What is this business expense worth?
“It’s a write-off” is doing a lot of work in most people’s heads. This shows what a purchase really costs once the deduction is counted.
What it really costs you
Not enough detail yet
Enter what something costs to see what it actually costs you after the deduction.
- Deductible amount
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- Total tax saved
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- Combined rate
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- SE tax saved
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How this is worked out
A deduction does not refund what you spent. It lowers the income you are taxed on, so it saves you your marginal tax rate on the deductible amount and no more.
The calculator first works out the deductible amount: the purchase price multiplied by its business-use percentage. It then adds up three savings. Self-employment tax is about 14.1% of it, because that tax is charged at 15.3% on 92.35% of profit. Federal income tax is your bracket rate on less than the full amount: a lower profit also means a smaller deduction for half of your self-employment tax, and, if you get the 20% QBI deduction, a smaller QBI deduction too. Together that leaves about 74% of each deducted dollar coming off your taxable income. State tax is the state rate you enter on the amount after the half-of-self-employment-tax effect, since most states start from federal adjusted gross income and have no QBI deduction.
Take a $1,000 laptop used only for work, bought by a self-employed person in the 22% bracket in a state with a 5% income tax. The deduction saves $164 of federal income tax, $141 of self-employment tax and $46 of state tax, $351 in all. The laptop still costs you $649.
Two things change the result. Above the Social Security wage base ($184,500 of self-employment earnings in 2026), only the 2.9% Medicare part of self-employment tax still applies, so the saving from that line drops to under 3%. And larger items may not be deductible all at once. Items up to $2,500 per invoice or item can usually be expensed under the de minimis safe harbour. Above that, equipment is normally depreciated, although Section 179 and bonus depreciation often let you deduct it in the first year anyway.
For anything used partly for personal reasons, keep a record of how you worked out the business percentage.
Sources
Common questions
How much does a tax deduction actually save me?
If you are self-employed, roughly 14% in self-employment tax plus your income tax rate on about three-quarters of the deduction, plus state tax. Only three-quarters, because a smaller profit also shrinks your half-of-self-employment-tax deduction and the 20% QBI deduction. At a 22% federal bracket that is about 30% — so a $1,000 purchase costs you around $695.
Is a business expense free if I can deduct it?
No. A deduction reduces the income you are taxed on, it does not refund the purchase. At a 22% bracket, spending $1,000 to save about $305 still leaves you about $695 down.
Can I deduct something I use for both work and personal life?
Only the business share, and you need records showing how you arrived at that percentage. A plausible-sounding split with nothing behind it is the first thing an audit unpicks.
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Estimates based on published federal rules for tax year 2026. State and local tax is not included. This is general information, not advice about your situation.