Write-off at your own risk: what you shouldn’t deduct on your business tax return
There’s a popular myth that once you start a business, everything from your morning latte to your new designer blazer magically becomes "free" because it's a tax deduction. It sounds great in theory, but as a business owner, guessing at your deductions is the fastest way to turn your joyful business journey into unwanted letters from the IRS.
Let’s clear the air and look at the common expenses that, despite what you might have heard, are actually not tax-deductible.
Personal living expenses
This is the golden rule of the IRS: you cannot deduct personal, living, or family expenses. This includes your groceries (unless it's a specific business meal), your personal rent/mortgage (unless you qualify for the home office deduction), and your household utilities. If an expense would exist even if you didn't have your business, it’s likely personal.
Let’s talk lunch: the "50% rule" and what’s changing
Meals are perhaps the most talked-about write-off, but they are also the most likely to be flagged if handled incorrectly. As of 2026, the IRS has tightened the belt on certain food expenses, so let’s get clear on what’s on the menu for your deductions:
The 50% rule still stands (for most): You can generally deduct 50% of the cost of a meal if you are meeting with a client, prospect, or business partner to discuss work. This also applies to meals you eat while traveling away from home for business (like attending a conference or visiting a client in another city).
Solo meals: If you’re a solopreneur grabbing a coffee while working on your laptop at a cafe, or picking up a quick lunch between errands, that is not deductible. If you are eating alone or with your family and you aren't traveling away from home, the IRS views that as a personal living expense.
A major 2026 change: Previously, many businesses could deduct 50% of "convenience" food, like snacks for the office or coffee for the breakroom. Starting in 2026, these employer-provided snacks and office meals are now 0% deductible. If it’s for convenience and not a formal business meeting or a company-wide party, it doesn’t get deducted as a business expense.
The 100% exception: Believe it or not, some meals are still fully deductible! This usually applies to company-wide events (like a holiday party for all your contractors or employees) or food provided to the general public (like cookies at an open house for your business).
Professional attire
This is a common point of confusion! You generally cannot deduct the cost of clothing you buy for work, even if you only wear it for business. If the clothes are suitable for everyday wear, like a nice blazer for a presentation or a pair of jeans for a casual meeting, they are considered a personal expense.
The Exception: Only specialized uniforms or protective gear not suitable for daily use (like branded scrubs or steel-toed boots) are typically deductible.
Entertainment (yes, even for clients)
The rules changed a few years ago. While you can still generally deduct 50% of business meals (where you are actively discussing business with a client or lead), you cannot deduct entertainment expenses. This includes tickets to concerts, sporting events, or rounds of golf, even if you are there with a client.
The $25 rule: when a gift is (and isn't) deductible
We all love showing appreciation to the clients who make our businesses possible! Whether it’s a holiday gift basket or a thank you bouquet, giving is part of building a joyful brand. However, the IRS has a very specific, and somewhat tiny, limit on how much of that kindness you can deduct.
You can only deduct up to $25 per person, per year for business gifts. This limit hasn't changed since the 1960s! So, if you send a $100 luxury gift box to your favorite client, you can only claim $25 of it as a business expense. The remaining $75 is essentially a personal "gift" from you to them and should be coded as an owner’s draw or non-deductible expense.
Political contributions or lobbying
Even if a political candidate or cause aligns perfectly with your business goals, donations to political campaigns or lobbying efforts are not deductible business expenses.
Fines and penalties
We all make mistakes, but unfortunately, the IRS doesn't give tax breaks for them. You cannot deduct fines or penalties paid to a government agency. This includes things like parking tickets received while on a business trip, late filing fees, or tax penalties.
How to stay confident
The best way to handle non-deductible expenses is to keep them off your books from the start.
Use a separate account: Using a a dedicated business bank account and credit card keeps personal transactions out of the equation.
Categorize in real-time: When you see a transaction pop up in QBO that you know is personal, categorize it as an "Owner’s Draw" or "Personal Expense" immediately. For expenses you aren’t sure about, use your “Uncategorized Expense” or “Ask My Accountant” account, then send the list to your tax preparer at year end. They’ll review the transactions and let you know if any are deductible by the business.
When in doubt, consult an expert!
