If you work from home or run a business, you may be able to deduct a portion of your home internet bill as a legitimate business expense. The IRS allows self-employed individuals and business owners to write off the business-use percentage of their internet costs — just like your cell phone bill. Here’s exactly how it works in 2025.
Can You Deduct Your Home Internet Bill?
Yes — if you’re self-employed, a freelancer, or a business owner, you can deduct the business-use portion of your home internet bill as a business expense. The IRS treats home internet as an ordinary and necessary business expense when you use it for work. However, like your cell phone, you can only deduct the percentage that corresponds to actual business use — not your entire monthly bill.
W-2 employees who work from home cannot deduct internet expenses under current tax law. The Tax Cuts and Jobs Act of 2017 eliminated unreimbursed employee expense deductions through 2025. If you’re an employee who works remotely, ask your employer about a reimbursement plan instead.
How to Calculate Your Business-Use Percentage
The IRS doesn’t prescribe a specific formula for calculating your internet business-use percentage, but your method must be reasonable and defensible. Here are the most common approaches:
- Hours-based method: Estimate what percentage of your daily internet use is for business. If you work 8 hours a day and are online for work about 6 hours of a typical 12-hour connected day, that’s roughly 50% business use.
- Device-based method: If you have multiple people in your household and one computer dedicated to business, you can estimate the business share based on who uses the connection and for what purpose.
- Reasonable flat estimate: Many sole proprietors who work from home full-time use a 50–80% business-use figure. Be conservative and consistent — whatever you claim, you should be able to explain your reasoning to an IRS auditor.
Example Calculation
Say your home internet plan costs $75/month ($900/year). You estimate you use the internet 60% for business (working, video calls, research, client communication) and 40% for personal use (streaming, social media, gaming).
Your internet deduction = $900 × 60% = $540 per year.
If you also deduct your cell phone at 70% business use on a $120/month plan, your combined phone + internet deduction is:
$1,008 (phone) + $540 (internet) = $1,548 in deductible communications expenses.
Where to Deduct Internet on Your Tax Return
Self-employed filers report internet expenses on Schedule C (Form 1040). You can categorize it on Line 25 (Utilities) or Line 27a (Other expenses). Either works — just be consistent year to year.
If you claim the home office deduction using the actual expense method, there’s an important nuance: your home internet may already be partially included in your home office deduction (as a utility). To avoid double-counting, deduct only the non-home-office portion of your internet business use on Schedule C, and let the home office calculation handle the rest. If you use the simplified home office method ($5/sq ft), you can still deduct the full business-use percentage of internet separately on Schedule C.
Internet Deduction and the Home Office
Many self-employed workers wonder how internet deduction interacts with their home office deduction. Here’s a quick summary:
| Home Office Method | Internet Deduction Treatment |
|---|---|
| Simplified method ($5/sq ft) | Deduct the full business-use % of internet separately on Schedule C |
| Actual expense method | Internet is a home utility — include it in the home office calculation to avoid double-counting |
| No home office | Deduct the full business-use % of internet on Schedule C, Line 25 or 27a |
What Documentation Do You Need?
To support your internet deduction in the event of an audit, keep the following records:
- Monthly internet bills or annual statement showing total cost for the year
- A written note or spreadsheet explaining how you calculated your business-use percentage
- Any supporting details: the nature of your work, tools you use online for business, approximate daily business usage
Frequently Asked Questions
Can I deduct 100% of my internet bill if I work from home full-time?
Only if you use your home internet exclusively for business — meaning no streaming, personal browsing, or household use by anyone else. For most people with a shared home internet connection, claiming 100% is difficult to defend and raises audit risk. A documented business-use percentage (even 70–80%) is far safer and still adds up meaningfully over the year.
Is mobile hotspot usage deductible?
Yes. If you use a mobile hotspot for business purposes — accessing client files, conducting video calls, working while traveling — the business-use portion of that data plan is deductible on Schedule C just like your home internet bill.
Can I deduct both my cell phone and internet bill?
Yes — these are separate deductions. Your cell phone deduction and internet deduction are calculated independently and both reported on Schedule C. Keep separate records for each and apply your business-use percentage to each one individually.
What if my employer pays part of my internet bill?
If your employer reimburses you for internet expenses, those reimbursements are generally tax-free and you cannot deduct the same expenses. You may only deduct unreimbursed business-use costs.
Bottom Line
Self-employed individuals and business owners can deduct the business-use percentage of their home internet bill as an ordinary and necessary business expense. Calculate your business-use percentage honestly, document your reasoning, and report the deduction on Schedule C. Combined with your cell phone deduction, this is one of the simplest recurring deductions for anyone who works from home or runs a digital business.
See also: Can I Deduct My Cell Phone as a Business Expense? | 1099 Tax Deductions: Every Write-Off for Independent Contractors
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