| Simplified: counted square feet | 200 | 200 sq ft |
| Simplified: the deduction | 200 × $5 | $1,000 |
| Regular: business percentage | 200 of 1600 sq ft | 12.5% |
| Regular: share of home costs | $24,000 × 12.5% | $3,000 |
| Regular: the deduction | added together | $3,000 |
- Both methods stop at the gross income from the business use of the home. Above that line the two part company: the regular method carries the excess to next year, the simplified method loses it.
- If you own the home and claim no depreciation, the regular method is being undersold here — that is the line the two methods differ on most.
- Either way the space must be used regularly and exclusively for business, and the choice can be made again each year.
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The figures this uses
| Figure | 2026 | Source |
|---|---|---|
| Home office, simplified option | $5 per square foot, at most 300 square feet — so at most $1,500 | irs.gov |
| Home office, what the simplified option gives up | no depreciation deduction, no recapture on sale, and no carryover of the amount the gross income limit disallows | irs.gov |
| Home office, the limit on both methods | the deduction cannot exceed gross income from the business use of the home less the business expenses that are not home costs | irs.gov |
How the calculation works
The calculator works out both methods of deducting a home office side by side and shows the one that wins.
The simplified option.
- The square feet used regularly and only for business, counted up to 300.
- Multiplied by $5. The most it can give is $1,500.
The regular method.
- The business percentage: the office's square feet divided by the home's.
- That percentage of a year of costs for the whole home: rent, property tax, utilities and repairs.
- Plus anything spent only on the office itself, such as painting it, which counts in full.
- Plus depreciation, if you own the home.
The limit on both. Neither method can deduct more than the gross income from the business use of the home, less the business expenses that are not home costs. Under the regular method the excess carries forward to the next year; under the simplified option it is simply gone.
The regular method is reported on Form 8829 and the simplified option directly on Schedule C, line 30.
What it leaves out
- The exact order of the regular method. Form 8829 applies the income limit in a set order, deducting operating costs before depreciation. The calculator adds them together and then applies the limit.
- Depreciation itself. You enter the figure; the calculator does not work it out. Claiming it also means recapture when you sell, which the simplified option avoids.
- A home day care, which measures business use by time as well as space. See the day care time-space percentage.
Whether the space qualifies at all comes first. The administrative use test explains when a home office counts as your principal place of business, and the trainer's home gym covers space used to see clients.
Common questions
Which method should I use?
What happens if the deduction is more than my business income?
Does the room have to be used only for work?
I rent my home. Does the regular method still help?
This calculator is for educational purposes only and does not constitute tax, legal, or financial advice. It covers United States federal tax and simplifies in the ways noted beside each result. Consult a qualified tax professional about your situation.