Most craft fair and farmers market vendors leave money on the table at tax time. Either they miss deductions they could legally take, or they avoid them out of fear of getting it wrong. Both are expensive over a multi-year vendor career.
Important: this article is general guidance, not tax advice for your specific situation. Tax law changes and individual circumstances vary. Talk to a CPA or enrolled agent for actual filing guidance, especially in your first year. The cost is usually $200 to $400 and pays for itself quickly.
That said, here is what experienced vendors typically deduct.
Schedule C is your main form
If you are a sole proprietor (the default for most vendors), you report your selling income and expenses on Schedule C of your federal return. The form runs you through categories of expenses. Almost every cost related to your vendor business goes on it. Net profit flows to your 1040 and is subject to income tax plus self-employment tax (15.3 percent on the first ~$168K in 2026).
If your vendor business is part-time alongside a W-2 job, this is still where it goes. The IRS does not care if it is full-time or a side hustle.
Booth fees and application fees
Every dollar you pay to apply to or rent a booth at an event is fully deductible. This includes:
- Booth fees and table fees
- Application fees, including ones where you were rejected
- Jury fees on platforms like Zapplication
- Subscription fees for vendor platforms or finder services
- Membership fees for vendor associations
Keep every receipt and email confirmation. A spreadsheet that lists event name, date, fee, and payment method is enough to satisfy an audit.
Mileage and travel
Travel to and from events is one of the biggest deductions vendors miss. The IRS lets you choose between two methods:
- Standard mileage rate. 2026 rate is around $0.67 per business mile. Track miles to and from each event, plus any business errands (supply runs, post office, bank). Most vendors use a phone app to log automatically.
- Actual expense method. Track gas, oil, insurance, repairs, depreciation, and deduct the business-use percentage. More paperwork but sometimes a larger deduction for high-cost vehicles.
You usually cannot switch back and forth year to year, so pick the right method in year one. Most small vendors use standard mileage because it is simpler.
Other travel deductions: tolls, parking at events, hotel stays for multi-day events, 50 percent of meals while traveling overnight for business.
Materials and supplies (cost of goods sold)
The materials that go into the products you sell are deductible, but they go in the COGS section of Schedule C, not the regular expenses section. This matters because COGS is calculated as: beginning inventory + purchases - ending inventory.
That means you need to track what you bought during the year and what you have left at year end. Two simple methods:
- Take a physical inventory on December 31 and value it at cost
- Use accounting software (QuickBooks Self-Employed, Wave, FreshBooks) that tracks inventory automatically
Materials include: yarn, fabric, beads, wire, soap base, fragrance, wax, wicks, paint, canvas, ceramics clay, glaze, leather, packaging, tags, labels.
Tools and equipment
Anything that lasts more than a year and costs more than a small amount is depreciable, but the Section 179 deduction lets most small vendors expense the full cost in the year of purchase. Common deductible equipment:
- Tent, table, weights, sidewalls, lighting
- Display fixtures (racks, shelves, mannequins, easels)
- Tools (sewing machine, kiln, laser cutter, polisher)
- Computer used for business
- Camera and lighting for product photography
- Card reader and POS hardware
- Hand truck, dolly, folding chairs
Keep receipts. Items used for both business and personal need to be allocated by use percentage.
Home office
If you make products at home, you may qualify for the home office deduction. There are two methods:
- Simplified method. $5 per square foot of dedicated business space, up to 300 square feet ($1,500 maximum).
- Regular method. Calculate business-use percentage of your home and apply it to mortgage interest, rent, utilities, insurance, repairs.
The space must be used regularly and exclusively for business. A studio dedicated to soap making qualifies. The kitchen table where you also eat dinner does not.
Other commonly missed deductions
- Software: Square fees, Stripe fees, accounting software, design software (Canva Pro, Adobe), email marketing
- Marketing: Business cards, banners, signs, social media ads, photography for product shots
- Banking: Business checking account fees, payment processor fees, business credit card annual fees
- Education: Workshops, classes, books, conferences related to your craft or vendor business
- Phone and internet: Business-use percentage of your cell and home internet
- Professional fees: Tax preparation, legal, accounting
Mistakes to avoid
Mixing personal and business money. Open a separate business checking account and put all sales into it and pay all expenses from it. This single change makes taxes easier and is the first thing an auditor checks.
Ignoring sales tax. Most states require you to collect and remit sales tax on craft fair sales. Some states require it on every sale, others only above a threshold. Get registered in your home state at minimum and check rules for any state where you sell at events.
Forgetting 1099-Ks. Stripe, Square, PayPal, and other processors send a 1099-K reporting your gross sales to the IRS. The threshold dropped in recent years. Make sure your reported income matches.
Not tracking inventory. Without an ending inventory number, you cannot calculate COGS correctly, which means you may overstate or understate income. Take inventory on December 31 every year.
What to do this year
- Open a business checking account if you have not
- Pick a mileage tracking app and use it from January 1
- Save every receipt (digital is fine; phone photos work)
- Decide on accounting software or a simple spreadsheet
- Find a CPA or enrolled agent in your area for the first filing
The vendors who treat their business like a business pay less tax and sleep better. Two hours a month of bookkeeping prevents most problems.
Looking for new events to sell at? Browse the VendorsMap event map or check our guide to pricing handmade goods.