Updated October 18, 2026. Quick answer: Line 25 is utilities for your trade or business and line 26 is the wages you paid, less certain employment credits. You build both from your own books and payroll records, and each total feeds the line 28 total of Part II. Your own pay as the owner does not go on line 26.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for construction trades and Schedule C code for doctors and dentists.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for house cleaners, Schedule C code for landscapers and Schedule C code for child care.
Business use of your home (Form 8829), the saver’s credit (Form 8880), clean vehicle credits (Form 8936) and amended returns (Form 1040-X), read line by line: Form 8829 lines 1 to 7 and Form 8829 lines 16 to 27.
What lines 25 and 26 ask for
On the form, line 25 is captioned “Utilities” and line 26 is captioned “Wages (less employment credits)”. Both sit in Part II, and the Part II heading adds “Enter expenses for business use of your home only on line 30.” That heading matters for utilities: a home’s electric or heating bill that supports a home office is handled on line 30, which has its own page at Schedule C line 30 and a broader explainer on the home office deduction page. This page covers the two lines themselves. The rest of the schedule is mapped on the Schedule C (Form 1040) page.
Where the number comes from: line 25
The instructions open the line with one sentence: “Deduct utility expenses only for your trade or business.” Your source is the bills and statements for the electric, gas, water, internet or phone service the business used.
Phone service has a specific rule. For a home phone, the instructions say “If you used your home phone for business, do not deduct the base rate (including taxes) of the first phone line into your residence.” They continue: “But you can deduct any additional costs you incurred for business that are more than the base rate of the first phone line.” They give an example: “if you had a second line, you can deduct the business percentage of the charges for that line, including the base rate charges.”
Where the number comes from: line 26
For line 26 the instructions say “Enter the total salaries and wages for the tax year reduced by the amount of the following credit(s), if applicable.” The credits listed are “Work Opportunity Credit (Form 5884).” “Empowerment Zone Employment Credit (Form 8844).” “Credit for Employer Differential Wage Payments (Form 8932).” and “Employer Credit for Paid Family and Medical Leave (Form 8994).”
Two limits keep line 26 clean. The first is “Do not include salaries and wages deducted elsewhere on your return or amounts paid to yourself.” The second is a pass-through rule: “Do not reduce your deduction for any portion of a credit that was passed through to you from a passthrough entity.” For fringe benefits the instructions say “If you provided taxable fringe benefits to your employees, such as personal use of a car, do not deduct as wages the amount applicable to depreciation and other expenses claimed elsewhere.”
The instructions also flag the paperwork side: “In most cases, you are required to file Form W-2 for each employee.” Payments to independent contractors are a different line, line 11, covered on the Schedule C lines 10 and 11 page. For the employer quarterly return, see the Form 941 page.
Where it goes next
Neither line is carried to another form on its own. Both are added into the Part II total, which the form captions “Total expenses before expenses for business use of home. Add lines 8 through 27b”. That total is line 28, covered with line 29 at Schedule C lines 27a to 29, and the net result reaches Schedule C lines 31 and 32.
Edition and line numbers
This page reads the 2025 Schedule C (Form 1040) and its 2025 instructions, the current files irs.gov served on 2026-10-18. They are byte-identical to the archived copies and they are the files for the tax year 2025 return, filed in 2026. The schedule says “Attach to Form 1040, 1040-SR, 1040-SS, 1040-NR, or 1041”; “partnerships must generally file Form 1065.” Schedule C has its own instructions booklet, titled “Instructions for Schedule C” (Form 1040). Check the tax year printed on the schedule you are filling in and use the line numbers on that year’s schedule, because a different year’s schedule can number or word its lines differently.
Common mistakes
- Deducting the base rate of the first phone line into your home. The instructions say “do not deduct the base rate (including taxes) of the first phone line into your residence.”
- Paying yourself on line 26. The instructions say “Do not include salaries and wages deducted elsewhere on your return or amounts paid to yourself.”
- Entering wages before the credits. The line asks for wages “reduced by the amount of the following credit(s), if applicable.”
Related: Schedule C (Form 1040), home office deduction, and Form 941.
Sources
- Instructions for Schedule C (Form 1040), Profit or Loss From Business (2025): https://www.irs.gov/pub/irs-pdf/i1040sc.pdf
- Schedule C (Form 1040), Profit or Loss From Business (2025): https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.