For NJ residents working from home — especially those who used to commute to New York City — the home office deduction is one of the most valuable write-offs available. You can use the simplified method ($5/sq ft, up to 300 sq ft, max $1,500) or the actual expense method, which allocates a portion of your rent or mortgage interest, utilities, insurance, and repairs based on the percentage of your home used exclusively for business.

Given NJ’s high housing costs, the actual expense method often produces a significantly larger deduction but requires careful recordkeeping. Our home office calculator runs both methods and shows you which one wins.

If you drive for business purposes — client visits, job sites, supply runs — you can deduct 70 cents per mile for 2025 (67 cents for 2024). This is the IRS standard mileage rate, and NJ follows the same rate for state purposes. Commuting miles (home to your regular office) are never deductible — but driving from your home office to a client site counts as business mileage.

For NJ contractors and consultants who drive frequently across the state’s dense metro areas, this deduction adds up quickly. Use our mileage calculator to find your exact deduction. Don’t forget: parking fees and tolls are deductible on top of the mileage rate.

The business-use portion of your home internet and cell phone is deductible. If you use your phone 70% for business, 70% of your monthly bill is a business expense. For NJ remote workers with fast fiber connections, this is a clean, easy write-off. Keep a record of your business-use percentage and your annual bills.

Business software subscriptions — design tools, accounting software, project management apps, cloud storage, professional databases — are fully deductible as ordinary business expenses. This includes Adobe, QuickBooks, Notion, Zoom, Slack, and similar tools used for business. Personal-use subscriptions (Netflix, Spotify) are not deductible even if used occasionally for work.

Accountant fees, attorney fees for business matters, professional licenses, and membership dues for trade organizations are all deductible. Continuing education costs that maintain or improve skills required in your current work are also deductible — online courses, professional certifications, and industry conferences all qualify. Note: education costs to enter a new career field do not qualify.

Federally, self-employed individuals can deduct 100% of health insurance premiums paid for themselves and their families as an above-the-line deduction — directly reducing your federal AGI on Schedule 1 of Form 1040.

New Jersey does not allow this deduction. NJ does not conform to the federal self-employed health insurance deduction, meaning your NJ gross income will be higher than your federal AGI by the full amount of your health insurance premiums. For a self-employed NJ resident paying $600/month in health insurance, that’s $7,200 in income that is taxed federally at $0 but taxed by NJ at your NJ marginal rate.

If you operate as an S-Corp, partnership, or LLC taxed as a partnership, New Jersey’s Business Alternative Income Tax (BAIT) may be worth exploring. BAIT allows pass-through entities to pay NJ income tax at the entity level, which creates a federal deduction for the tax paid — effectively working around the $10,000 federal SALT cap for business owners. The BAIT election is made at the entity level and produces a corresponding NJ credit for the individual owners. This is a more complex strategy — consult a NJ CPA if you have a multi-member LLC or S-Corp.