Home Office Deduction Calculator
A 150 sq ft home office can mean a $750 deduction (simplified) — or more via the actual-expense method. Compare both IRS methods side by side and see your estimated tax savings.
Your deduction
Simplified vs. actual: which wins?
The simplified method is $5 per square foot, capped at 300 sq ft ($1,500 max). No receipts, no depreciation recapture, no hassle. The actual-expense method deducts the business percentage of rent/mortgage interest, utilities, insurance, and repairs — often larger, but requires records and complicates things if you sell the home.
Rule of thumb: if your actual expenses are high (expensive rent/mortgage, big utility bills), the actual method usually wins. If you rent cheap or hate paperwork, simplified is fine. You can switch methods year to year — compare both each tax season.
The exclusive-use rule
The IRS requires the space be used regularly and exclusively for business. Your kitchen table doesn't count; a dedicated desk area in a spare room can. It doesn't need to be a separate room — a clearly defined area works — but personal use of that exact space disqualifies it. Document with photos.
Frequently asked questions
How does the home office deduction work?
If you use part of your home regularly and exclusively for business, you can deduct related costs. Two methods: simplified ($5/sq ft up to 300 sq ft) or actual expenses (business % of rent, utilities, etc.). The calculator compares both.
What is the simplified home office deduction?
$5 per square foot of office space, maximum 300 sq ft = $1,500 max deduction. No receipts or depreciation calculations needed. You can switch methods each year.
Can I claim a home office if I rent?
Yes — renters use the same rules. Under the actual method, you deduct the business percentage of rent plus utilities and renter's insurance.
Does a home office increase audit risk?
The simplified method is low-risk and rarely questioned. The actual method with large deductions draws more scrutiny — keep good records (photos, measurements, expense receipts).
Can employees claim the home office deduction?
No — since the 2018 Tax Cuts and Jobs Act, employees cannot claim it through 2025. It's only for self-employed individuals and business owners. (Check current law — provisions may change.)
More tax savings
Estimate only — not tax advice. IRS rules change; the exclusive-use test and method details matter. Consult a tax professional for your situation.