1. Mileage, at two different rates.
The IRS standard mileage rate for business use is 72.5 cents per mile from January 1 through June 30, 2026, and 76 cents per mile from July 1 through December 31. The midyear change came from higher fuel prices. Your mileage log needs dates, not just a yearly total, so the right rate applies to each half.
Trips from Fuquay-Varina to client sites in Raleigh or Cary add up fast. Commuting to a regular workplace does not count.
2. The home office.
The simplified home office method allows $5 per square foot of the home used for business, up to 300 square feet. It skips the utility and depreciation math of the regular method. The space generally has to be used regularly and only for the business.
3. Self-employed health insurance.
If you show a profit on Schedule C, premiums for medical coverage for you, your spouse, your dependents, and children under 27 at year-end can be deducted on Form 7206. The catch: no deduction for any month you were eligible for a health plan subsidized by an employer.
4. A retirement plan, even after December 31.
A SEP-IRA can be set up and funded as late as the return due date, including extensions. A sole proprietor with no employees can open a solo 401(k) after year-end and make first-year deferrals for 2026 until the April 15, 2027 due date. The 2026 deferral limit is $24,500, and the overall limit is $72,000.
5. The qualified business income deduction.
Most sole proprietors can deduct up to 20% of qualified business income, and the deduction is now permanent. Starting in 2026, anyone with at least $1,000 of qualified business income gets at least $400.
Records first, then the return.
Each of these deductions rests on a record: a mileage log, a measured floor plan, premium statements, and plan paperwork. Self-employment tax of 15.3% still applies to net earnings, with the Social Security part capped at $184,500 of 2026 earnings. Our page on sole proprietor and Schedule C returns covers the return itself, and the self-employed records checklist helps you organize.
COMMON QUESTIONS
Questions you may have.
What is the 2026 business mileage rate?
72.5 cents per mile for January through June 2026, and 76 cents per mile from July 1 through December 31, 2026.
How much is the simplified home office deduction?
$5 per square foot of space used for business, up to 300 square feet.
Can I still open a retirement plan for 2026 after December 31?
Yes. A SEP-IRA can be set up by the return due date, including extensions. A sole proprietor with no employees can open a solo 401(k) and make first-year deferrals until the return due date, not counting extensions.