Knowing how to take the deductions you are entitled to may help your bottom line if you are a business owner.¹ You may use various deductions this tax season 2024 to manage your taxable income and hopefully keep more of your hard-earned dollars. Here’s a rundown of the main tax deductions your business may take for 2024.²

1. Business Operating Expenses

You have operating expenses, which are just your regular expenses for the day-to-day functions of your business. Many of these are tax-deductible, including:

• Rent or lease expenses for office space or equipment
• Power, electricity, Internet connectivity, paper, postage, and more.
• Fees for professional services like legal, accountant, consulting, etc.
• Costs for insurance, including general liability, workers' compensation, professional liability, etc.

To qualify as tax-deductible, these expenses must be routine for your profession/industry and necessary for running your business.

2. Salaries, Wages, and Employee Benefits

If you have employees, you may generally deduct their salaries, wages, and bonuses. The employer’s part of payroll taxes, such as Social Security and Medicare, are deductible, too.

You also get to deduct the expenses of:

• Health insurance
• 401(k) employer’s contributions
• Education reimbursement
• Paid sick or vacation time off

3. Vehicle and Transportation Expenses

You deduct the actual cost (gas, repairs, insurance), or you may use the base mileage rate (in 2024, it’s 65.5 cents per mile) if you maintain detailed mileage records and receipts supporting your claims.

4. Travel Expenses

If you travel overnight for business, you may deduct travel expenses, including:

• Airfare, train, or bus expense
• Local transportation at your destination (like car rental or ride-sharing)
• Hotel or lodging costs
• Meals and tips (50% of the expenses are deductible)

Keep all travel-related receipts and document the business purpose of the trip.

5. Depreciation of Assets

Whether it’s equipment, machinery, or real estate that you use for your business, you deduct the expense of those investments from your taxable income as depreciation. If 2024 is your first year for an asset, you may qualify for Bonus Depreciation.³

You may deduct a portion of the cost of eligible assets for the tax year that the assets go into service. The bonus depreciation rate was 80% for 2023 and is 60% for 2024, declining 20% each year after that until it is zero.⁴

Section 179 Deduction

Investing in qualifying assets under Section 179 allows you to immediately deduct the total purchase price of eligible business equipment up to $1.16 million in 2024.

Calculating your depreciation deduction is complicated, so get a tax professional’s help if you’ve made some large purchases.

6. Retirement Plan Contributions

Contributing to a retirement plan⁵ provides for your future and may give you tax advantages now. Popular options include:

• SEP IRA: Deductible contributions up to 25% of compensation or $66,000, whichever is less.
• SIMPLE IRA: Employee contributions of up to $15,500 are deductible, plus a $3,500 catch-up for those over 50.
• 401(k) Plans: You may add up to $23,000 ($30,000 if you are 50 and over) as a deductible for 2024.

These plans lower taxable earnings and may help attract and retain valuable employees.

Final Thoughts

When you have complicated tax arrangements or are taking large deductions, having your taxes handled by an experienced tax professional should help you stay on top of the latest tax laws. Effective tax planning now may save your company a significant amount in 2024 and beyond.