Equipment

• The IRS allows you take a deduction or depreciation on the value of equipment and furnishings used for business purposes. According to the IRS, a deduction allows you to decrease your tax burden by the cost of property you purchase for business purposes. A depreciation allows you to deduct the cost of business equipment over a number of years. The rules for the deduction differentiate between property used wholly or partially for business. According to the IRS, you may claim a Section 179 deduction if you run a business out of your home and you use your computer at least 50 percent of the time for business purposes. However, you may only take a depreciation if you use your computer less than 50 percent for business uses.
  
  

Travel Expenses

• Travel expenses are deductible only when the travel is a common and necessary expense in your industry or profession. The IRS requires you to determine your tax home, which is the location where you regularly conduct business or main place of duty. You are unable to deduct travel expenses if you do not claim a tax home. According to the IRS, the expenses you incur traveling away from your tax home include air or ground transportation costs you pay for. In addition, the cost of renting a car is only deductible for the portion of use dedicated to business purposes. Other deductible business travel expenses include lodging, meals, phone calls and laundry.
  
  

Employee Pay

• The salary and incentives you pay your employees are deductible on your business tax returns. According to the IRS, qualifying pay includes salary, wages, bonuses, commissions and vacation allowances. In addition, your business may qualify for additional employment credits for hiring employees under certain circumstances. Some of these employment credits include the work opportunity credit, empowerment zone and renewal community employment credit. However, the IRS requires employee pay to meet qualifying tests. The pay must be reasonable and must result from performing a service for your business.
  
  

Taxes

• The IRS allows businesses to deduct tax payments only in the year in which the tax is paid. The IRS allows a deduction for real estate taxes your business pays to a local taxing authority. In addition, businesses may also deduct local and state income taxes but not federal income taxes. These taxes are deducted as business expenses if the business is a partnership or corporation. Individuals deduct local and state income taxes as a deduction and itemized on schedule A on IRS Form 1040. In addition, businesses may also deduct employment taxes such as the business' share of Social Security and Medicare paid from business funds.