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Yes. Contractors who use a vehicle for business can deduct actual costs (gas, insurance, depreciation, repairs) proportional to business use, or use the 2026 IRS standard mileage rate of 70 cents per mile. If the vehicle is used more than 50% for business and costs over $25,000, bonus depreciation (100% in 2026 under OBBBA) may allow you to deduct the full cost in year one. Document all business trips with date, mileage, and business purpose. Personal commuting miles are never deductible. Source: IRS Publication 463, IRC § 168(k).

For most contractors earning over $60,000–$80,000 in net self-employment income, an S-Corporation saves more in taxes than a single-member LLC. A sole prop/LLC pays 15.3% SE tax on 100% of net profit. An S-Corp only pays SE tax on the owner's W-2 salary — the rest passes through without SE tax. On $150,000 net income (single filer, California), an S-Corp saves $8,687/year. Below $50,000–$60,000, S-Corp payroll and compliance costs often exceed the savings. Use our Entity Comparison tool for your exact numbers.

Contractors can deduct ordinary and necessary business expenses including: vehicle mileage or actual auto expenses (70¢/mile in 2026), tools and equipment (Section 179 up to $1,160,000 or 100% bonus depreciation), materials and supplies used on job sites, work clothing and PPE (if not suitable for everyday wear), subcontractor payments, job site travel (not commuting), business insurance and licensing, home office (if dedicated exclusively to business), 50% of business meals, and self-employed health insurance premiums. Source: IRS Publication 535, IRC § 162.

The self-employment tax rate in 2026 is 15.3% on net self-employment income up to the Social Security wage base of $176,100 (12.4% Social Security + 2.9% Medicare). Above $176,100, only the 2.9% Medicare portion applies. An additional 0.9% Medicare surtax applies on net income above $200,000 (single filers). You can deduct 50% of SE tax as an above-the-line deduction on Form 1040. Use the SE Tax Calculator to see your exact number. Source: IRS Publication 533, IRC § 1401.

Yes — and in 2026, you can often deduct them 100% in the year of purchase. The Section 179 deduction allows immediate expensing of equipment up to $1,160,000. The One Big Beautiful Bill Act (OBBBA) also restored 100% bonus depreciation for property placed in service 2025–2029. For smaller tools (under $2,500 per item), the de minimis safe harbor lets you expense them immediately without Section 179 filing requirements. Source: IRC §§ 179, 168(k), IRS Rev. Proc. 2015-20.

W-2 employees have taxes withheld and their employer pays half of FICA. 1099 contractors pay both halves of Social Security and Medicare — totaling 15.3% — as self-employment tax. However, 1099 contractors can deduct business expenses that W-2 employees can't, must make quarterly estimated tax payments, and have more flexibility in entity structure (LLC, S-Corp) to manage their tax burden. The upside: every legitimate business expense reduces both income tax and SE tax. Source: IRS Publication 1779, IRC §§ 1401–1403.

Yes, with an important distinction. Travel from a regular home base or office to a temporary job site is deductible business travel. However, commuting from home to a regular, fixed place of business is not deductible. If a contractor has no fixed office and drives directly from home to job sites, claiming a home office deduction can make the home a business location — making all job site travel potentially deductible. Keep a mileage log with date, destination, and business purpose. The 2026 rate is 70 cents per mile. Source: IRS Publication 463, Revenue Ruling 99-7.