Home Office Deduction Calculator

This calculator compares the two IRS methods for the home office deduction side by side: the simplified method ($5 per square foot, capped at 300 square feet) and the actual expense method you would report on Form 8829. Enter your square footage and annual housing costs, and it shows which method produces the larger deduction for you.

Short answer: the simplified method can never exceed $1,500 a year, so if your office is more than about 10% of a home with meaningful rent or mortgage interest, the actual expense method usually wins. If your office is small or your housing costs are low, the simplified method is close enough and far less paperwork.

The results are estimates for informational purposes only. They do not account for every limit in IRS Publication 587, and they are not a substitute for completing Form 8829 or for advice on your specific facts.

How to fill in each field

Employment type. Choose self-employed if you report business income on Schedule C (sole proprietors, single-member LLCs, freelancers, 1099 contractors). If you choose W-2 employee, the calculator tells you the deduction isn't available — employees can't claim it on a federal return, even if the employer requires remote work.

Calculation method. Pick "Simplified" to see only the flat-rate figure, or "Actual expense" to see both methods and the larger of the two.

Office square footage. Measure only the area used regularly and exclusively for business. Multiply length by width for each rectangle and add them up. A 12 ft × 14 ft room is 168 sq ft. Include a closet only if it holds business files or supplies and nothing personal.

Total home square footage. Use the finished living area of the whole home. The same number should appear on any appraisal, listing, or lease. Garages and unfinished basements are usually left out unless the office is in one of them.

Gross business income. Enter the gross income from the business that uses the office. The IRS caps the deduction at the income from that business, so a $4,000 deduction against a side business that earned $1,500 gets limited.

Annual rent or mortgage interest. Renters enter twelve months of rent. Owners enter mortgage interest plus real estate taxes for the year — not the principal portion of the payment. Your Form 1098 shows the interest; the property tax bill or escrow statement shows the taxes.

Annual utilities. Electricity, gas, heating oil, water, sewer, and trash. Leave out a separate business phone line or a business-only internet plan; those are deducted in full on Schedule C, not through the home office calculation.

Annual home insurance. Homeowner's or renter's insurance premiums for the year.

Annual repairs and maintenance. Repairs that affect the whole home (furnace service, roof patch, exterior painting). A repair made only to the office, such as painting that room, is a direct expense and is deductible at 100% — add it on Schedule C separately rather than here.

Home value. Owners enter the home's value to generate a depreciation estimate. Renters leave this blank.

How the calculator does the math

Simplified method

The formula is fixed by the IRS: office square footage (up to 300) × $5. A 168 sq ft office produces 168 × $5 = $840. A 400 sq ft office is capped at 300 × $5 = $1,500. The calculator then limits that figure to your gross business income.

Actual expense method

1. Business-use percentage = office square feet ÷ total square feet.
2. Indirect expenses (rent or mortgage interest and taxes, utilities, insurance, repairs) are added up and multiplied by the business-use percentage.
3. Depreciation for owners is estimated from the home value and multiplied by the same percentage.
4. The total is limited to gross business income.

One caution on step 3. The calculator's depreciation line is a quick estimate: it treats 80% of the home value as building and spreads it over 27.5 years. On Form 8829, the IRS treats a home office as nonresidential real property depreciated straight-line over 39 years (Publication 946), and the basis is the lower of your adjusted basis or fair market value on the date you started using the office, excluding land. A full year of 39-year depreciation is 2.564% of the business-use basis. If depreciation is a large share of your result, recompute it with the 39-year rate before you file.

Worked example: homeowner

Maria is a self-employed bookkeeper. Her home is 2,000 sq ft; her office is 250 sq ft, so her business-use percentage is 250 ÷ 2,000 = 12.5%.

Depreciation, done the Form 8829 way: Maria's adjusted basis in the building (excluding land) is $320,000. Business basis = $320,000 × 12.5% = $40,000. A full year at 2.564% = $1,026.

