Who can claim it?
The deduction is for people who use part of their home for business and are self-employed (sole proprietors, independent contractors, some partners). If you are a W-2 employee who works from home, you generally cannot deduct a home office on your federal return — that deduction is suspended for employees under current law, which legislation enacted in 2025 made permanent. Check IRS guidance if your situation is unusual, and note some states differ.
The two key tests
- Regular and exclusive use. The space must be used regularly and only for business. A spare bedroom that is also a guest room or a corner of the living room used for family purposes generally does not qualify. There are exceptions for certain storage and day-care uses.
- Principal place of business. The space is your main place of business, or the place where you meet clients, or a separate structure used for business. A home office can be your principal place of business if you use it to administer or manage the business and have no other fixed location where you do substantial administrative work.
Two ways to calculate
Simplified method
Deduct $5 per square foot of the business space, up to 300 square feet — a maximum of $1,500. You don’t need to track actual expenses or depreciation. You can’t deduct more than your business’s gross income from the activity.
Regular method
Calculate the business percentage of your home (office area divided by total home area) and apply it to actual expenses: mortgage interest or rent, utilities, insurance, repairs, and depreciation if you own. This often yields a higher deduction but requires records, and depreciation may affect taxes when you sell the home. Use Form 8829.
| Feature | Simplified | Regular |
|---|---|---|
| Calculation | $5 × square feet (max 300) | Business % × actual expenses |
| Max deduction | $1,500 | No flat cap |
| Records | Square footage proof | Receipts, bills, area measurements |
| Depreciation | None | Yes (if you own) |
What to keep
- A measurement and photo of the space and its use.
- Rent or mortgage statements and utility bills if using the regular method.
- Documentation that you use it only for business.
Does a home office cause an audit?
There is no official rule that it triggers an audit, but claims that look inflated relative to income can attract attention. If you qualify, claim it accurately and keep records.
Renters and homeowners
Both can claim the deduction. Renters deduct a share of rent; homeowners deduct a share of mortgage interest, property taxes and other costs.
Selling your home later
If you used the regular method and took depreciation, part of the gain on sale may be taxable. Review the rules with IRS Publication 587 or a tax professional.
Frequently asked questions
Can W-2 employees deduct a home office?
Generally no on the federal return, because the deduction for employee business expenses is suspended. Some states may differ.
What is the simplified home office method?
A deduction of $5 per square foot for up to 300 square feet, for a maximum of $1,500.
Can I deduct a home office if I also use it for personal activities?
Generally not. The space must be used regularly and exclusively for business.
Official sources
- IRS Topic 509: Business use of home
- IRS Publication 587: Business use of your home
- IRS: About Form 8829 (home office)
- IRS: About Schedule C
General information only — not tax, legal or financial advice. Tax figures change every year; verify the current numbers at IRS.gov or with a qualified professional. Read the full disclaimer.