Quick Answer
Crafters and craft bloggers can deduct supplies used to make crafts sold to customers, given away to non-household recipients, or used in classes you teach. Supplies for crafts kept in your home (decorations, personal projects, gifts to family in your household) are not deductible. Standard online business expenses (website, software, photography equipment, marketing) are also deductible. Clean separation of business and personal purchases is the key.
If you run a craft business — selling handmade items on Etsy, at craft shows, in local boutiques, or through online tutorials and classes — your tax deductions follow a specific framework. It comes down to one core question for every project: where does the finished craft end up?
As a former government tax auditor turned virtual bookkeeper for online business owners, here’s the complete guide to what’s deductible for crafters and craft bloggers, what’s not, and how to set up your finances so the line stays clear.
The Foundation: Where Does the Craft Go?
The IRS framework for crafter deductions hinges on where the finished project ends up:
If you sell it. Supplies are deductible. Income is reported.
If you give it away outside your household. Supplies are deductible. No income to report (unless it’s a paid commission or sponsored gift).
If you use it for a class you teach. Supplies are deductible.
If it stays in your home as decor or personal use. Supplies are not deductible.
If you give it to family who lives with you. Supplies are not deductible.
This is consistent with the broader rule that personal-use items don’t become deductible just because content is created around them.
Craft Tutorials (Blog and Video Content)
Most craft bloggers create tutorials — written or video — showing how to make specific projects. The deductibility of supplies depends on what happens to the finished craft.
If you make the craft, photograph or record the tutorial, and then sell, donate, or give away the finished piece to someone outside your household: Supplies are deductible. Standard business expense.
If you make the craft, create the tutorial, and keep the piece for personal use or your home: Supplies are not deductible. Even with extensive content, the personal-use ending disqualifies the deduction.
This means craft bloggers who consistently keep finished pieces have limited materials deductions. Bloggers who consistently dispose of pieces (sell, donate, gift outside household) capture more deductions.
The IRS expects the disposition to be real and documented. You can’t claim “I gave it away” if the piece is visible in your house tour video three months later.
Crafts Made to Sell
If you sell your crafts — through Etsy, local craft shows, an online shop, in-person events, or wholesale to local stores — the materials are clearly deductible as business expenses.
Deductible:
- Raw materials (fabric, yarn, beads, wood, paint, etc.).
- Tools needed for production (when business-only use).
- Packaging and shipping materials.
- Postage.
- Photography and product display materials.
- Booth fees for craft shows.
- Etsy or other platform listing/transaction fees.
Income reporting: every dollar of revenue from craft sales gets reported as business income. Materials offset that income as cost of goods sold or business expenses.
Track materials at the cost you paid, not at marked-up prices. I’ve seen crafters try to expense materials at the price they charge customers. That’s not how it works — the cost is what you actually paid.
Crafts Made to Give Away
If you make crafts specifically to give away (not sell) — for charity drives, gifts to non-household recipients, content giveaways, or freebies for your audience — materials are deductible.
The household rule matters: giving the craft to a family member who lives in your house counts as personal use. Giving the same craft to a non-household friend, sibling, or charity counts as deductible.
This isn’t arbitrary. The IRS treats the household as the unit of personal consumption. What stays in the home benefits the household. What leaves the home is either business activity or charitable giving.
Document who received gifted crafts and when. A simple log works fine.
Teaching Craft Classes
If you teach crafts — in-person classes, online video courses, or workshops — both your teaching costs and student supplies are deductible.
In-Person Classes
When you teach in person, you typically buy supplies for every student in the class. The cost of those supplies is fully deductible — they’re class materials, clearly business expense.
You may also pay rent for the teaching space. Deductible.
The cost of supplies to make your own demonstration craft is deductible when you teach it in a class format.
Online Video Classes
When teaching online, you usually don’t supply materials for students — you provide a supply list and students buy their own. Your supply cost for your own demonstration is similar to a tutorial situation: deductible if you give it away or sell after, not deductible if you keep it.
The class supply kit option: Some online instructors send physical supply kits to students. The cost of those kits — supplies plus shipping — is fully deductible because they’re sold or included as part of the paid class.
Course platform fees, video editing software, microphones, lighting — all deductible.
Standard Business Expenses
Beyond craft-specific deductions, all the standard online business expenses apply:
Website and online presence:
- Hosting, domain, SSL.
- Themes and plugins.
- Course platforms.
- Email marketing services.
Software:
- Design tools (Canva Pro, Adobe Creative Cloud).
- SEO tools.
- Social media scheduling.
- Bookkeeping software.
- Project management.
Photography:
- Camera and lenses for product photography.
- Lighting and backdrops dedicated to product shoots.
- Props clearly for content use (not personal home decor).
Marketing:
- Paid ads (Etsy, Facebook, Pinterest, Google).
- Email marketing.
- Influencer partnerships.
Professional services:
- Bookkeeper, CPA.
- Lawyer (business-related).
- Insurance (general liability, product liability for sold items).
Education:
- Craft technique courses.
