Real estate agent taxes and deductions

Client gifts are capped at $25 per recipient per year, and closing gifts routinely cost more than that. The excess is not deductible, however good the intention.

Almost every agent is treated as self-employed by law even when working under a brokerage, which means nothing is withheld from a commission check and the whole tax bill arriving at once. Desk fees, brokerage splits and MLS dues come off gross commission, and staging costs you fund yourself are deductible where the seller reimburses you they are not.

The deductions with a rule attached

These are the lines where the answer is not simply "keep the receipt"each has a cap, a percentage or a test that decides how much of the spend you actually get:

Client gifts: Capped at $25 per recipient per year, and that figure has not moved in decades. A $200 closing gift is a $25 deduction and a $175 personal expense. Engraving and shipping sit outside the cap; the gift itself does not.
Vehicle: Business driving counts; commuting does not. The rate changed mid-year: 72.5 cents a mile to June 30, 2026 and 76 cents from July 1, so a full year has to be split at that date rather than multiplied by one figure. A hundred business miles a week across the whole year is about $3,861 off your profit. You cannot use the standard rate at all on a vehicle you have already claimed MACRS depreciation, Section 179 or bonus depreciation on.

The rest of the real estate agent deduction list

Ordinary and necessary business expenses, deductible in full in the year you pay them, provided they are genuinely for the business:

MLS fees
Errors and omissions insurance
Marketing
Staging costs

That is what is specific to this trade. The larger deductions are the universal ones, see the full checklist.

What each deduction is worth to you

On $100,000 of profit with no state income tax, $1,000 deducted saves $305, 30.5%, because it comes off self-employment tax and income tax together:

Net profit	Saved per $1,000 deducted	Effective
$40,000	$231	23.1%
$100,000	$305	30.5%
$200,000	$297	29.7%

The last row is worth less than the one above it, and that is not a mistake: past the Social Security wage base the self-employment part of the saving drops from 15.3% to 2.9%, and the higher income-tax bracket does not quite make up the difference. A deduction is worth most in the middle.

Add a state income tax and every row rises. The 1099 calculator applies that layer.

Where this comes from

The rules on this page that are specific rather than general are cited below. Follow a link to read the provision itself rather than taking our word for it:

Real estate agents and brokers are excluded from 'brokerage services'Reg. 1.199A-5(b)(2)(x)

What these words mean

Section 179: A rule letting you deduct the whole cost of equipment in the year you start using it, instead of spreading it over the years you own it.
Depreciation: Spreading the cost of something long-lasting, a vehicle, a camera, a tractor, across the years you use it, rather than deducting it all at once.
MACRS: The standard federal timetable for depreciation, the schedule that decides how much of an asset’s cost you deduct in each year of its life.

General information about how these deductions work, not tax advice. Whether a particular expense is deductible for you depends on facts this page does not have, check with a tax professional before claiming anything listed here.