What business expenses can self-employed people deduct when applying for SNAP?
Executive summary
Self-employed applicants can reduce their gross self-employment income for SNAP either by using a jurisdiction’s standard percentage deduction (commonly 40–50% depending on state policy) or by documenting actual, allowable business expenses, which can include supplies, advertising, phone and prorated home-usage costs but exclude personal taxes and retirement set‑asides [1] [2] [3]. States vary in the size of the standard deduction and the scope of verifiable expenses, and applicants must provide proof on request or accept the automatic standard deduction [4] [2] [1].
1. How SNAP counts self-employment income — standard method and the choice to use actual costs
SNAP treats self-employment income by taking gross receipts and deducting either a standard percentage to cover the cost of doing business or the applicant’s verified actual business costs; the standard is commonly 40% in many state rules and 50% in some administrative systems, and applicants generally choose which method to use for their benefit calculation [4] [1] [2].
2. The common standard deductions: 40% versus 50% and why it matters
Different state systems apply different defaults — California and several states use a 40% standard deduction for self-employment, while other administrative guides and system rules show a 50% standard being applied in places using automated case-entry systems; the practical effect is the same: a substantial portion of gross receipts is not counted as income unless the household proves higher actual expenses [1] [4] [2].
3. What counts as allowable business expenses — categories and concrete examples
Allowable self-employment expenses that can be deducted when properly documented include the cost of goods or supplies sold, business advertising and website costs, business portions of cell phone and phone plans, licensing fees and other business permits, and ordinary business utilities or increased home heating/electricity when part of the home is used for the business [5] [6] [7]. Day‑care providers and other in‑home businesses are explicitly noted: a portion of utilities, food used for business (snacks), licensing costs and supplies can be allocated as business expenses when they are the business’s actual costs [5].
4. Home‑based business expenses must be prorated and not double-counted
When a business operates from the household, agencies require prorating shelter-related costs (rent, utilities, mortgage principal portion tied to income‑producing property or rooms) by the percent of the home used for business — only the business portion is allowed as an expense and the remainder may be treated separately as the household’s shelter deduction; programs caution against counting the same cost twice [7] [1].
5. Expenses typically disallowed or limited for SNAP deduction purposes
SNAP policy lists categories that are not permitted as business deductions for SNAP eligibility, including federal, state and local income taxes, money set aside for retirement, and other personal work‑related expenses such as routine transportation to and from work; agencies may also limit or disallow certain items if they are not reasonable for the business or if SNAP benefits were used in the transactions [3].
6. Documentation, timing and verification — how to claim actual expenses
Claiming actual expenses requires documentation: tax forms like Schedule C, recent business records, itemized bills, or a signed statement explaining profits and losses may be acceptable depending on the state office’s rules, but many systems will apply the standard deduction automatically unless the applicant timely provides proof of higher expenses within the application or recertification period [5] [2] [1]. If an applicant cannot produce verification, agencies may revert to the standard percentage and some state guides emphasize that failure to verify can mean no actual expense deduction is allowed [1] [2].
7. Practical implication — why tracking business costs matters for SNAP
Because net self‑employment income determines both eligibility and benefit amount, identifying and documenting all allowable business expenses — even small, prorated items like a business share of phone bills or a corner of home utilities — can materially lower countable income; conversely, reliance on the standard deduction is a faster route but may not maximize a household’s benefit if actual costs exceed the standard [5] [6] [4].