- Business courses.
- Conferences and craft fairs (as attendee).
Contractors:
- Editors, photographers, designers.
- Virtual assistants.
Tools and Equipment
Tools used exclusively for business projects are fully deductible (often depreciated for higher-cost items). Mixed-use tools require a business-use percentage.
Deductible exclusively:
- Specialty equipment bought specifically for content/business projects.
- Workshop equipment in a dedicated business workspace.
Mixed-use complications:
- A drill you use for content projects but also for personal home projects — partial deduction based on business use percentage.
- Tools you owned before starting the business — generally not deductible.
The cleanest setup for serious craft businesses: dedicated tools that stay in your business workspace.
Inventory Considerations
If you make crafts to sell and hold inventory at year-end (finished products not yet sold), inventory accounting matters.
Cash basis with COGS: Most small craft businesses can treat materials as expenses when purchased, not when sold. Talk to your CPA about whether this applies to you.
Larger inventory businesses may need accrual accounting with proper inventory tracking. Materials become cost of goods sold when items are actually sold, not when purchased.
This nuance matters for tax filing. Confirm with your CPA which method applies.
Home Office Deduction for Crafters
If you have a dedicated craft workspace in your home — workshop, studio, or office — used regularly and exclusively for your craft business, you qualify for the home office deduction.
For crafters, the workspace might include:
- A dedicated craft room.
- A garage workshop used only for craft business.
- A studio for content creation.
If the space is used for personal hobbies too, it doesn’t qualify. If it’s strictly business, the deduction applies.
Calculate using the simplified method or the regular method. See dedicated home office articles for details.
The Personal vs. Business Receipt Separation
The single most important habit for crafters: separate business and personal purchases at the receipt level.
At the craft supply store: Do two transactions or two checkout lanes. Business supplies on the business card. Personal supplies on the personal card.
For online orders: Order business and personal supplies separately. Different orders, different cards, different receipts.
Document the business purpose for any borderline purchase. “Supplies for the holiday craft fair tutorial” is much more defensible than just having a Michael’s receipt.
When receipts are clean from the start, your bookkeeping stays clean. When they’re mixed, every reconciliation becomes a sorting exercise — and deductions get missed.
What Crafters Cannot Deduct
A few specific situations that don’t qualify:
Decorating your own home. Even if you blog about it.
Crafts made for family members who live with you. Even if you’re “teaching” them or documenting the project.
Personal-use upgrades. A new sewing machine for your hobby that you also occasionally use for business is mostly personal.
Vacation crafting. A trip where you happened to create a craft piece isn’t business travel.
Aspirational projects. Crafts you started but didn’t finish, sell, or give away.
If audited, the IRS scrutinizes craft business deductions for the personal-use loophole. Be honest about disposition. Document where finished pieces went. Don’t claim deductions that wouldn’t survive scrutiny.
Sales Tax Considerations
If you sell physical products, you may need to collect and remit sales tax. Rules vary dramatically by state and product type, and online sales (especially across state lines) have nexus implications.
For platform sellers (Etsy, Shopify), some platforms collect and remit sales tax for you in certain states (marketplace facilitator laws). For direct sales, you’re typically responsible yourself.
This isn’t a deduction issue, but it’s a major compliance area for craft businesses. Talk to a CPA familiar with multi-state sales tax for your specific situation.
Frequently Asked Questions About Craft Tax Deductions
Can I deduct supplies for crafts I make and keep in my home?
No. If the finished craft stays in your home for personal use or decoration, the supplies are personal expenses, not business expenses. The deductibility requires the project to leave your possession.
What if I make a craft, photograph it, then donate it?
Donating to a non-household recipient (charity, friend, family member who doesn’t live with you) makes the supplies deductible. Document the donation.
Are tools I use for craft business deductible?
Tools used exclusively for business projects are deductible (often depreciated). Tools shared with personal projects require a business-use percentage. Dedicated business tools are the cleanest setup.
Can I deduct booth fees for craft shows?
Yes. Booth fees, table rental, display materials, and travel to craft shows are all deductible business expenses.
Do I need to collect sales tax on craft sales?
Probably yes, depending on your state and where your buyers are. Most states require sales tax collection for in-state sales. Online sales across state lines have nexus rules that vary by state. Confirm with a CPA familiar with your situation.
Ready to Get Your Craft Business Finances Right?
Craft businesses have specific deduction rules that require clean tracking and clear separation between business and personal projects. With the right system, capturing every legitimate deduction is straightforward.
If you’d like help setting up your bookkeeping for your craft business, book a free discovery call and we’ll walk through your situation.
If you want to handle it yourself, grab the Bookkeeping Toolkit — it includes a chart of accounts for craft businesses and the project tracking system I use with clients.
Either way, capture every legitimate deduction while keeping the personal-business line clear.
All information on this site is provided for general education purposes only and may not reflect recent changes in federal or state laws. It is not intended to be relied upon as legal, accounting, or tax advice. Always consult with a tax or accounting professional about your specific situation before taking any action.