As a skilled tradesperson, you’re an expert at your craft—whether that’s electrical work, plumbing, carpentry, or another specialized trade. But when it comes to taxes? That might not be your strongest skill set.
Here’s the thing: missing legitimate tax deductions is like leaving money on the table. And in trades where profit margins can already be tight, maximizing your tax savings isn’t just smart—it’s essential for your financial health.
In this guide, we’ll walk through 17 commonly overlooked tax deductions specifically for tradespeople. Whether you’re self-employed or work for someone else, these write-offs could save you thousands of dollars each year.
IMPORTANT: Tax laws change regularly, and individual situations vary. While this guide provides general information for the 2025 tax year, always consult with a qualified tax professional before claiming deductions.
For Self-Employed Tradespeople & Independent Contractors
1. Tools and Equipment Purchases
The tools of your trade are likely your biggest expense—and potentially your biggest tax write-off.
What qualifies: Power tools, hand tools, specialized equipment, safety gear, and even tool storage solutions.
How to deduct:
- Items under $2,500: Can typically be fully deducted in the year purchased using the de minimis safe harbor election
- Items over $2,500: May need to be depreciated over several years, but Section 179 deduction often allows for immediate full expensing up to $1,220,000 (2025 limit)
Pro Tip: Keep detailed receipts with descriptions. Photos of major equipment purchases alongside receipts provide extra documentation.
2. Vehicle Expenses
Your truck or van isn’t just transportation—it’s a mobile workshop. The IRS offers two methods for deducting vehicle expenses:
Standard Mileage Rate:
- 70.5 cents per business mile (2025 rate)
- Easier record-keeping—just track your business miles
- Includes gas, insurance, maintenance, and depreciation
Actual Expense Method:
- Track all actual costs: gas, insurance, repairs, maintenance, etc.
- Deduct the business-use percentage of these expenses
- May result in larger deductions for newer or larger vehicles
Pro Tip: Even if you use the standard mileage rate, track tolls and parking separately—these are additional deductions beyond the standard rate.
3. Home Office Deduction
If you use part of your home exclusively for business administration, you may qualify for this valuable deduction.
Two calculation methods:
- Simplified Option: $5 per square foot of office space (up to 300 sq. ft.)
- Regular Method: Calculate the percentage of home used for business and apply to eligible expenses (mortgage interest/rent, utilities, property taxes, etc.)
Requirements:
- The space must be used regularly and exclusively for business
- It must be your principal place of business for administrative activities
Pro Tip: Document your home office with photos and maintain clear boundaries between work and personal space.
4. Business Insurance Premiums
Deductible insurance costs include:
- Liability insurance
- Commercial auto insurance
- Equipment insurance
- Workers’ compensation premiums (for your employees)
- Business interruption insurance
Pro Tip: Health insurance premiums for self-employed tradespeople are deductible, but as an adjustment to income rather than a business expense.
5. Licensing and Certification Costs
Deductible professional expenses include:
- Trade license fees
- Professional certification costs
- Continuing education required to maintain licensing
- Professional association memberships
Pro Tip: Keep a digital folder of all license renewals and certification expenses for easy reference at tax time.
6. Contract Labor
When you hire other tradespeople or helpers:
- Payments to subcontractors are fully deductible
- Must issue 1099-NEC forms to those paid $600+ annually
- Keep detailed records of work performed
Pro Tip: Using accounting software like QuickBooks can automatically track payments requiring 1099s.
7. Work Clothing and Protective Gear
Not all work clothes qualify, but many do:
Deductible items:
- Safety equipment (hard hats, safety glasses, steel-toe boots)
- Specialty clothing with company logo
- Clothing unsuitable for everyday wear
- Clothing required for work that gets excessively soiled
Non-deductible items:
- Regular jeans and t-shirts
- General-purpose clothing that could be worn elsewhere
Pro Tip: Uniform cleaning and laundry costs for specialty work clothes are also deductible.
8. Materials and Supplies
Consumable items used in your work:
- Fasteners (nails, screws, staples)
- Electrical components
- Plumbing supplies
- Lumber and building materials
- Adhesives, caulks, and sealants
Pro Tip: For larger jobs, keep materials separate by project for better expense tracking and potential cost recovery.
9. Mobile Phone and Internet Expenses
If used for business purposes:
- Business percentage of phone bills
- Business apps and software
- Mobile hotspot or internet costs related to business
Pro Tip: Consider a dedicated business phone to simplify deduction calculations and improve work-life balance.
