Quick facts: Washington
- The rule
- Ordinary and necessary business expenses
- Common
- Materials, tools, vehicle use, insurance, bond, licenses, software, phone, advertising
- Not deductible
- Personal expenses
- Keep
- Receipts and records as long as needed to prove the deduction
- Confirm
- With your CPA
Fees, rules and rates change, often on July 1 and January 1. Verify every item with the responsible agency before you rely on it.
Short answer: The general rule is that ordinary and necessary business expenses are deductible: an ordinary expense is common and accepted in your trade, and a necessary one is helpful and appropriate for your business. For contractors that usually includes materials, tools, the business share of vehicle costs, insurance, bonds, licenses, software, phone and advertising. Personal expenses are not. How and when each is deducted varies, so confirm with your CPA and keep records.
Updated October 12, 2026. Requirements and fees change; confirm with the agency named on this page.
This is the rule of thumb most contractors are searching for. Use it to organize your records and your questions, then confirm the details with your CPA.
The rule
The IRS: "An ordinary expense is one that is common and accepted in your field of trade, business, or profession." and "A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary."
Common contractor expenses to ask your CPA about
- Materials and parts used on jobs.
- Tools and equipment. Larger purchases may be deducted over time or expensed under special rules.
- Vehicle costs for business use, by standard mileage or actual expenses.
- Liability insurance, workers' comp, and your contractor bond.
- Licenses, registrations and permits.
- Software, phone and internet for the business.
- Advertising and lead costs.
- Wages, payroll taxes and subcontractor payments, with the right forms.
- Uniforms with your logo, safety gear, and training.
What usually does not count
Personal expenses, the personal share of a mixed-use vehicle or phone, and fines and penalties. Ask before you assume.
Keep the records
The IRS: "You must keep your records as long as needed to prove the income or deductions on a tax return." Set up a chart of accounts so each expense lands in the right place, and keep a weekly bookkeeping routine.
Need a CPA? See finding a CPA for a contracting business.
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Common questions
What can a contractor deduct?
In general, ordinary and necessary business expenses: materials, tools, business vehicle use, insurance, bonds, licenses, software, phone, advertising and labor costs. Confirm the treatment of each with a CPA.
Can I write off my truck as a contractor?
The business-use share of vehicle costs is generally deductible, by standard mileage or actual expenses. Larger purchases have special rules; ask your CPA.
How long should a contractor keep receipts?
The IRS says as long as needed to prove the income or deductions on a return, and at least four years for employment tax records.
Sources
Official pages checked on 2026-10-12.