July 31, 2026·10 min read

Internet Deduction for the Self-Employed: How Much of Your Bill Is Actually Deductible

Almost nobody running a business from home writes off their internet correctly. Some skip it entirely because it feels too small to bother with; others deduct the whole bill and quietly create an audit problem. The truth sits in between: the IRS lets you deduct the business-use share of your connection, and for most full-time freelancers that lands somewhere between 40% and 80%. Here is how to figure out your number, where it goes on Schedule C, and how it interacts with the home office deduction.

Can you deduct internet if you're self-employed?

Yes — internet service is an ordinary and necessary expense for anyone who works online, so the business portion is deductible on Schedule C. What you cannot do is deduct the full bill for a connection your household also uses for streaming, gaming, and school. The IRS wants an allocation, and it wants you to be able to explain how you arrived at it.

The only rule that matters: business-use percentage

There is no IRS safe-harbor percentage for internet. You pick a method, apply it consistently, and document it. A freelancer who spends 45 hours a week online for clients while the household uses the connection another 30 hours can reasonably claim 60%. Write that math down once a year and keep it with your return.

Three defensible ways to calculate your percentage

Hours of use: business hours divided by total household hours on the connection. Data volume: if your router app reports usage per device, split work devices from personal ones. Room-and-time hybrid: if you already compute a home-office percentage, some filers use it as a floor and adjust upward for heavy online work. Any of the three works — inconsistency is what causes problems.

Hours method example

You work online 40 hours a week; your family uses the connection roughly 25 hours. 40 ÷ 65 = 62% business use. On a $85/month plan that's $632 a year.

Device method example

Your router shows 320 GB monthly, of which 145 GB comes from your work laptop and business phone. 145 ÷ 320 = 45% business use.

Internet vs. the home office deduction — they are not the same line

If you use the simplified home office method ($5/sqft, capped at 300 sqft), that flat amount already stands in for utilities — but internet is still separately deductible as a business expense because the simplified rate covers occupancy costs, not communications. Under the actual expense method, be careful not to claim internet twice: either include it in your home-office utilities allocation or claim it separately on its own line, never both.

Which Schedule C line to use

Most filers put internet on Line 25 (Utilities). Line 27a (Other expenses) with an 'Internet service' label also works and is common among consultants who want it visible. Pick one and use it every year — flipping lines annually is the kind of small inconsistency that makes a return look sloppy.

What counts beyond the monthly bill

The business share of your modem or router purchase, mesh extenders, a static IP or business-class upgrade, and VPN subscriptions are all deductible. A dedicated business line — a second connection used only for work — is 100% deductible with no allocation needed.

Mobile hotspots and travel internet

Hotspot data plans used for client work, airport and hotel Wi-Fi charges during business travel, and in-flight Wi-Fi purchased to work are fully deductible when the trip is a business trip. Keep the receipt; these are small, frequent, and easy to forget at filing time.

Coworking memberships and cafés

A coworking day pass or monthly membership is a fully deductible business expense (Line 27a or Rent, depending on the arrangement). A latte you buy to use café Wi-Fi is not — the IRS treats it as personal meal spending unless it meets the business-meal rules with a client present.

The deduction lowers self-employment tax too

Because internet is a Schedule C expense, it reduces net profit — which cuts both income tax and the 15.3% self-employment tax. A $700 internet deduction is typically worth $170–$260 in real tax for a mid-bracket freelancer, not just your marginal rate.

Worked example — full-time freelance designer

Plan: $95/month = $1,140/year. Hours method gives 65% business use → $741 deduction. New mesh router $220 × 65% = $143. VPN $60 fully business = $60. Total: $944. At a 22% bracket plus 15.3% SE tax, that's roughly $330 saved.

Worked example — evening side hustle

Plan: $70/month = $840/year. Side business uses the connection 10 of 60 weekly household hours → 17% → $143 deduction. Small, but it takes two minutes and still shaves both income and SE tax.

Gig drivers: your phone data is the internet deduction

If you drive for Uber, Lyft, DoorDash, or Instacart, you rarely deduct home internet — your working connection is cellular data. That belongs in the phone deduction, allocated by business-use percentage, not in a home internet line. Do not claim both for the same activity.

Records to keep

Twelve monthly statements (not just the bank debit), a one-paragraph memo explaining your percentage and method, one screenshot of router or device usage if that's your method, and receipts for hardware. That memo is what turns a guess into a documented position.

Mistakes that get this disallowed

Deducting 100% of a shared household connection, double-counting internet inside a home-office utilities allocation and again on Line 25, claiming service for months you had no business activity, and using a different percentage every year with no explanation.

Employees can't claim it — only Schedule C filers

W-2 remote workers cannot deduct home internet through 2026; the Tax Cuts and Jobs Act suspended unreimbursed employee expenses. If you have both W-2 and 1099 income, only the self-employed share supports a deduction.

The bottom line

Choose one honest method, apply it to your annual bill, and file it consistently on Line 25. Then stack it with your other write-offs in the [tax deduction calculator](https://gigmytax.com/calculators/tax-deduction), and check the related [home office deduction calculator](https://gigmytax.com/calculators/home-office-deduction) so you don't claim the same utility twice.

Frequently asked questions

+What percentage of internet can I deduct as self-employed?

Whatever you can substantiate. Full-time home-based freelancers commonly document 50–80%; part-time side hustlers usually land at 15–35%. Derive it from hours of use or per-device data volume.

+Can I deduct 100% of my internet bill?

Only if the connection is used exclusively for business — typically a second, dedicated business line. On a shared household connection, claim the documented business share instead.

+Which Schedule C line is internet?

Line 25 (Utilities) is the most common. Line 27a (Other expenses) labelled 'Internet service' is also acceptable. Use the same line every year.

+Can I deduct internet and the home office deduction?

Yes, but not the same dollars twice. Under the simplified $5/sqft method, deduct internet separately. Under the actual expense method, either include it in the utilities allocation or claim it on its own line — never both.

+Is a router or modem purchase deductible?

Yes, at your business-use percentage. Under $2,500 you can expense it immediately with the de minimis safe harbor; more expensive equipment can be expensed under Section 179.

+Do remote employees get an internet deduction?

No. Through 2026, W-2 employees cannot deduct unreimbursed home internet. Ask your employer about an accountable reimbursement plan instead.