When Are (and Aren't) Small Business Deductions Legitimate?

Small businesses can often substantially reduce their federal income tax liability by claiming legitimate deductions. However, small business owners also need to be careful to avoid claiming invalid deductions and triggering IRS scrutiny. Learn more from Boston small business tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.

Under the Internal Revenue Code, small businesses can claim a variety of deductions to reduce what they owe on their quarterly and annual returns. This is a legitimate tax-mitigation strategy, and small business owners should take advantage of all available deductions.

But small business owners also need to avoid claiming federal tax deductions improperly. This can trigger IRS scrutiny, which can lead to liability for back taxes, interest, and penalties. As Boston small business tax attorney Kevin E. Thorn explains, informed decision-making is critical, and small business owners need to focus on their business’s specific federal tax deduction eligibility.

What Tax Deductions Can Small Businesses Claim for 2026?

Qualifying small businesses can claim several federal tax deductions in 2026. Some examples of the most common deductions that small business owners can use to reduce their corporate or pass-through tax liability include:

• The qualified business income (QBI) deduction
• The home office deduction
• The deductions for office rent and utilities
• The “Section 179” deduction for qualifying vehicles, equipment, and software
• Standard vehicle and mileage deductions
• Employee payroll, health insurance and retirement deductions
• The self-employment tax deduction

The QBI deduction alone can substantially reduce many small businesses’ federal tax liability; combined, these deductions (among others) can minimize what might otherwise be a substantial tax bill. With year-end fast approaching, now is a good time for small business owners to make sure they are prepared to claim as many deductions as possible.

What Tax Deductions Can’t Small Businesses Claim in 2026?

Whether a small business can claim a particular federal tax deduction depends on that business’s unique circumstances. As a result, when deciding which deductions to claim, an informed and business-specific approach is key. Documentation is key as well. For example, if a small business owner can’t substantiate when a vehicle was (and wasn’t) used for business purposes, claiming a substantial deduction for mileage and operating costs could prove costly down the line.

How Thorn Law Group Can Help

At Thorn Law Group, we help Massachusetts small business owners make informed decisions to minimize their federal tax liability. We also represent small businesses (and small business owners) in IRS audits and investigations. If you have questions or concerns, we invite you to contact us for more information.

Schedule a Call with Boston Small Business Tax Attorney Kevin E. Thorn

To schedule a call with Boston small business tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, contact us today. Call 617-692-2989 or contact us confidentially online to let us know how we can help.