United States · Schedule C · IRS Publication 587
Simplified vs regular home office deduction.
Enter your office and home size and your yearly housing costs to compare the $5-per-square-foot method with the actual-expense method on Form 8829.
The simplified method is $5 per square foot of office, up to 300 square feet, so at most $1,500. The regular method deducts your business-use percentage of actual home costs plus depreciation. Both are limited to the gross income from the business.
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How the calculation works
Qualify first. You must be self-employed, and use part of your home regularly and exclusively for business (Pub. 587). W-2 employees cannot deduct home office costs on their personal return; the Form 8829 instructions say so for 2025, and you should confirm the current rule for 2026.
Simplified (Rev. Proc. 2013-13): $5 × office square feet, with at most 300 square feet counted. Limited to gross business income less business expenses unrelated to the home. No depreciation, no actual expenses, no carryover. Mortgage interest and real estate taxes stay on Schedule A.
Regular (Form 8829): business percentage = office area ÷ home area. Mortgage interest and taxes, rent, utilities, insurance and repairs are multiplied by that percentage. Depreciation = business percentage × depreciable basis × the 39-year nonresidential rate (2.564% if business use began before the tax year; first-year rates run from 2.461% for January to 0.107% for December). Deductions are allowed in IRS order under the income limit: mortgage interest and taxes first, then operating expenses, then depreciation. Whatever the limit blocks carries to next year.
Worked example
Office 200 sq ft in a 1,800 sq ft home is 11.11%. Gross income $60,000 less $12,000 unrelated expenses leaves a $48,000 limit. Simplified: 200 × $5 = $1,000. Regular: ($9,000 + $3,500) × 11.11% = $1,388.89 for mortgage interest and taxes; ($3,000 + $1,200 + $800) × 11.11% = $555.56 operating costs; $280,000 × 11.11% × 2.564% = $797.69 depreciation; total $2,742.13. Regular wins by $1,742.13, unless you itemize, in which case the $1,388.89 slice already sits on Schedule A under the simplified method and the like-for-like regular figure is $1,353.24.
Not modelled: the part-year or mixed-use home rules, daycare and inventory-storage exceptions, casualty losses, direct expenses for the office alone, home sale effects of depreciation, state rules, and the effect on self-employment and income tax.
Official sources: IRS Publication 587, Business Use of Your Home; IRS Topic no. 509; Instructions for Form 8829; Rev. Proc. 2013-13, all opened October 2, 2026.
Frequently asked questions
Can W-2 employees deduct a home office?
No. The Form 8829 instructions say expenses for business use of your home as an employee cannot be deducted on your personal return. The deduction is for self-employed people, including gig workers and independent contractors. Check current IRS guidance for 2026 before relying on any employee deduction.
What is the exclusive and regular use test?
The space must be used regularly and only for business. A desk in a guest bedroom that also hosts guests does not qualify, but a dedicated room or a clearly defined part of a room can. Pub. 587 also requires the home to be your principal place of business or a place where you meet clients, with exceptions for storage and a separate structure.
Is simplified or regular better?
Simplified is capped at $1,500 and needs no records of actual costs. Regular usually wins when your business-use percentage and housing costs are high, such as a large office in a costly home. This calculator shows both so you can compare.
What is the income limit?
Your home office deduction cannot exceed gross income from the business use of the home, less business expenses unrelated to the home. Under the regular method the excess operating costs and depreciation carry to next year. Under the simplified method nothing carries over.
Does the simplified method let me still deduct mortgage interest?
Yes. Under Rev. Proc. 2013-13 you treat mortgage interest and real estate taxes as personal expenses and claim them on Schedule A in full if you itemize. You give up depreciation and other actual expenses for that year.
Can I switch methods from year to year?
Yes. You choose each year on a timely filed return, and you cannot change that year's choice later. If you used the regular method before, carryovers cannot be used in a simplified year.
Not tax advice
This is an educational estimate, not a tax return or personalized tax advice. Confirm your figures with Form 8829, Publication 587 or a qualified tax professional. Your inputs stay in your browser and are never sent or stored.