Contract nurse taxes and deductions

Agency contracts vary on who carries the malpractice cover, and premiums you pay yourself are deductible while premiums the agency pays are not yours to claim. Licensing in multiple states adds up fast for anyone taking assignments across state lines, and each state's fee is deductible in the year paid. If you are working in a state you do not live in, you will owe a non-resident return there as well as a resident return at home, the credit for tax paid elsewhere usually prevents double tax, but only if you file both.

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:

Scrubs

Scrubs, deductible only because it fails the suitable-for-everyday-wear test. That is the whole rule, and it is why a suit bought specifically for client meetings is not deductible however strictly the client expects it.

Continuing education units

Hours required to keep a license you already hold are the clearest case there is. Spending on continuing education units to stay current is deductible; the training that qualified you to start is not. The test is about where you are, not what the course teaches, which is why the identical enrollment fee can be deductible for you and not for the person sitting beside you.

Mileage or travel

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 contract nurse deduction list

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

• Malpractice insurance
• Licensing fees

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:

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.

What these words mean

Nonresident

Someone who earns money in a place without living there. Most states and cities tax non-residents only on what they earned inside the boundary, and residents on everything.

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.

Related

• Full deductions checklist
• Every profession
• 1099 taxes by state
• Quarterly payments
• Is an S-corp worth it?
• Local income tax

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.