How Starting a Newsletter Business Could Unlock a $69,000 Tax Deduction

Disclaimer: This post is brought to you by our friends at Carry. The information provided here is for general informational purposes only and is not intended as specific tax, legal, or financial advice. Tax laws and regulations are subject to change, and individual circumstances vary. Please consult a certified tax professional, financial advisor, or attorney for personalized advice tailored to your situation. beehiiv does not assume responsibility for the accuracy or completeness of this information and will not be liable for any errors or omissions, or for any losses, injuries, or damages arising from its use.

In America, one of the smartest financial moves you can make is to start a business. 

You can start a full-time small business, a venture capital-backed startup, or even a side-hustle that makes a little bit of extra money. 

The U.S. tax code is designed to favor business owners significantly, and a newsletter is one of the best opportunities out there right now.

Newsletters are perfect because they’re quick to launch, you can write it on your own, and they don’t require any outside capital to start. 

Plus, beehiiv has taken care of everything from growth to monetization, so all you have to focus on is writing. 

The playbook is simple — launch a newsletter, monetize and turn it into a business, and use this guide to unlock some big tax savings.

Here’s a closer look at the various ways you can leverage your newsletter business to save money on taxes.

1. Deductible Business Expenses

One of the most significant advantages of owning a newsletter business is the ability to deduct business expenses. 

If you fall into the 25% tax bracket, expenses related to running your business effectively grant you a 25% discount on those costs.

Not only can you deduct direct expenses, but you also have access to deductions that W-2 employees do not. 

For instance, if you have a home office, you can deduct a portion of your rent or mortgage, along with related costs like cleaning, utilities, internet, and phone bills.

And these deductions are not just limited to your home office. If you have software (i.e., beehiiv), other content subscriptions, or anything else for your business, those are all acceptable business expenses! 

In contrast, a W-2 employee cannot claim this deduction.

2. No Taxes on the Sale of Your Newsletter Business

If your newsletter business is set up as a C corporation, the tax benefits become even more compelling. 

If you hold your shares for five years, you can sell your newsletter and pocket up to $10 million without incurring federal taxes—and in over 40 states, no state taxes either. This strategy is commonly known as Qualified Small Business Stock, and it’s incredibly powerful.

Additionally, if you haven’t held the shares long enough, you can roll over the pre-tax amount into another business of any type, allowing the five-year timeline to continue. This strategy can potentially multiply your tax-free gains to $20 million, $30 million, or even $40 million through some smart estate planning.

3. $69,000 Tax Deduction Via a Solo401(k)

If you run your newsletter by yourself, then you can maximize your tax benefits even further by tailoring your own retirement plan. You can establish a Solo401(k), which enables you to take up to a $69,000 tax deduction. 

And if you're a high-earner, combining a Solo 401(k) with a Cash Balance Plan can yield annual deductions in the low hundreds of thousands—an incredible opportunity for tax optimization. The only requirements are that you have to run the business solo and cannot have any W2 employees (outside of your spouse). 1099 contractors are allowed though.

4. The 2017 Tax Cuts & Jobs Act

While the provisions of the 2017 Tax Cuts & Jobs Act are set to expire in 2025, many newsletter business owners still enjoy an automatic 20% Qualified Business Income (QBI) deduction. 

High-income earners should consult with their CPA to optimize their W-2 salary for maximum benefit.

Additionally, while the state and local tax deduction is capped at $10,000 for W-2 employees, newsletter owners can often pay state taxes through their business and fully deduct those amounts.

5. The Benefits of Business Losses

Owning physical property through your business can open up even more avenues for tax savings. 

As assets like vehicles or real estate depreciate over time, this depreciation generates phantom losses that can be deducted from your newsletter income. 

Some innovative strategies employed by clever accountants have taken this concept to new heights. For example, sports teams often generate substantial losses by depreciating player contracts.

6. Additional Benefits for Business Owners

The benefits of owning a newsletter extend beyond deductions and tax strategies. Here are a few miscellaneous advantages:

• Credit Card Points: Use business credit card points for personal expenses (like travel and flying first class!).

• Family Employment: Hire family members, reducing overall tax liabilities (bonus: if you have kids, this can also get them setup for retirement earlier by opening up a custodial Roth IRA).

• Rental Opportunities: Rent your home to your business for up to 14 days a year without tax implications — also known as the Augusta Rule.

• S-Corp Structure: Pay yourself a lower salary through an S-Corp to save on payroll taxes (though always consult with a CPA to ensure that you're optimizing things correctly).

• Tax Credits: Access various tax credits, like the R&D tax credit, Employee Retention Credit, and EACA Credit. (The EACA Credit is a $1500 tax credit that you can receive specifically by setting up a Solo401k through a provider like Carry.)

Why Trust Me: Ankur Nagpal is the founder and CEO of Carry. Helping business owners grow their net worth by saving money on taxes. Previously built Teachable to a $250m acquisition.

Conclusion

With numerous deductions, retirement plan options, and unique tax benefits available to business owners, it’s clear that owning a newsletter can lead to significant financial advantages.

If you’re already writing a newsletter and monetizing it, you’re already a business owner, and it might be time to optimize your tax strategy. 

Platforms like Carry provide the necessary education and financial products to help you navigate these opportunities effectively.

Whether it’s setting up an account like a Solo401k or Roth IRA, investing in the stock market or crypto, or diving deeper into tax strategies, Carry has it all. 

Carry is the all-in-one platform for modern professionals to reduce your tax bill through smart tax strategies.

Starting a newsletter isn’t just a passion project. It can also have real business implications and serve as a powerful strategy for saving on taxes in the U.S. 

With beehiiv, you can start your newsletter today and monetize it through the Ad Network, Boosts, Paid newsletters, and more, all while leveraging these financial benefits.

Kickstart your journey with a 30-day, free trial and see how running a newsletter can also become a powerful strategy for your financial growth!