What is a tax write-off for a small business?

A tax write-off (business deduction) is an ordinary and necessary business expense you subtract from gross income, reducing the income your business pays tax on. Common examples: rent, payroll, supplies, equipment, professional fees, and interest on business loans.

"Tax write-off" and "tax deduction" mean the same thing. The IRS foundational rule is in Publication 535 (Business Expenses): to be deductible, an expense must be ordinary (common and accepted in your industry) and necessary (helpful and appropriate for your business). Every qualifying write-off reduces your net taxable income — and by extension, your tax bill. This is educational content; consult a CPA or tax professional for your specific situation.

Common small business write-offs

Rent and utilities — office, retail, or warehouse space used for business.
Payroll and benefits — wages, salaries, health insurance premiums paid for employees.
Supplies and materials — office supplies, raw materials, inventory.
Professional fees — accounting, legal, consulting, and business coaching.
Business insurance — premiums for general liability, E&O, property, and other business policies.
Marketing and advertising — website, ads, content creation, business cards.
Business travel — transportation, lodging, and 50% of meals for qualified business travel (not commuting).
Interest on business debt — interest paid on a business loan, line of credit, or equipment financing is generally deductible (see IRS Pub 535).
Home office deduction — if you use part of your home exclusively and regularly for business, a portion of housing costs may be deductible (see IRS Publication 587).
Retirement plan contributions — contributions to a SEP-IRA, solo 401(k), or SIMPLE IRA for yourself as self-employed.

Equipment and large purchases: Section 179 and bonus depreciation

Capital expenditures — computers, machinery, vehicles used for business — are generally depreciated over time rather than deducted in full the year of purchase. However, IRS Section 179 lets eligible businesses deduct the full purchase price of qualifying equipment in the year placed in service, up to an annual limit (verify the current-year limit at IRS.gov; the 2025 limit was $1,160,000). Bonus depreciation (currently phasing down under the Tax Cuts and Jobs Act) offers an additional first-year deduction percentage. A CPA can help you decide which approach is better for your cash flow and tax situation.

Write-offs and business financing

Business owners often face a tension: legitimate deductions lower taxable income — but lower income on tax returns can make qualifying for financing harder. Lenders typically review two years of business tax returns to assess revenue and profitability. A CPA can help you balance tax minimization with maintaining the documented income you'll need to qualify for growth capital. If your business is looking for funding, apply with ClearValue Lending — one application, one matched lender partner.

Keep your records

The IRS requires substantiation for all deductions — invoices, receipts, bank statements, or mileage logs. Deductions without documentation can be disallowed in an audit. This content is educational; consult a qualified tax professional before claiming deductions you're uncertain about.

IRS rules on business write-offs

To be deductible, a business expense must be both ordinary (common in your industry) and necessary (helpful and appropriate). — IRS Publication 535 — Business Expenses
Interest paid on a business loan is generally deductible as a business expense if the loan is for business purposes and the taxpayer is liable for repayment. — IRS Publication 535
Section 179 allows businesses to deduct the full cost of qualifying equipment placed in service in a given year, up to an annual dollar limit that adjusts for inflation. — IRS — About Form 4562, Depreciation and Amortization

Key takeaways

A tax write-off and a tax deduction are the same thing — an expense that reduces taxable income.
To qualify, expenses must be ordinary (common in your industry) and necessary (appropriate for your business).
Common write-offs: rent, payroll, supplies, professional fees, insurance, interest on business debt.
Equipment purchases are generally depreciated — Section 179 lets you deduct the full cost in year one up to the annual limit.
Keep receipts and documentation; consult a CPA before claiming deductions you're unsure about.