Office Size
Must be used exclusively for business
Business-use percentage: 10.0%
Calculation Method
Home Expenses (Regular Method)
Used to calculate annual depreciation
Excluded from depreciation (land doesn't depreciate)
Tax Settings
Simplified method deduction is capped at this amount
Method Comparison
The regular method saves you an additional $2,646 in deductions this year.
Using the Better Method
Regular Method Breakdown (10.0% of each expense)
Note: Depreciation deducted now may be subject to 25% recapture tax when you sell your home. The simplified method avoids this.
2026 Quick Reference
What is Home Office Deduction Calculator?
The home office deduction allows self-employed individuals, freelancers, and independent contractors to deduct the business-use portion of their home expenses from their Schedule C income. For 2026, the IRS offers two calculation methods: the simplified method ($6 per square foot, max $1,800), and the regular method (your actual home expenses × the percentage of your home used as an office). The deduction reduces both federal income tax and self-employment tax.
How to Use
- Enter your home office area (in square feet) and your total home area.
- Select a calculation method: Simplified, Regular, or Compare Both.
- For the Regular method, choose whether you own or rent, then enter your annual home expenses.
- Enter your net business income — the simplified method deduction is capped at this amount.
- Select your federal tax bracket and whether you want to include self-employment tax savings.
- The results show your deduction amount, a breakdown of expenses, and your estimated annual tax savings.
Why Use This Tool?
Tips & Best Practices
- "Exclusive use" is strict: your office must be used only for business, not as a guest room or personal space.
- The simplified method avoids depreciation recapture tax when you sell your home — a significant long-term benefit.
- The regular method usually wins if your home is expensive or your office takes up a large portion of the space.
- If you switch from regular to simplified method, suspended regular-method carryforwards are not lost — they resume when you switch back.
- Home office deductions go on Schedule C and reduce both income tax and self-employment tax — the SE tax savings alone can be worth $200–$600/year for a typical freelancer.
- Keep documentation year-round: a floor plan, square footage measurements, utility bills, and a business activity log.
Frequently Asked Questions
Who can claim the home office deduction in 2026?
Self-employed individuals (sole proprietors filing Schedule C), independent contractors, freelancers, and LLC owners can claim the home office deduction. W-2 employees cannot — this deduction was suspended for employees by TCJA in 2018 and remains suspended through at least 2026. S-corp owners who work from home may qualify through an accountable plan reimbursement arrangement instead.
What is the simplified method for the home office deduction?
The IRS simplified method allows $6 per square foot of your home office, up to 300 sq ft — a maximum of $1,800 per year. No depreciation calculation is needed, and there is no depreciation recapture when you sell your home. However, if your actual home expenses produce a higher deduction under the regular method, the simplified method costs you money.
What is the regular method, and when is it better?
The regular method applies your office percentage (office sq ft ÷ total home sq ft) to all qualifying expenses: rent or mortgage interest, property taxes, utilities, insurance, repairs, and depreciation. It is better when: (1) your office is large relative to your home, (2) you have high rent or mortgage interest, or (3) you own a high-value home where depreciation is significant. For most renters in expensive cities, the regular method wins by a wide margin.
Can the home office deduction create a business loss?
Under the simplified method, the deduction is capped at your net business income — it cannot create a loss, and unused amounts are not carried forward. Under the regular method, the mortgage interest and property tax portions can be deducted even if they create a loss, but the other expense portions (utilities, insurance, repairs, depreciation) are limited to net income. Unused regular-method amounts carry forward to future profitable years.
What is depreciation recapture and how does it affect home sale?
If you deduct depreciation under the regular method and later sell your home, the IRS requires "depreciation recapture" — the depreciation you took is taxed at up to 25% on sale. This applies even if your profit is covered by the $250,000/$500,000 home sale exclusion. For this reason, some taxpayers prefer the simplified method to avoid future recapture complexity. Use the regular method if the annual deduction benefit outweighs the eventual recapture cost.