For Employed Tradespeople (W-2 Workers)
10. Unreimbursed Employee Expenses (State Level)
While the federal deduction for unreimbursed employee expenses was suspended until 2026, many states still allow these deductions on state income tax returns.
Potentially deductible expenses at state level:
- Personal tools required for work
- Protective clothing and safety equipment
- License fees
- Union dues
Pro Tip: Check your specific state tax regulations, as they vary widely.
11. Education and Training Costs
When improving skills in your current trade:
- Trade school courses
- Continuing education
- Workshops and training sessions
- Reference books and subscriptions
Pro Tip: Some education expenses might qualify for tax credits rather than deductions—these are even more valuable.
For Both Self-Employed and Employed
12. Health Insurance Premiums
For self-employed:
- Premiums for yourself, spouse, and dependents are deductible as an adjustment to income
- May qualify for Premium Tax Credit if purchased through Marketplace
For employed:
- Premiums paid outside employer plans may be deductible if you itemize and medical expenses exceed 7.5% of AGI
Pro Tip: Health Savings Accounts (HSAs) offer additional tax advantages for those with high-deductible health plans.
13. Retirement Plan Contributions
Self-employed options:
- SEP IRA (contribution limits up to $73,500 for 2025)
- Solo 401(k) (up to $69,000 plus catch-up contributions)
- SIMPLE IRA (employee contribution up to $16,000 plus employer match)
Employed options:
- Traditional or Roth 401(k) through employer
- Traditional or Roth IRA individually
Pro Tip: Self-employed retirement plans often have much higher contribution limits than employed options—a significant tax advantage.
14. Mileage Between Job Sites
When deductible:
- Travel between different work locations during the same day
- Not deductible: commuting between home and first/last job site
Pro Tip: Use a mileage tracking app to automatically log trips between job sites.
15. Per Diem for Overnight Travel
When working away from home area:
- Lodging and meal expenses for overnight job sites
- Per diem rates can be used instead of actual expenses
- Location-specific rates available from GSA website
Pro Tip: Per diem rates often result in higher deductions than actual expenses and require less documentation.
16. Professional Subscriptions and Publications
Tax-deductible information sources:
- Trade magazines and newsletters
- Code books and technical manuals
- Online subscription services with trade information
- Software subscriptions for estimating or technical reference
Pro Tip: Digital subscriptions are fully deductible—keep email receipts as documentation.
17. Banking and Merchant Processing Fees
Business-related financial costs:
- Business account maintenance fees
- Credit card processing fees for client payments
- Payment app fees (PayPal, Venmo Business, etc.)
- Loan interest for business purposes
Pro Tip: Consider a dedicated business account to simplify tracking these expenses.
Documentation: The Key to Claiming What You Deserve
The difference between a successful deduction and a rejected one often comes down to documentation. For tradespeople, consider these record-keeping essentials:
1. Separate Business Banking
- Dedicated business checking account
- Business credit card for work expenses
2. Digital Receipt Management
- Apps like Expensify or QuickBooks to capture receipts
- Cloud storage organized by expense category and year
3. Vehicle Logs
- Mileage tracking apps (MileIQ, Everlance, Stride)
- Date, starting/ending odometer, purpose, and client for each trip
4. Asset Inventory
- Spreadsheet of major tools and equipment
- Purchase date, cost, and expected useful life
- Photos of significant items with visible serial numbers
Conclusion: Don’t Leave Money on the Table
The skilled trades offer numerous tax advantages that many workers miss each year. By capturing these legitimate deductions, you could potentially save thousands of dollars annually—money better used for growing your business, saving for retirement, or investing in your personal financial goals.
Your Next Steps:
- Review this list and identify deductions you may have missed in previous years
- Implement a better tracking system for the current tax year
- Consider consulting with a tax professional familiar with the trades
- Set calendar reminders for quarterly tax planning check-ins
Remember, tax planning is year-round, not just a April activity. The best tradespeople approach their finances with the same attention to detail they bring to their craft.
Have questions about tax deductions specific to your trade? Leave a comment below, and we’ll do our best to address your situation in an upcoming article.
Disclaimer: This article contains general tax information and should not be construed as personalized tax advice. Tax laws change frequently, and individual situations vary. Always consult with a qualified tax professional regarding your specific circumstances before implementing any tax strategy.