Home office deduction calculator

The two IRS methods

The IRS allows two methods for the home office deduction. You choose one per tax year and can switch between them annually.

Simplified method (Rev. Proc. 2013-13)

Multiply the square footage of your home office by $5 per square foot, up to a maximum of 300 square feet (max deduction: $1,500/year). You do not need to track actual home expenses. No depreciation deduction is claimed, and there is no depreciation recapture when you sell your home.

Regular method (Form 8829)

Calculate the percentage of your home used for business (office sq ft ÷ home sq ft), then multiply that percentage by your total home expenses for the year: rent or mortgage interest, utilities, insurance, and repairs. For home owners, you can also deduct a portion of depreciation (office percentage × home's depreciable basis ÷ 39 years). This calculator covers the cash expenses only — add your depreciation figure to the calculator's regular-method result if you want to include it.

Simplified vs. regular — when each wins

The simplified method wins when your annual home expenses are relatively low or your office is small. The regular method wins when you have high rent or mortgage interest, pay significant utilities, and your business-use percentage is meaningful. A quick rule of thumb: if your annual home expenses multiplied by your business-use percentage exceed $1,500, run the regular method.

For example, a consultant with a 200 sq ft office in a 1,200 sq ft apartment paying $2,400/mo rent: simplified gives $1,000, but regular gives 16.7% × $28,800 = $4,800 — nearly five times more.

Worked examples

Example 1 — small office, modest rent: 150 sq ft home office in a 900 sq ft apartment. Annual rent $18,000, utilities $2,400, insurance $600, repairs $600.

Example 2 — large office, low expenses: 200 sq ft office in a 1,500 sq ft owned home. Mortgage interest $6,000/yr, utilities $2,400, insurance $1,200, repairs $600.

Assumptions and limitations

• Regular and exclusive use required. The space must be used only for business, on a regular basis. A guest room that doubles as an office generally does not qualify. The IRS applies this requirement strictly.
• Principal place of business. Your home office must be your principal place of business, or a place where you meet clients or customers in the normal course of business, or a separate structure used in your business.
• Not available to employees. The Tax Cuts and Jobs Act (TCJA) suspended the miscellaneous itemized deduction for unreimbursed employee expenses through 2025. W-2 employees cannot deduct a home office. This calculator is for self-employed individuals, sole proprietors, and business owners filing Schedule C or Schedule F.
• Depreciation not included. The regular method also allows a deduction for the depreciable portion of the home (for owners). Depreciation is calculated on Form 8829 as: (home cost − land value) ÷ 39 years × business-use percentage. This calculator does not compute that figure — add it to the regular-method result shown here.
• Gross income limitation. The home office deduction (regular method) cannot exceed gross income from the business less other deductions. Unused amounts can be carried forward. The simplified method has no carryforward.
• Rent only covers the interest portion of your mortgage. If you own, enter only the mortgage interest, not the full payment. Principal payments are not a deductible expense.

Frequently asked questions

Can I switch between the simplified and regular methods each year?

Yes. You choose the method for each tax year when you file your return. There is no multi-year commitment. However, the simplified method has no depreciation carryforward — switching back to the regular method in a future year does not recover unused simplified amounts.

Does the home office deduction apply to renters?

Yes. Renters can use both methods. For the regular method, enter your annual rent as the "rent or mortgage interest" input. Insurance and utilities are allocated the same way as for owners.

What qualifies as "exclusive use"?

The space must be used only for business — not occasionally, and not shared with personal activities. A dedicated room used as an office generally qualifies. A kitchen table used for work does not. Partitioned areas of a room may qualify if clearly separated and used only for work.

Can I deduct a home office if I also work at a client's office sometimes?

Yes, as long as your home office is your principal place of business (where you handle administrative and management work), even if you spend time at client locations. The key is that the home office is used regularly and exclusively for business.

What records do I need?

For the simplified method: a floor plan or measurements showing the office square footage and total home square footage. For the regular method: the same measurements plus receipts or statements for rent, mortgage interest (Form 1098), utilities, insurance, and repairs. Document that the space is used exclusively for business — photographs and a consistent work schedule help.