Updated August 7, 2026. Quick answer: there are two methods and the simplified one is $5 per square foot, up to 300 square feet — a maximum of $1,500. It takes no records beyond the square footage. The actual-expense method can be worth considerably more if you have a real mortgage, real utilities and a decent-sized room, and it costs you a spreadsheet and, for homeowners, a consequence when you sell. The requirement both methods share is the one that disqualifies most people, and it is stricter than it sounds: the space must be “exclusively used on a regular basis for business purposes.”
On deductions by profession: tax deductions for private tutors and tax deductions for virtual assistants.
On deductions by profession: tax deductions for freelance writers, tax deductions for graphic designers and tax deductions for therapists in private practice.
Schedule F (Form 1040) for 2025, line by line: Schedule F lines 32a to 32f.
On records for a one-person business: how to document the business use of a phone or internet bill and what records to keep for a home office and Form 8829.
On receipts and records for a one-person business: whether scanned receipts replace paper under Rev. Proc. 97-22, how to invoice reimbursed client expenses and report them on Schedule C and what to send your accountant for a Schedule C business.
IRS worksheet walk-throughs: Form 8829 Line 11 Worksheet.
IRS worksheet walk-throughs: Pub 587 Line 7 Worksheet.
IRS worksheet walk-throughs: Pub 587 Area Adjustment Worksheet.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for interior designers and Schedule C code for web designers.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for architects and engineers, Schedule C code for massage therapists and Schedule C code for mental health counselors.
Related reading on this site: IRS Publication 583.
More on the 2026 tax figures: the 2026 standard mileage rate.
More on the 2027 tax figures: the 2027 standard mileage rate.
IRS worksheets read line by line: Daycare Facility Worksheet.
IRS worksheets read line by line: Simplified Method Worksheet for the home office and Pub 587 business use of home worksheet.
Related reading on this site: IRS Tax Topic 509.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for handymen, Schedule C code for IT consultants and Schedule C code for Etsy sellers.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for real estate agents, Schedule C code for freelance writers and artists and Schedule C code for child care.
More IRS forms and schedules for individual filers, read line by line: Form 2106 instructions.
Related reading on this site: IRS Publication 587.
Business use of your home (Form 8829), the saver’s credit (Form 8880), clean vehicle credits (Form 8936) and amended returns (Form 1040-X), read line by line: Form 8829 lines 1 to 7, Form 8829 lines 28 to 36 and Form 8829 lines 37 to 44.
Sales of business property (Form 4797), passive activity losses (Form 8582) and depreciation (Form 4562) for 2025, read line by line: Form 4797 lines 33 to 35, Form 8582 line 9 and Form 4562 Part V.
Schedule D and Schedule E (Form 1040) for 2025, read line by line: Schedule E lines 5 to 11.
Schedule C and Schedule SE (Form 1040) for 2025, read line by line: Schedule C line 30, Schedule C Part IV and Schedule C line 48.
Read box by box from the IRS instructions: Form 1098 box 3 and box 11, Form 1098 box 6 and Form 1098 boxes 7, 8, 9.
More IRS forms and schedules, read line by line: Schedule C instructions.
Exclusive use is the whole gate
Exclusively means exclusively. A spare room used only for the business qualifies; the same room with a guest bed in it for two weeks a year does not, and the corner of a kitchen table does not. There is no partial credit for a room used mostly for work.
It does not have to be a whole room — a clearly identifiable portion of one is fine — but the portion has to be genuinely set aside. This is where most home-office claims fail, and it is a factual question rather than a judgement call.
The two methods, side by side
Simplified. $5 per square foot, capped at 300 square feet, so the ceiling is $1,500. No records of actual expenses, no allocation of the mortgage or the utilities — and, importantly, no depreciation deduction is permitted under it.
Actual expenses. You work out the business percentage of the home (usually by area) and apply it to the real costs — mortgage interest, property tax, insurance, utilities, repairs — plus depreciation on the business portion if you own. For a 250-square-foot office in a 2,000-square-foot house that is 12.5% of the running cost of the home, which for most homeowners exceeds $1,500 comfortably.
The honest test: if the simplified ceiling of $1,500 is close to what the actual method would give you, take the simplified one and spend the afternoon on the business instead. If your housing costs are substantial, the difference is worth the spreadsheet.
The catch for homeowners, and it arrives years later
Depreciation claimed on the business portion of a home you own does not disappear when you sell. It is recaptured, and it is taxed on a rule that surprises people because it does not follow your ordinary capital-gains rate — our calculator sizes it against a specific sale, and the home-sale cluster owns that story in full.
This is the one real argument for the simplified method beyond convenience, since it permits no depreciation deduction and therefore creates nothing to recapture. Whether that is a good trade depends on how long you will own the home and how much the actual method would have given you — it is a genuine trade-off, not a trick, and we are not going to pretend one answer fits.
If you rent, this is simpler and often better
Renters have no depreciation and therefore no recapture, so the actual-expense method loses its main complication: the business percentage of the rent and the utilities, and nothing waiting at a future sale. Renters with a real dedicated room are the group most likely to be leaving money on the table by defaulting to the simplified method.
On the audit folklore
The belief that claiming a home office invites an audit is durable and we have found no support for it in any IRS material. We are also not going to tell you it is definitely false, because the IRS does not publish audit-selection weightings and nobody outside it can honestly claim to know them. What can be said is narrower and more useful: the exclusive-use test is objective, and a claim that meets it is documented by a floor plan, a measurement and a consistent story. The reason to skip the deduction is not fear; it is that you do not meet the test.
Sources and limits
The simplified-method rate, the 300-square-foot cap, the exclusive-use language and the no-depreciation rule quoted 2026-08-07 from the IRS’s Simplified option for home office deduction. That page carries no tax-year stamp — the $5 rate and the 300-square-foot cap are stated as the current rule rather than as a year’s figure, and we are reporting them the same way. The worked percentage above is arithmetic, not an IRS example. Depreciation recapture mechanics belong to the home-sale cluster and are not restated here. General information, not tax advice.