Home Office Deduction Calculator
Compare the two IRS home office methods: the simplified $5-per-square-foot option (up to 300 sq ft) and the regular method based on your share of rent, utilities, and other home costs. See which is bigger and roughly what it saves.
Your bigger home office deduction
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— · estimated tax saved —
Either way, the deduction can’t exceed your business income minus other business expenses. Savings assume you’re self-employed and take the QBI deduction.
How we calculate
- Simplified method = $5 × office square feet, up to 300 sq ft (maximum $1,500 a year), per the IRS simplified option (Rev. Proc. 2013-13).
- Business-use percentage = office area ÷ total home area.
- Regular method ≈ business-use % × (rent or mortgage interest + real estate taxes, utilities, insurance/HOA/repairs) + depreciation you enter. The full rules are on Form 8829 and in Publication 587.
- Tax saved ≈ deduction × 92.35% × 15.3% (SE tax) + (deduction − half of that SE saving) × your bracket × 80% (with the 20% QBI deduction). Assumes profit stays under the Social Security wage base.
Before you rely on this
Not tax, legal, or financial advice. The space must be used regularly and exclusively for business (with limited exceptions such as daycare and inventory storage). W-2 employees can’t take this deduction on their federal return. If you itemize, the business share of mortgage interest and property tax moves from Schedule A to Schedule C rather than being new. Depreciation taken under the regular method may be recaptured when you sell. See IRS Publication 587 or a qualified professional.
Official sources & tax year
Frequently asked questions
How much is the simplified home office deduction?
$5 per square foot of qualifying office space, up to 300 square feet, so the maximum is $1,500 a year. You don’t deduct actual home costs or depreciation under this method.
Is the regular method better?
Often, if you rent in a high-cost area or your office is a large share of your home. With the example inputs (200 of 1,200 sq ft, $21,600 rent, $3,000 utilities, $1,200 insurance), the regular method gives $4,300 versus $1,000 simplified.
Can I switch methods each year?
Yes. The IRS lets you choose either method each year on a timely filed original return. If you switch from simplified back to regular, depreciation uses the IRS optional tables.
Can W-2 employees take the home office deduction?
No. Employee home office costs aren’t deductible on the federal return. The deduction is for self-employed people using the space regularly and exclusively for their business.
Does the home office deduction reduce self-employment tax?
Yes. It’s a business expense on Schedule C (via Form 8829 for the regular method), so it lowers both SE tax and income tax.