Independent workers and freelancers may be leaving significant money on the table each tax season by overlooking a powerful deduction built into the tax code. This lesser-known benefit allows eligible self-employed individuals to deduct an additional 20% of their qualified business income, separate from any other write-offs they claim.
Earnings vary. Figures quoted are reported examples, not a forecast for you.
What the Qualified Business Income Deduction Means for Freelancers
Self-employed individuals who qualify can reduce their taxable income by up to 20% through what is known as the Qualified Business Income deduction, a provision that applies regardless of what other business expenses they write off. Because this benefit is automatic for many eligible filers rather than something that must be actively applied for, countless freelancers simply file without claiming it. Consulting a tax professional or carefully reviewing IRS guidelines can help independent workers determine whether they qualify and ensure they capture the full savings.
Why it matters
For the millions of Americans working as freelancers or independent contractors, this overlooked deduction could meaningfully reduce their annual tax burden. Awareness of existing tax provisions is critical, especially for self-employed workers who do not have employer-based tax guidance.
Common questions
Do I need to do anything special to claim the 20% Qualified Business Income deduction when I file?
Eligible self-employed filers must complete IRS Form 8995 or Form 8995-A when filing their tax return in order to claim the Qualified Business Income deduction.
