The home office deduction allows qualifying self-employed individuals and business owners to deduct expenses related to the part of their home used regularly and exclusively for business. Most employees who work remotely for an employer currently cannot claim it under federal law — a change that took effect for tax years 2018 through 2025 under the Tax Cuts and Jobs Act and has not been reversed as of this writing. The IRS describes the full eligibility rules in Publication 587.
The exclusive-and-regular-use rule
Two conditions must both be met for any workspace to qualify:
Exclusive use: the area must be used only for business. A kitchen table where you also eat, or a bedroom with a desk, does not satisfy this requirement. The business area must be a dedicated space — a separate room is easiest to document, but a clearly defined portion of a room can qualify if it is used for nothing else.
Regular use: the space must be used for business on a consistent, ongoing basis. Occasional use does not qualify.
There is a limited exception for certain storage areas and for licensed daycare facilities, but for most taxpayers the rule is strict.
Principal place of business
For a home office to qualify, your home must be your principal place of business, or you must use it as the place where you meet clients or customers in the normal course of business. If you have an outside office and also do some work at home, the home office generally does not qualify unless the home location is where you perform your most important or time-consuming activities, or the outside office is not regularly available to you.
Simplified vs actual-expense method
Once you confirm eligibility, you choose one of two calculation methods each year:
| Method | How it works | Record-keeping |
|---|---|---|
| Simplified | Multiply the square footage of the qualifying space (up to a maximum set by the IRS) by the IRS prescribed per-square-foot rate | Minimal — only square footage needed |
| Actual expense | Deduct a proportional share of mortgage interest or rent, utilities, repairs, depreciation, and insurance based on the percentage of home square footage used for business | Detailed receipts and home-cost records required |
You may switch methods from year to year. The simplified method is easier but may produce a smaller deduction for larger home offices with high actual costs. The actual-expense method requires tracking more records but can yield a larger deduction.
Note that deductions under the home office deduction generally cannot exceed your net business income from that activity for the year. Excess amounts may carry forward under the actual-expense method.
Depreciation and the sale of your home
If you use the actual-expense method, you will depreciate the business portion of your home over time. When you eventually sell the home, that depreciation can affect your gain calculation. This is one reason careful recordkeeping matters from the first year you claim the deduction.
Why W-2 employees currently cannot claim it
Before 2018, W-2 employees could claim unreimbursed employee business expenses — including a home office — as a miscellaneous itemized deduction subject to a floor. The Tax Cuts and Jobs Act suspended that deduction for tax years 2018 through 2025. If your employer does not reimburse you for a home office, you currently have no federal deduction available as a W-2 employee. This may change if Congress acts on expiring provisions; check IRS guidance for updates after 2025.
Self-employed individuals and those who file Schedule C, Schedule E (for rental activity), or Schedule F are not affected by this suspension.
Recordkeeping recommendations
Whether you use the simplified or actual-expense method, maintain:
- A floor plan or sketch showing the office dimensions
- Photos of the dedicated workspace
- A log or calendar showing business use
- Receipts for home costs if using actual expenses
Good records protect you if the deduction is ever questioned.
Where to get help
Determining whether a workspace qualifies and choosing between calculation methods involves facts specific to your home and business. A find a tax professional can review your situation and help you apply the rules correctly.
Sources
- IRS Publication 587, Business Use of Your Home (irs.gov)
- IRS Form 8829 instructions (irs.gov)
- IRS Topic No. 509, Business Use of Home (irs.gov)