How it works
The home office deduction comes in two flavours, and this calculator runs both so you can keep the larger. The simplified method is almost frictionless: multiply your office square footage by $5, capped at 300 square feet for a maximum $1,500, with no expense records required. The actual-expense method is uncapped but demands paperwork: work out the office as a percentage of your whole home, then deduct that share of your real housing costs — rent or mortgage interest, utilities and insurance. A 150-square-foot office in an 1,800-square-foot home is 8.3% of the space; against $18,000 of annual costs that is a $1,500 actual deduction, matching the simplified figure here. The calculator takes whichever is larger and tells you which method won. Two rules matter more than the arithmetic. The space must be used regularly and exclusively for business — a desk in a shared family room fails, a partitioned room or dedicated outbuilding passes. And homeowners using the actual method must recapture the depreciation slice on sale, which the simplified method avoids entirely. Figures here are 2026 planning values, so confirm the current IRS rate and cap before filing.
Formula
Simplified = min(sqft, 300) x $5 | Actual = (office / home) x annual costs
Tips
- The simplified method is $5 per square foot, capped at 300 sq ft ($1,500), with no records needed.
- The actual method is uncapped but needs a full year of home-cost records.
- Regular and exclusive use is required — a shared family-room desk does not qualify.
- Homeowners recapture depreciation on sale under the actual method; simplified skips it.
- Run both methods every year — the winner changes as your costs and space change.
Frequently asked questions
- How do I calculate the home office deduction?
- Two ways. Simplified: multiply office square footage by $5, capped at 300 square feet ($1,500). Actual: deduct the business percentage of your home from real costs like rent, utilities and insurance. The calculator runs both and keeps the larger.
- What is the simplified home office method?
- A flat $5 per square foot of office space, up to 300 square feet for a maximum $1,500 deduction, with no expense records required. It trades a potentially smaller deduction for zero paperwork and no depreciation recapture on sale.
- What qualifies as a home office?
- A space used regularly and exclusively for business. A dedicated room or partitioned area qualifies; a desk in a shared family room does not. It must be your principal place of business or where you meet clients, not occasional use.
- Is the actual-expense method worth it?
- Often, when your housing costs are high relative to your space, since it is uncapped. But it needs a full year of records, and homeowners must recapture the depreciation slice when they sell. Run both methods — the calculator shows which wins for your numbers.
- Can employees claim the home office deduction?
- Generally no — since 2018 the deduction is for the self-employed, not W-2 employees working from home. If you freelance or run a business from home, you qualify; if you are a remote employee, you typically do not.