Home Office Deduction Calculator 2026
Your home office deduction both ways — the $5-per-square-foot simplified method (max $1,500) and the regular method with rent or mortgage interest, utilities, insurance and depreciation — with the profit limit and the income plus self-employment tax saved.
| Business-use percentage | — |
|---|---|
| Simplified method | — |
| Regular method — indirect expenses × percentage | — |
| Regular method — depreciation | — |
| Regular method — total | — |
| Limited to business profit | — |
| Better method | — |
| Tax saved (income + self-employment tax) | — |
In short
Self-employed people can deduct a home office used regularly and exclusively for business either at $5 per square foot up to 300 sq ft ($1,500 maximum) or by the regular method — the office's share of rent or mortgage interest, property tax, insurance, utilities, repairs and depreciation plus direct office costs. The deduction cannot exceed business profit, reduces self-employment tax as well as income tax, and employees cannot claim it.
Who this is for: US self-employed and gig workers deciding between the simplified and regular home office methods.
Simplified vs regular method
- Simplified: $5 per square foot up to 300 sq ft — a maximum of $1,500. No depreciation, no recapture on sale, no Form 8829, and your full mortgage interest and property tax stay on Schedule A.
- Regular: the business-use percentage (office ÷ home area, or rooms ÷ rooms) of rent or mortgage interest, property tax, insurance, utilities, repairs and depreciation (home cost excluding land ÷ 39 years), plus 100% of direct office expenses. Usually larger for renters in expensive cities and for owners with big homes.
- Profit limit: the deduction cannot create a business loss. Unused regular-method amounts carry forward; unused simplified amounts are lost.
- Depreciation recapture: regular-method depreciation taken after May 1997 is taxed (up to 25%) when you sell, even if the rest of the gain is excluded — the main reason some owners prefer the simplified method.
- Self-employment tax too: because the deduction is on Schedule C, it lowers the 15.3% SE tax as well as income tax — worth roughly 35–40% of the deduction for many filers.
See also: Mileage Deduction Calculator 2026.
Assumptions
- Business-use % = office ÷ home area; simplified = $5 × sq ft (max 300).
- Regular = indirect expenses × % + depreciation (building value × % ÷ 39) + direct expenses; capped at business profit.
- Tax saved = deduction × (income rate + net SE tax rate of 0.9235 × 15.3% × (1 − half the income rate)).
Worked example
Business use 10%. Simplified: 180 × $5 = $900. Regular: 10% of $24,900 = $2,490 of indirect expenses plus depreciation of $300,000 × 10% ÷ 39 = $769, total $3,259 — $2,359 more than the simplified method. At 22% plus about 12.6% net self-employment tax, the regular method saves roughly $1,127 of tax, versus about $311 for the simplified method. The $769 of depreciation will be recaptured when the home is sold.
Frequently asked questions
Can W-2 employees claim a home office?
Not on the federal return (the employee deduction was suspended in 2018 and the 2025 law made that permanent). Only self-employed, gig and business-owner income qualifies.
Does the office have to be a separate room?
No, but the space must be used only for business — a desk corner used exclusively counts; a kitchen table does not.
Which method should I choose?
Simplified if your office is small and your home costs modest, or you want to avoid depreciation recapture; regular if 10%+ of a high-cost home is used for business. The calculator compares both.
Does the deduction hurt me when I sell my home?
Only depreciation taken under the regular method is recaptured (max 25%); the §121 exclusion still covers the rest of the gain if the office is inside the home.
Can I deduct a home office if I rent?
Yes — the business share of rent, renters insurance and utilities under the regular method, or the $5 per square foot simplified method.
What if I use the office only part of the year?
Pro-rate the deduction for the months of qualifying use under either method.
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