Home Internet as a Business Deduction: Documenting the Business-Use Percentage for Schedule C (2026)

Published: July 3, 2026 · Reading time: 7 min

TL;DR: Home internet is a legitimate business deduction — but for a mixed-use connection you can only deduct the business-use percentage, and only if you can document it. Calculate a defensible percentage (a short written rationale is often enough), apply it consistently, and deduct that share on Schedule C Line 25 (utilities). The one trap: don't double-count — if internet is inside your actual-method home-office deduction (Line 30), don't also deduct it on Line 25. It's the same rule as the cell phone bill: a percentage, documented, applied the same way every month.

If you work from home, your internet connection is as much a business tool as your laptop — and it's deductible. But almost every freelancer gets it slightly wrong, either by deducting the whole bill or by claiming a percentage they can't back up. Here's how to deduct home internet correctly and keep it audit-proof for 2026.

The Rule: Deduct the Business Share, Not the Whole Bill

Home internet you use for both business and personal purposes is a mixed-use expense. The IRS lets you deduct the part that's ordinary and necessary for your business — the business-use percentage, not the full monthly charge.

• Connection is 40% business → deduct 40% of the bill.
• Connection used exclusively for business (a rare dedicated line) → deduct 100%.

Deducting the entire bill for a connection the whole household streams, games, and browses on is a classic overreach — and an easy one for an auditor to knock down. Claim the honest share and you keep the whole deduction.

This is the same business-vs-personal split that applies to a mixed-use phone or a home office: a percentage, documented.

How to Calculate a Defensible Percentage

There's no single required formula — the IRS wants a reasonable basis you can explain. Three accepted methods:

1. Time-based estimate. Estimate the share of your connected hours that are business vs. personal. If you work online 8 hours a weekday and the household streams a few hours each evening, a business share around 40–50% is defensible.
2. Device or user split. Allocate by how much of the household's total usage is your work — reasonable when you're one of several people (and devices) on the connection.
3. Home-office allocation. Tie internet to the business-use percentage you already calculate for your home office, for consistency across your home-related deductions.

Whichever you pick, write it down and apply it consistently. The cardinal sin isn't choosing the "wrong" method — it's claiming a suspiciously round "100%" or "50%" with no support behind it. A one-paragraph written rationale that reflects how you actually use the connection is usually enough.

Consistency tip: Use the same method year over year, or note why it changed. A stable percentage reads as honest; a number that jumps around reads as guessing — the same sampling-and-consistency logic the IRS accepts for mileage logs.

Which Schedule C Line?

Most freelancers deduct the business share of home internet on Line 25 (utilities) — internet is a communications utility, the same line commonly used for a cell phone bill. Some use Line 27a (other expenses) with an "internet" label. Either works if you're consistent.

The Trap: Don't Double-Count With the Home Office

This is where freelancers accidentally claim internet twice. Two home-office methods handle internet differently:

• Actual-expense method (Line 30). The business-use share of home utilities — potentially including internet — can be part of that calculation. If you put internet here, don't also deduct it on Line 25.
• Simplified method ($5/sq ft, up to 300 sq ft). The flat amount covers general home-operating costs. You can still deduct the business-use share of internet separately on Line 25, because internet is a business communications service, not a general home-operating cost bundled into the per-square-foot rate.

The rule of thumb: pick one home for internet — Line 25 or inside the actual-method home office — and never claim it in both places. Doing both is a fast way to turn a clean deduction into an audit adjustment.

Common Mistakes That Sink the Deduction

• Deducting 100% of a household connection. The fastest way to lose part of it in an audit.
• A round number with no basis. "50%" pulled from nowhere invites scrutiny — write down why.
• Double-counting with the home office. Internet on both Line 25 and Line 30 is a red flag.
• Tossing the bills. You need the statements to prove the amount, not just the percentage — save the PDF your ISP emails.
• Changing the percentage every year with no explanation.

Keeping It Audit-Proof

Three records, and the deduction holds:

1. Monthly internet bills — proof of what you paid (save the PDF your provider emails).
2. Your business-use basis — a short written rationale, a time-usage estimate, or your home-office allocation.
3. Consistency — the same method applied across the year, or a note explaining any change.

Handle internet the same way you handle every receipt that has to be IRS-valid: capture the record when it arrives, note the business purpose and the percentage, and file it where you'll find it in April. Pair it with your phone bill and other subscriptions and you've got the whole communications-utility corner of Schedule C covered.

Frequently Asked Questions

Can a freelancer deduct their home internet bill?

Yes, but only the business-use portion of a mixed-use connection — if it's 40% business, you deduct 40% of the bill. A dedicated business-only line would be 100% deductible. Either way you need records supporting the percentage.

How do I calculate the business-use percentage of my home internet?

Use a reasonable, consistent method: a time-based estimate of business vs. personal connected hours, a device/user split, or an allocation tied to your home-office use. A short written rationale that reflects reality is usually enough. Avoid unsupported round numbers.

Which Schedule C line does a home internet deduction go on?

The business share goes on Line 25 (utilities) — or Line 27a (other expenses) — applied consistently. Don't also claim it inside an actual-method home-office deduction on Line 30; pick one place.

Does the home-office deduction include internet?

It can under the actual-expense method (Line 30). Under the simplified method ($5/sq ft), you can still deduct internet separately on Line 25 as a communications utility. Just don't claim it twice.

What records do I need to deduct home internet in an audit?

Monthly bills (proof of amount), documentation of your business-use percentage (written basis or usage estimate), and consistent application across the year. The deduction fails only when the percentage has nothing behind it.

Authoritative References

• IRS Schedule C (Form 1040) and Instructions
• IRS Publication 535 — Business Expenses
• IRS Publication 587 — Business Use of Your Home
• IRS — Recordkeeping for Small Businesses

Capture Every Internet Bill — and Every Other Receipt

The business share of your internet bill is a deduction you'll claim twelve times a year — easy to forget, easy to lose the statement for. CentSense scans receipts and bills with AI, tags each to the right Schedule C line, and lets you record the business-use split as you go, alongside mileage at the 2026 rate of $0.725/mile. Export a CPA-ready CSV at tax time with nothing missing. Start free with 10 AI scans a month — no credit card required; the Solo plan ($5/month) adds unlimited scanning and mileage tracking.

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This article is educational and not tax advice. Consult a qualified tax professional about your specific situation.