The business portion is — if you're self-employed. Internet is the textbook mixed-use expense: you deduct the share you actually use for business, not the whole bill. What matters is picking a reasonable method for that percentage, documenting it, and applying it consistently.
Claiming 100% of a household connection your family also uses is the version that gets challenged.
📖 Full guide with a worked example: Is Your Internet Bill Tax Deductible?
The rule
IRS Publication 587, Business Use of Your Home treats utilities and services as primarily personal expenses of which you may deduct the business part. There is no IRS-published percentage for internet — the method is yours to choose and yours to justify.
⚠️ Many articles still cite Publication 535, Business Expenses for this. That publication was discontinued (last revision 2022); its content moved into Pubs 334, 463, 587 and 946.
Three defensible methods
- Time-based — business hours online ÷ total hours online. Easiest to defend because it maps to actual use. Weakness: fuzzy on an always-on connection; estimating others' usage is hard.
- Device/user-based — your work devices ÷ total household devices. Weakness: treats a 4K-streaming device as equal to your email.
- Space-based — fold internet into the actual-expense home office calculation, where it takes your home-office percentage. Weakness: square footage is a poor proxy for internet usage.
Worked example (time-based): $75/month = $900/year. 30 business hours ÷ 75 total household hours = 40%. Deduction = $900 × 40% = $360/year.
Pick one method and stay with it — switching year to year is what makes a percentage look optimised rather than reasonable.
When 100% is allowed
A separate connection used exclusively for the business — a second line, or the connection at separate business premises. Pub 587 draws this line explicitly for telephone: the basic charge for the first landline into your home is nondeductible personal, but a second line used exclusively for business is deductible.
"I work from home full time" does not get you to 100% on a shared household connection — a full-time schedule doesn't make evening personal use disappear.
Internet vs home office vs phone
Three separate calculations. Internet has its own usage-based percentage; the home office deduction is based on space; phone is its own mixed-use calculation.
Interaction worth knowing: under the simplified home office method ($5/sq ft) utilities are already covered by the flat rate — nothing separate to add. Under the actual-expense method you choose whether internet sits inside it as a utility or outside it as its own expense. Either is fine; both is double-counting.
How ExpenseBot helps
Set a business use percentage per expense category in your expense category settings — internet is the standard example. It's applied automatically to every expense in that category, and your year-end tax report shows both the full amount paid and the calculated business portion. See also: "How do I set business use percentage for expense categories?"
Your provider's monthly invoice arrives by email; ExpenseBot captures it from Gmail into a Google Sheet in your own Drive, so twelve invoices become a running total instead of a shoebox.
What to keep
- The bills — all twelve invoices, not just bank lines (a bank line shows money left; the invoice shows what it bought)
- The method — a dated note of how you derived the percentage and its inputs
- The months — the log or sample period behind it, plus any mid-year change and why
US federal rules for self-employed Schedule C filers. Estimates — confirm with your tax professional.