Top 5 Tax Deductions Every Freelance Crafter Should Claim

Freelance crafting is more than just a passion—it’s a business. And like any small business owner, freelance crafters need to be smart about taxes. The good news? There are plenty of tax deductions available to help you keep more of your hard-earned money.

From supplies to workspace expenses, knowing what deductions to claim can significantly lower your tax bill. But there’s one deduction many crafters overlook—insurance. Protecting your business while benefiting from tax savings? That’s a win-win!

Let’s break down the top five tax deductions every freelance crafter should claim and how business insurance plays a role in keeping your creative business protected and financially optimized.

1. Craft Supplies & Materials

What’s Deductible?
Any materials and tools you purchase to create your products can be deducted. This includes:
✅ Fabric, yarn, beads, and paint
✅ Sewing machines, knitting needles, and crafting tools
✅ Packaging and shipping materials

How Insurance Fits In:
Your supplies and tools are your livelihood. If they’re lost, stolen, or damaged, you could face serious financial setbacks. Business property insurance (often included in a business owner’s policy) can cover these losses, and the premiums are tax-deductible!

2. Home Office & Studio Space

What’s Deductible?
If you have a dedicated workspace in your home where you design, create, or manage your crafting business, you can claim a portion of your:
✅ Rent or mortgage
✅ Utilities (electricity, heating, internet)
✅ Home insurance (the business-use portion)

How Insurance Fits In:
A home insurance policy often doesn’t cover business-related losses. If a fire or theft damages your craft space, you might not be reimbursed unless you have home-based business insurance. The good news? This insurance is tax-deductible, helping you save while staying protected.

3. Business Insurance Premiums

What’s Deductible?
Yes, your business insurance itself is a tax deduction! Freelance crafters should consider:
✅ General Liability Insurance – Protects you if a customer claims your product caused harm.
✅ Product Liability Insurance – Specifically covers claims related to injuries or damages caused by your handmade items.
✅ Business Property Insurance – Covers damage to your tools and materials.
✅ Workers’ Compensation Insurance – Required if you hire employees or assistants.

Why It’s Important:
If you sell handmade products, you could be held liable for any harm caused by your items. A simple lawsuit could be devastating to your small business. Claiming business insurance as a tax deduction keeps you covered without stretching your budget.

4. Marketing & Online Selling Expenses

What’s Deductible?
Any expenses related to promoting and selling your crafts count, including:
✅ Etsy, Shopify, or website hosting fees
✅ Facebook, Instagram, or Google Ads
✅ Business cards, branding, and photography services

How Insurance Fits In:
If you attend craft fairs or markets, you might need event insurance to meet vendor requirements. These premiums are deductible, ensuring you’re both compliant and covered while maximizing tax savings.

5. Travel & Business Transportation

What’s Deductible?
If you travel for craft fairs, business meetings, or to buy supplies, you can deduct:
✅ Mileage driven for business-related trips
✅ Flights, hotels, and meals during business travel
✅ Tolls and parking fees

How Insurance Fits In:
If you use a vehicle for business purposes, you may need commercial auto insurance—especially if you transport large amounts of products or equipment. Luckily, your commercial auto insurance premiums are also tax-deductible!

Final Thoughts: Protecting Your Craft Business While Maximizing Deductions

Freelance crafters have a lot of opportunities to save on taxes, but business insurance is one deduction that is often overlooked. Not only does it protect your handmade business from unexpected financial risks, but it also lowers your tax burden—allowing you to reinvest in your passion.

Need insurance for your craft business? Bunker makes it easy to get covered fast. Get a free quote today and protect your business while optimizing your tax savings! If you’re interested in learning more please visit buildbunker.com or contact us at support@buildbunker.com!