• Actual method total: $3,200 + $1,026 = $4,226
• Simplified method: 250 × $5 = $1,250
• Difference: $2,976 in favor of the actual method

What the extra $2,976 is worth: it cuts self-employment tax by about $2,976 × 92.35% × 15.3% = $420, and in the 22% bracket it cuts income tax by roughly ($2,976 − $210 for the lower half-SE-tax deduction) × 22% = $609. That is about $1,029 before the QBI deduction trims the income-tax piece slightly.

There's a trade-off: under the simplified method, Maria would deduct all of her mortgage interest and property taxes on Schedule A if she itemizes. Under the actual method, the business share ($2,375) moves to Form 8829 and only the remaining 87.5% stays on Schedule A. If she takes the standard deduction ($16,100 single for 2026), that shift costs her nothing — the business share becomes deductible when it otherwise wouldn't be.

Worked example: renter

Dev rents a 900 sq ft apartment and uses a 150 sq ft second bedroom only as a design studio. Business use = 150 ÷ 900 = 16.67%.

Simplified method: 150 × $5 = $750. The actual method produces $3,790 more. Renters have no depreciation and no recapture to worry about, which is why the actual method is almost always the better choice for renters in high-rent cities.

How to read your result

• "Recommended: actual" means the actual method beats $5 per square foot with the numbers you entered. Before you rely on it, confirm the depreciation figure with the 39-year rate described above.
• "Recommended: simplified" is common when the office is under 10% of the home or when you own a home with little mortgage interest left.
• A deduction that equals your gross business income means you hit the income limit. Under the actual method, the excess carries forward to next year on Form 8829. Under the simplified method, the excess is simply lost.

The figure you see is the deduction itself, not the tax saved. To translate it into dollars of tax, run your full Schedule C numbers through the 1099 tax calculator, which applies self-employment tax, the QBI deduction, and your bracket.

When the actual method is not worth it

The actual method costs you more than recordkeeping time in a few situations:

• You plan to sell soon at a large gain. Depreciation you claim (or could have claimed) on the office is taxed at up to 25% when you sell, even if the rest of the gain is excluded under the $250,000/$500,000 home-sale exclusion. See Publication 523.
• The gap is small. If the actual method beats the simplified figure by $200, the extra federal tax saved may be $50–$75, which may not justify tracking every utility bill.
• Your business barely breaks even. When the income limit bites, a large actual-method figure may only carry forward instead of reducing this year's tax.

What the calculator does not handle

• Partial-year use. If you started using the office in July, the simplified method uses the average monthly square footage, and the actual method uses only the expenses for the months the office qualified.
• Daycare providers. A licensed home daycare can use space that isn't exclusive, but the percentage is time-weighted (hours used ÷ total hours in the year) as well as space-weighted. Use the worksheet in Publication 587.
• Separate structures. A detached studio or workshop can qualify without being your principal place of business, but its depreciation and later sale are handled differently from an office inside the house.
• Prior-year carryovers. Unused actual-method amounts from earlier years can be added only in a year you use the actual method again.
• State returns. Most states start from federal adjusted gross income, so the deduction flows through automatically, but a few have their own rules.

Where the deduction goes on your return

• Simplified method: a single number on Schedule C, line 30, with the square footage entered on the line's worksheet. No Form 8829.
• Actual method: Form 8829, with the result carried to Schedule C, line 30. The Form 8829 instructions walk through the three-tier income limit: mortgage interest and taxes first, then operating expenses, then depreciation.
• Farmers: Schedule F filers use the same calculation but report it as an expense on Schedule F.

For the qualification rules — exclusive use, principal place of business, daycare and storage exceptions, and what happens when you sell the house — read the full home office deduction guide. Contractors who run their business from a home office while working on job sites can also check the contractor tax deductions guide, which covers vehicles, tools, and the trips between the home office and job sites that the office makes deductible.

Because the deduction lowers the profit your quarterly payments are based on, update your estimates after you settle on a method; the guide to paying quarterly estimated taxes shows how.