How much tax does a small business pay?

It depends on the business structure. Sole proprietors and LLC owners pay ordinary income tax (10-37%) plus self-employment tax (15.3%). S-Corp owners pay income tax on distributions and payroll tax only on salary. C-Corps pay a flat 21% corporate rate, but distributions face additional tax.

What are the biggest tax deductions for small businesses?

The biggest deductions include: the 20% Qualified Business Income (QBI) deduction, retirement plan contributions (up to $69,000), health insurance premiums, home office, vehicle expenses, salaries/wages, rent, depreciation of equipment, and business insurance.

When do small businesses file taxes?

Sole proprietors and single-member LLCs file with their personal return (April 15). S-Corps and partnerships file Form 1065/1120-S by March 15. C-Corps file Form 1120 by April 15. Extensions are available (6 months for individuals, 6 months for corporations).

Small Business Tax Guide: Deductions, Rates, and Filing (2026)

Small business owners have more tax deductions available than W-2 employees—but also more complexity. Here’s how to minimize your tax bill legally.

Tax Rates by Business Structure

Structure	Tax Type	Rates	Filing Form
Sole Proprietor	Income tax + SE tax	10-37% + 15.3%	Schedule C (with Form 1040)
Single-Member LLC	Same as sole proprietor (default)	10-37% + 15.3%	Schedule C (with Form 1040)
Partnership / Multi-Member LLC	Pass-through to partners	Partners’ individual rates	Form 1065 + K-1s
S-Corporation	Pass-through (salary + distributions)	10-37% income + payroll tax on salary only	Form 1120-S + K-1s
C-Corporation	Corporate tax + dividend tax	21% corporate + 15-20% dividends	Form 1120

Top Small Business Tax Deductions

Biggest Deductions by Savings Potential

Deduction	Maximum	Typical Savings
QBI (20% of qualified business income)	20% of QBI	$5,000-$40,000+
Retirement contributions (Solo 401k/SEP)	$69,000	$5,000-$20,000+
Health insurance premiums (self-employed)	100% of premiums	$5,000-$20,000
Employee wages and benefits	Unlimited	Largest expense for most businesses
Rent/lease payments	Actual cost	$5,000-$50,000
Home office	$5/sq ft or actual	$500-$5,000
Vehicle expenses	$0.70/mile or actual	$1,000-$10,000
Depreciation (Section 179)	$1,220,000	Varies
Business insurance	Actual cost	$1,000-$10,000
Professional services (legal, accounting)	Actual cost	$1,000-$10,000
Software and subscriptions	Actual cost	$500-$5,000
Marketing and advertising	Actual cost	$1,000-$20,000

The QBI Deduction (Section 199A)

Income Level (Single)	QBI Deduction	Limitations
Under $191,950	Full 20% of QBI	None
$191,950-$241,950	Phased out for “specified service” businesses	SSTB limits apply
Over $241,950	Limited by W-2 wages or property basis	Complex calculation

“Specified service” businesses include: doctors, lawyers, consultants, accountants, financial advisors, athletes, performers.

Section 179 and Bonus Depreciation

Feature	Section 179	Bonus Depreciation (2026)
Maximum deduction	$1,220,000	60% of cost
What qualifies	Equipment, vehicles, software, some improvements	Equipment, vehicles, software
Must be profitable?	Yes (can’t create a loss)	No (can create a loss)
Used equipment?	Yes	Yes (for equipment placed in service)

Example: Buy a $60,000 work vehicle. Section 179 lets you deduct most or all of it in year one instead of depreciating over 5 years.

Tax Filing Calendar

Business Type	Tax Return Due	Extension Deadline
Sole Proprietor / Single-Member LLC	April 15	October 15
Partnership / Multi-Member LLC	March 15	September 15
S-Corporation	March 15	September 15
C-Corporation	April 15	October 15
Estimated tax payments	Apr 15, Jun 15, Sep 15, Jan 15	No extensions
W-2s to employees	January 31	No extensions
1099s to contractors	January 31	March 31 (electronic)

The Bottom Line

The most impactful tax moves for small business owners: (1) choose the right structure (consider S-Corp when profitable), (2) maximize the 20% QBI deduction, (3) contribute to retirement accounts (Solo 401k or SEP IRA), (4) deduct health insurance premiums, (5) track every legitimate business expense, and (6) make quarterly estimated payments to avoid penalties. A good CPA will more than pay for themselves in tax savings.