What is the simplified method for the home office deduction?

You multiply $5 by the square footage used for a qualified business use, up to 300 square feet, for a maximum of $1,500. It requires no Form 8829 and no record of actual expenses, and you cannot depreciate the home or carry forward anything the gross income limit disallows.

What does exclusive use mean?

The area must be used only for business. A guest bed, a personal laptop, or family use on a single day defeats it for the whole year. A clearly identifiable portion of a room can qualify if it is used only for business. Two statutory exceptions relax this: storing inventory or product samples for a retail or wholesale business, and a licensed daycare.

Do I lose money on depreciation later if I use the regular method?

You defer it, not lose it. The regular method lets you depreciate the business portion of the home over 39 years, but section 1250 recaptures that depreciation at up to 25 percent when you sell. The simplified method claims no depreciation, so there is nothing to recapture. That is often the reason a higher regular-method deduction still loses once the sale is accounted for.

· Verified

Home Office Deduction Calculator

Q: Can I claim the home office deduction if I am a W-2 employee?

No, not on your federal return. Unreimbursed employee business expenses were suspended by the Tax Cuts and Jobs Act and the suspension was made permanent by the One Big Beautiful Bill Act. The deduction now belongs to self-employed filers on Schedule C, partners, and statutory employees. A few states still allow their own version.

Q: Why can the deduction not create a loss?

IRC section 280A(c)(5) caps the deduction at the gross income from the business that uses the home, after the other business deductions that are unrelated to the home office. Under the regular method the disallowed amount carries forward; under the simplified method it is lost.

The simplified method against the regular method on Form 8829 for 1099 and self-employed filers — and the qualification test that decides whether either one applies to you.

Prepared for the 2026 tax year.

The rules for the 2026 tax year are published during 2025 and 2026 — the adjusted figures first, the explaining publications as the year goes on — and the return they govern is filed in 2027.

The edition of Publication 587 in force today is the 2025 one — the rules for the 2025 tax year, which is the return filed in 2026. The 2026 edition is published during 2026.

Do you qualify?

All three must be true. The deduction is lost at the qualification step far more often than in the arithmetic.

Exclusive and regular use. The area is used only for business, consistently through the year. A guest bed, a personal laptop kept there, or family use on one day defeats it. Principal place of business. That is where you do the main work, or where you meet clients, or a separate structure on the property — or the administrative/management safe harbor: you run the business from there and have no other fixed place where you do those tasks. You are not a W-2 employee claiming this. Employees cannot take it federally on Schedule A. Self-employed, partners and statutory employees can.

Which method?

Office area, in square feet

Enter the area used for business

Total home area, in square feet

Finished living space. An attached garage usually does not count.

Total area must be larger than the office

Business gross income, before the home office deduction

Used for the gross income limit, which stops the deduction from creating a loss.

Add your actual home costs optional

Only needed for the regular method. Leave them empty and the page still compares against the simplified method, which needs no receipts at all.

Rent or mortgage interest, per year

Utilities, per year

Insurance and other indirect costs, per year

Insurance, HOA, repairs to the whole home. Not repairs made only inside the office — those are direct and fully deductible.

Direct office repairs, per year

Work done only in the office. Deducted at 100%, not by percentage.

Your result

Tax year 2026

Publication 587 in force is the 2025 edition. The IRS has not yet published a 2026 edition, and the publication runs ahead of the return year — so the 2025 edition governs 2026 returns until it is replaced.

Business-use percentage 0%

Simplified method $0

Regular method $0

Gross income limit $0

Carried forward (regular method) $0 Allowed next year, subject to the same limit. Under the simplified method a disallowed amount is lost instead.

Estimated tax saved $0

How this is worked out

Two methods are computed and the larger is shown — but the larger one this year is not automatically the better one overall, and the reason is on the last line.

Business-use percentage

Office square feet ÷ Total home square feet

IRS Publication 587 (2025), Form 8829 Part I

A room-count method exists where rooms are of similar size, but the area method is the one that holds up on examination.

Simplified method

min(Office square feet, 300) × $5

Revenue Procedure 2013-13

The cap applies before the multiplication, which is why an office larger than 300 square feet stops at $1,500.

Indirect expenses

(Rent or mortgage interest + Utilities + Insurance and other whole-home costs) × Business-use percentage

IRS Publication 587 (2025), Form 8829 Part II

Mortgage interest and property tax stay on Schedule A under the simplified method, so the two columns are not compared like for like.

