What is Line 23 on Schedule C?
Line 23 — Taxes and licenses
Line 23 on Schedule C is taxes and licenses. It covers state and local taxes imposed on the business, business license and permit fees, and the employer share of payroll taxes if you have employees. Two common mistakes: federal income tax is never deductible here, and your self-employment tax does not go on Line 23 either — half of it is deducted separately on Schedule 1 of your Form 1040.
Examples
- An annual business license renewal from your city or county.
- A state gross-receipts tax on your business.
- A professional license fee required to operate.
Watch out for
- Sales tax you collect from customers is not your expense — you collect and remit it.
- Real estate tax on business property goes on Line 20b if rented, or through Form 8829 for a home office.
- Keep the license or tax notice itself, not just the payment record.
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General information, not tax advice. Amounts, limits, and percentages change between tax years — check the current IRS Schedule C instructions or ask a tax professional about your situation.
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