Quick Answer
Yes, you can deduct the business percentage of your internet bill as a utility expense. If you use your internet 70% for business, you can deduct 70% of your monthly bill. For a $80/month plan used 70% for business, that's $672 annually in deductions.
Best Answer
Robert Kim, CPA
Best for entrepreneurs who work primarily from home and use internet for business operations
How much of your internet bill can you deduct?
Yes, you can absolutely deduct the business portion of your internet bill. The key is calculating the exact percentage used for business versus personal activities. According to IRS Publication 535, utilities used for business purposes are fully deductible as ordinary and necessary business expenses.
The deduction amount depends on your business usage percentage. Track your internet usage for a typical week, noting hours spent on business activities versus personal use.
Example: Calculating your internet deduction
Let's say you have an $80/month internet plan ($960/year) and use it:
Business percentage: 50 ÷ 70 total hours = 71.4%
Your deductible amount: $960 × 71.4% = $685 annually
Documentation requirements
To support your deduction, maintain:
Different calculation methods
Time-based method (most common):
Data usage method (for businesses with heavy uploads):
Room-based method (if you have a dedicated office):
Common business internet uses
What you should do
Start tracking your internet usage immediately. Create a simple log showing business hours online each day. Keep all internet bills and calculate your business percentage quarterly to ensure accuracy.
Use our return scanner to check if you've been missing this deduction on previous returns - you may be able to amend and claim refunds.
Key takeaway: Most home-based business owners can deduct 60-80% of their internet bills, saving $400-800 annually on a typical $80/month plan.
*Sources: [IRS Publication 535](https://www.irs.gov/pub/irs-pdf/p535.pdf), Business Expenses*
Key Takeaway: Track your business internet usage percentage and multiply it by your annual internet costs - most home businesses can deduct 60-80% of their internet bills.
Internet deduction methods and typical business usage percentages by work type
| Work Type | Typical Business Usage % | Monthly Bill | Annual Deduction |
|---|---|---|---|
| Home-based consultant | 70% | $80 | $672 |
| Freelance designer | 60% | $90 | $648 |
| Real estate investor | 40% | $85 | $408 |
| Part-time side business | 25% | $75 | $225 |
More Perspectives
Diana Flores, EA
Best for property investors who use internet for rental property management and research
Internet deductions for rental property management
As a landlord or real estate investor, your internet usage for property management activities is fully deductible against rental income. This includes time spent on property research, tenant screening, marketing vacant units, and managing rental finances online.
Calculating your rental business percentage
Track internet time spent on:
Example: If you spend 15 hours weekly on rental activities and 35 hours total online, that's 43% business use. On an $85/month internet plan, you can deduct $437 annually.
Where to report the deduction
Report internet expenses on Schedule E (Rental Income) under "Other" expenses. If you manage multiple properties, allocate the deduction proportionally based on gross rental income from each property.
Documentation for rental internet use
Maintain a log showing:
This creates a clear business purpose trail if the IRS questions your deduction percentage.
Key takeaway: Real estate investors typically use 30-50% of their internet for rental activities, making $300-500 annually deductible on average internet plans.
Key Takeaway: Real estate investors can deduct internet costs used for property research, tenant management, and rental marketing - typically 30-50% of total usage.
Robert Kim, CPA
Best for freelancers who have a separate home office and want to use the simplified method
Using home office percentage for internet deduction
If you claim a home office deduction using Form 8829, you can apply that same percentage to your internet bill without additional usage tracking. This simplified approach works when your internet router and primary work computer are located in your dedicated office space.
Simplified calculation method
If your home office is 15% of your total home (200 sq ft office ÷ 1,333 sq ft home), you can deduct 15% of your internet costs automatically. For a $75/month plan, that's $135 annually.
This method works best when:
When to use actual usage tracking instead
Track actual business usage percentage if:
Many freelancers find their actual business internet usage (50-70%) significantly exceeds their home office percentage (10-20%), making usage tracking more beneficial.
Combining with other home office utilities
If using the home office percentage method, you can also deduct the same percentage of:
This creates a consistent, defensible approach across all utility deductions.
Key takeaway: Freelancers with dedicated offices can use their home office percentage for internet deductions, but tracking actual usage often yields higher deductions.
Key Takeaway: Freelancers can use their home office percentage for internet deductions, but tracking actual business usage typically results in larger deduction amounts.
Sources
- IRS Publication 535 — Business Expenses - covers utility deductions for business use
Reviewed by Robert Kim, CPA on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.