Direct expenses

Work done only in the office × 100%

IRS Publication 587 (2025), Form 8829 Part III

Not multiplied by the percentage — the whole cost belongs to the business.

Regular method

Indirect expenses + Direct expenses

IRC §280A · Form 8829

Gross income limit

Gross income from the business − other business deductions

IRC §280A(c)(5)

The deduction cannot create or increase a loss. The page uses gross income as the ceiling; deductions unrelated to the home office would lower it further.

Deduction allowed this year

min(Deduction, Gross income limit)

IRC §280A(c)(5)

Amount carried forward

max(0, Regular method − Gross income limit)

Form 8829 Part IV

Only the regular method carries forward. Under the simplified method a disallowed amount is lost permanently.

Depreciation (regular method only)

Business-use percentage of the building basis, over 39 years

IRS Publication 587 (2025) · IRC §1250

The reason the bigger number may not be the better one. §1250 recaptures that depreciation at up to 25% when you sell. The simplified method claims no depreciation and so has nothing to recapture — a larger deduction now can be partly repaid later.

The formulas are shown as the authority defines them, in its own terms — the arithmetic is not copyrightable and the rates are public-domain US government material. What these lines cannot tell you is where your figures came from; that is what the table above is for.

What comes next? A deduction on the Schedule C lowers the profit they will tax. It does not change what you owe during the year. The Quarterly Tax Calculator shows how much to send in April, June, September and January, and why the amount is not simply last year divided by four.

Claiming mileage as well? Both come off the same Schedule C, and the IRS does not let you take the simplified home-office rate and a mileage rate for the same space. The Mileage Deduction Calculator works out the standard-rate figure for the year.

Where these figures come from

Simplified rate: $5 per sq ft ·
Area cap: 300 sq ft — $1,500 maximum
Base publication: IRS Publication 587 (2025)
Form: 8829, Expenses for Business Use of Your Home
Income limit: IRC §280A(c)(5)
Depreciation: 39-year straight line · recaptured at up to 25% (§1250)
Employee rule: IRC §67(g) · made permanent by the OBBBA
Verified: 2 October 2026

Answer the three qualification questions, then press Calculate.

Frequently asked questions

Can I claim this if I am a W-2 employee working from home?

Not federally. Unreimbursed employee business expenses were suspended by the Tax Cuts and Jobs Act and the suspension was made permanent by the One Big Beautiful Bill Act. The home office deduction now belongs to self-employed filers on Schedule C, partners, and statutory employees. A small number of states still allow their own version — worth checking on the state return even when the federal one is barred.

What is the simplified method?

$5 per square foot of qualified business use, up to 300 square feet, for a maximum of $1,500. No Form 8829, no receipts, no depreciation. It is genuinely simpler — but three things are given up: you cannot depreciate the home, you cannot carry forward an amount the income limit disallows, and mortgage interest plus property tax stay entirely on Schedule A rather than moving partly into the business deduction.

What does “exclusive use” actually mean?

The area is used only for business. A guest bed in the office fails it — the IRS states the test without a tolerance, so occasional personal use in the same space defeats it for the whole year. A clearly identifiable part of a room can qualify if that part is business-only. Two statutory exceptions relax the rule: storing inventory or product samples for a retail or wholesale business, and a licensed daycare, which is measured by time and space rather than by exclusivity.

Why can the deduction not create a loss?

IRC §280A(c)(5) caps the deduction at the gross income from the business that uses the home, reduced by the business's other deductions. So it can zero out income from that business but cannot produce a loss. The difference that matters: under the regular method the disallowed amount carries forward to a later year, while under the simplified method it is simply lost.

Is the bigger regular-method deduction always better?

Not always. The regular method depreciates the business portion of the home over 39 years — but §1250 recaptures that depreciation at up to 25% when you sell. The simplified method takes no depreciation, so there is nothing to recapture. If you expect to sell at a gain, a larger deduction today can be partly given back later. That comparison is not in the arithmetic above, and it is the reason a calculator showing only this year is not the whole answer.

Home Office Deduction Calculator

Your result

Where these figures come from

Frequently asked questions

Can I claim this if I am a W-2 employee working from home?

What is the simplified method?

What does “exclusive use” actually mean?

Why can the deduction not create a loss?

Is the bigger regular-method deduction always better?

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