible—unless your home qualifies as your principal place of business.
Tips to Maximize Your Mileage Deduction
- Use a mileage tracking app or keep a written log with dates, destinations, business purposes, and miles driven.
- Record odometer readings at the start and end of each year.
- If you also use your car for personal purposes, only the business portion is deductible.
Why This Matters for Realtors, Contractors, and 1099 Workers
Realtors
- If your home office is your main business hub, you can also deduct mileage to every property, meeting, or closing location.
- The higher 2025 mileage rate can significantly reduce your taxable income in high-driving markets.
Contractors
- Travel between multiple job sites or supplier trips adds up quickly at $0.70 per mile.
- A dedicated home office for scheduling, invoicing, and client calls can unlock additional deductions.
Other 1099 Workers
- Consultants, photographers, designers, and other self-employed professionals often meet clients on location—those miles are deductible if properly tracked.
- A home office can also make your first and last trip of the day deductible.
Final Takeaway
The home office and mileage deductions remain two of the most valuable—and most misunderstood—tax benefits for self-employed individuals. Under the OBBB’s stable tax framework, these deductions can continue to provide meaningful savings when claimed correctly.
Careful documentation and a clear understanding of the rules will help you keep more of what you earn while staying IRS-compliant.
Want to make sure you’re getting every deduction you’re entitled to?
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