Business Write-Off Estimator
Add up your deductible business expenses and see what they are actually worth in tax saved — at your real combined income + self-employment rate.
Written by Dorothy Ibrahim, 10+ years in banking & finance
Reviewed by Benton Jona, EA (Enrolled Agent) — 2026-07-13
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How we calculate this
This estimator adds up your deductible business-expense categories — home office, supplies, software, travel, meals, vehicle, and other — and shows what they are actually worth in tax saved. A write-off is not free money: it lowers your taxable income, so it saves tax at your marginal rate, not the full amount you spent. For a sole proprietor that rate blends federal income tax and the 15.3% self-employment tax, which is why deductions are worth more to freelancers than to employees.
The formulas
- Total deductions
- home office + supplies + software + travel + (meals × 50%) + vehicle + otherBusiness meals are limited to 50% — enter the full amount and the tool applies the limit.
- Net profit after deductions
- max(0, net profit before deductions − total deductions)Sets the tax bracket the deductions are valued at.
- Combined marginal saving rate
- income-tax bracket rate at taxable income + (15.3% × 92.35%) self-employment marginal
- Tax saved
- total deductions × combined marginal saving rate
Worked example
- With the defaults — $1,500 home office, $1,200 supplies, $2,400 software, $800 travel, $1,000 meals, $0 vehicle, $500 other — total deductions are $1,500 + $1,200 + $2,400 + $800 + ($1,000 × 50% = $500) + $0 + $500 = $6,900.
- Net profit before these deductions is $80,000, so profit after them is $80,000 − $6,900 = $73,100. On that, taxable income works out to about $41,468 (after the deductible half of SE tax, the $16,100 standard deduction, and the QBI deduction), which lands in the 12% federal bracket.
- The saving is the actual difference in federal tax: tax on $80,000 minus tax on $73,100. That comes to about $1,591 — roughly 23.1% of the $6,900 in deductions.
- That effective rate is a little below the raw 12% + 14.13% (self-employment, 15.3% × 92.35%) ≈ 26.1% marginal, because trimming your profit also shrinks the income-limited QBI deduction. Each deducted dollar softens the cost by about 23 cents — you still pay the rest, so a write-off is a discount, not a rebate.
Rates, benchmarks & sources
- Deductible business expenses (ordinary and necessary; Schedule C). — IRS Publication 535 / Publication 334
- Travel, Gift, and Car Expenses — the 50% limit on business meals. — IRS Publication 463
- Self-employment tax: 15.3% on 92.35% of net profit (the SE-tax marginal). — IRS Schedule SE (Form 1040)
- 2026 federal income-tax brackets, standard deduction, and QBI threshold. — IRS Rev. Proc. 2025-32
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- It assumes every amount you enter is a legitimately deductible business expense; it cannot judge whether an item actually qualifies or what business-use share applies to mixed-use items.
- It models a sole proprietor on Schedule C taking the standard deduction, with no other household income and no state tax — those factors change your real bracket and saving rate.
- The vehicle line is the actual-expense method; you cannot also claim the standard mileage rate on the same miles, so use the Mileage Deduction tool to compare.
- It is an educational estimate for planning, not tax advice, and does not replace a return prepared or reviewed by a CPA/EA.
Frequently asked questions
How much is a business write-off actually worth?
A deduction reduces your taxable income, so it saves you tax at your marginal rate — not the full amount you spent. For a freelancer that rate includes both income tax and the 15.3% self-employment tax, which is why write-offs are worth more to the self-employed than to employees. Spend $1,000 on software and you save whatever tax that $1,000 would have been charged, not the full $1,000.
Why are business meals only 50% deductible?
The IRS generally limits business meal deductions to 50% of the cost (Publication 463). This tool applies that automatically — enter the full amount you spent and it counts half toward your deduction. That is why the meals line contributes less to your total than the dollar figure you type in.
What counts as a deductible business expense?
Costs that are ordinary and necessary for your work: software, supplies, a home office, business travel, professional services, and more. Personal expenses do not qualify, and mixed-use items like a phone are deductible only for the business-use share. Keep receipts and log the business purpose so each deduction can survive an audit.
Should I use actual vehicle expenses or the mileage rate?
You can deduct either your actual vehicle costs or the standard mileage rate — not both for the same miles. This tool’s vehicle line is for the actual-expense method; use the Mileage Deduction calculator to compute the standard-rate figure and compare which method gives the larger deduction for your driving.
Does this estimate include state tax or other income?
No. The saving rate here blends federal income tax and self-employment tax only, for a single-business sole proprietor with no other household income. State income tax, a spouse’s earnings, or investment income would shift your real bracket, so treat the figure as a federal planning estimate and confirm specifics with a CPA or EA.
Related calculators
Federal figures only unless noted. State taxes vary.