If you use part of your home regularly and only for your business, you can deduct some of the cost of your home. The IRS offers two ways to work it out: a simplified flat rate per square foot, and the regular method based on your actual expenses. This calculator runs both so you can pick the larger one, or the one worth the record-keeping.
Figures checked by Muhammad Ahmad against IRS: Home office deduction, IRS: Simplified option for home office deduction and IRS Publication 587. Prices and rules change, so confirm with the official source before relying on them. How we check the math
How it works
Simplified method: $5 × the office's square footage, up to 300 square feet, so at most $1,500 a year. No expense records are needed beyond the measurement, and there is no depreciation to recapture when you sell.
Regular method: work out the office's share of the home (office area ÷ home area) and apply it to your actual yearly home costs: rent or mortgage interest and property tax, utilities, insurance, HOA fees and repairs, plus depreciation if you own the home. Costs that only affect the office, such as painting it, count in full.
Either way, the deduction can't be more than your business profit before it. Under the regular method, any excess can be carried forward to next year; under the simplified method it can't.
The office must be used regularly and exclusively for business. A desk in a guest room also used by family generally doesn't qualify. Employees working from home for an employer can't claim it on their federal return.
A worked example
A 200 sq ft office in a 1,600 sq ft rented home is 12.5% of the home. With $24,000 a year of rent, utilities and insurance, the regular method gives 12.5% × $24,000 = $3,000. The simplified method gives $5 × 200 = $1,000. The regular method is $2,000 larger here, which is worth keeping receipts for. In a small office with low rent, the simplified method often wins.
Questions people ask
What is the simplified home office deduction for 2026?
$5 per square foot of office space, up to 300 square feet, so a maximum of $1,500. The rate hasn't changed since the method was introduced.
Which home office method is better?
The regular method is usually larger when rent or home costs are high or the office is a big share of the home. The simplified method is quicker, needs fewer records, and avoids depreciation recapture when a homeowner sells.
Can I switch methods each year?
Yes. You can choose either method each year, though switching from simplified to regular affects how depreciation is calculated.
Does a home office have to be a separate room?
No, but the space must be used regularly and only for business. A clearly defined part of a room can qualify if nothing else happens there.
Can employees who work from home claim this deduction?
Not on their federal return. The deduction is for self-employed people and business owners; employees generally can't claim it.