Schedule C changes for tax year 2025

The 2025 Schedule C instructions list these as new.

• Line 9: the business standard mileage rate is 70 cents a mile.
• Line 27a: the energy efficient commercial buildings deduction (Form 7205) now has its own line, and other expenses from line 48 move to line 27b.
• Line 13 via Form 4562: 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025, and a Section 179 limit of $2.5 million, reduced once qualifying purchases pass $4 million.
• Domestic research and experimental costs can be deducted currently from 2025, or capitalized and amortized over at least 60 months (Rev. Proc. 2025-28).
• Up to $150,000 of qualified sound recording production costs incurred after July 4, 2025 and before 2026 may be deductible under section 181.

The IRS is explicit that qualified tips, qualified overtime and personal-use car loan interest are claimed on Schedule 1-A, not Schedule C. For a vehicle used partly for business, only the business share of the interest belongs on Schedule C. An excess business loss is worked out on Form 461 and flows to Schedule 1, line 8p, rather than reducing line 31.

For home offices, the only What’s New item on the 2025 Form 8829 is the higher SALT limit, which affects how much real estate tax is treated as an itemized deduction rather than a business expense.

The IRS draft 2026 Schedule C (created May 15, 2026) splits interest into three lines: 16a mortgage, 16b vehicle loan and 16c other. On the 2025 form there were only 16a mortgage and 16b other. The draft does not yet have instructions, so the reporting rules for line 16b are not published.

Most of these lines are only as good as the ledger behind them. With bank feeds and AI categorisation in HelloBooks, expenses land in the right accounts during the year, receipts and bills stay attached to the transactions, and the fixed asset register keeps purchases with their invoices so the Form 4562 work starts from a list rather than a hunt. Contractor payments are tracked against the 1099 threshold for line I.