Yes, freelancers and 1099 contractors can deduct internet and phone bills on their 2026 taxes — but only the business-use portion, and only if you meet the IRS's "ordinary and necessary" standard. Here's how to calculate a safe, audit-proof deduction without overstepping.
The basic rule
IRS Publication 535 says you can deduct business expenses that are both ordinary (common and accepted in your trade) and necessary (helpful and appropriate for your business). Internet and phone service qualify — but only for the business-use portion.
Internet: how to calculate the deductible amount
Your home internet is likely used for both personal and business. You can deduct the business portion using any reasonable method. The three most common:
Method 1: Percentage-based on usage
Track your business vs. personal internet time for a representative month (or use your best reasonable estimate). For example, if you work from home 30 hours a week out of 60 total hours awake, that's roughly 50% business use. Apply that percentage to your monthly bill.
Method 2: Number of devices used for business
If your internet supports five devices and two are used primarily for work (your laptop, a work tablet), deduct 2/5 = 40% of the bill. This is a safe, easy-to-defend method.
Method 3: Home office percentage
If you use the regular home office method, you can apply your business-use percentage (based on square footage) to your internet bill as part of home office expenses. For example, a 100 sq ft office in a 2,000 sq ft home = 5% business use of all home utilities including internet.
Phone: two common scenarios
Scenario 1: Personal phone used for business
If you use your personal cell phone for work calls, emails, and apps, you can deduct the business portion. Options:
- Track business usage for a month (calls, texts, data) and apply that percentage to your bill.
- Use a flat 25–40% if you work from your phone regularly — this is common and generally accepted by the IRS.
- Deduct the cost of a separate work phone line or app (e.g., Google Voice for business) if you use one.
Scenario 2: Dedicated business phone
If you have a separate phone or line used exclusively for business, deduct 100% of its cost — this is the cleanest approach and requires minimal documentation.
Software and cloud services: fully deductible
While we're on the topic, almost all work-related software and cloud services are 100% deductible in the year of purchase. This includes:
- Email and productivity suites (Google Workspace, Microsoft 365)
- Design tools (Figma, Adobe Creative Cloud)
- Project management (Asana, Trello, Notion)
- Accounting software (QuickBooks, Xero, Freshbooks)
- Website hosting and domains
- VPNs for business use
Avoid the red flags
The IRS may question your deduction if:
- You deduct 100% of your personal internet or phone (especially if you don't have a separate business line).
- Your percentage seems unreasonable (e.g., 90% business use of a personal phone).
- You use one method for internet and a completely different method for phone without explanation.
Simple worksheet example
| Expense | Monthly Cost | Business Use % | Annual Deduction |
|---|---|---|---|
| Home internet | $80 | 40% | $384 |
| Cell phone (personal) | $120 | 30% | $432 |
| Google Workspace | $18 | 100% | $216 |
| Website hosting | $25 | 100% | $300 |
| Total | $1,332 |
That's over $1,300 in deductions most freelancers forget to claim. For someone in the 22% federal bracket, that's roughly $293 in tax savings — not huge, but it adds up across many categories.
Frequently Asked Questions
Can I deduct 100% of my internet if I work from home?
Only if the internet is used exclusively for business, which is rare for home-based workers. Most freelancers should use a reasonable business-use percentage (25–50% is typical and safe).
Can I deduct my phone's data plan?
Yes — the same business-use percentage applies to the data portion of your phone bill. If you itemize usage, you can allocate voice, text, and data separately.
Should I use actual expenses or the simplified method for home office utilities?
If you use the simplified home office method ($5/sq ft), you cannot separately deduct utilities like internet. If you use the regular method, utilities are part of the home office allocation. Pick whichever gives you the larger total deduction.
Final tip for 2026
Set a calendar reminder every quarter to review your business-use percentages. The Tax Deduction Finder walks you through all these categories and gives you a safe, audit-ready deduction estimate in minutes.