Home Office Deduction Calculator
Tax year: 2026 · Figures for Tax Year 2026 · Source: IRS
Built and audited by the CalcSumly Engineering Team using official IRS and State Department of Revenue data.
Your Schedule C net profit before the home office deduction.
Square footage of your dedicated, exclusively-business workspace.
Total square footage of your home (for actual method business-use percentage).
Rent or mortgage interest, utilities, insurance, and repairs for the whole home.
Simplified method
$750
$5/sqft × 150 sqft · 2026
Actual method
Recommended$1,800
10.0% of home × expenses · 2026
Federal savings only. See a state page for state income tax savings.
How the home office deduction works in 2026
Self-employed people and sole proprietors can deduct home office costs directly on Schedule C, reducing net profit before any tax is calculated. This is more powerful than a personal itemized deduction: it lowers self-employment (SE) tax, federal income tax, and most state income taxes in one move.
The IRS allows two methods under IRC §280A:
- Simplified method (Rev. Proc. 2013-13). Multiply your home office square footage by $5, up to 300 square feet. The maximum deduction is $1,500. No receipts, depreciation schedules, or Form 8829 are required. The $5/sqft rate has not changed since 2013.
- Actual expense method. Compute your business-use percentage (office sqft divided by total home sqft), then multiply by your allowable home costs: rent or mortgage interest, utilities, insurance, and repairs. Use IRS Form 8829 to report this method. Depreciation on the home is also deductible but must be recaptured on sale.
How tax savings are calculated
This calculator computes your total tax at your current net profit, then again at net profit minus the deduction. The difference is your savings, broken into three layers:
- SE tax savings. The deduction reduces your Schedule C net profit. SE tax is 15.3% on 92.35% of net profit (12.4% Social Security plus 2.9% Medicare). A $1,500 deduction saves roughly $212 in SE tax for a freelancer earning $80,000.
- Federal income tax savings. The deduction also reduces your federal AGI through two channels: the lower net profit itself, and the reduced deductible half of SE tax (which is recalculated at the lower profit). At the 22% bracket, a $1,500 deduction saves roughly $307 in federal income tax.
- State income tax savings. Most states that start from federal AGI automatically receive the benefit. Per-state calculations are shown on each state page. Pennsylvania and New Jersey require actual expenses for the state deduction.
Qualification requirements
The space must be used regularly and exclusively for business (IRC §280A(c)(1)). A dedicated room qualifies; a kitchen table or shared space does not. There is no minimum square footage. Home office expenses cannot create a net loss when combined with your other business income in a given year (the deduction is limited to net profit).
Scope and limitations
This calculator models a single Schedule C business owner with no other income sources. It does not include home depreciation recapture, QBI deduction, health insurance deductions, or tax credits. State calculations are estimates based on each state's income brackets; local taxes (county, city) are excluded. Use this tool for planning. Consult a tax professional before filing.
Sources
Frequently asked questions
What is the home office deduction?+
The home office deduction (IRC §280A) lets self-employed people and small business owners deduct the cost of a dedicated workspace in their home. To qualify, the space must be used regularly and exclusively for business. Deducting home office costs lowers your Schedule C net profit, which reduces self-employment tax, federal income tax, and most state income taxes.
What is the simplified method for the home office deduction?+
The simplified method, introduced by IRS Rev. Proc. 2013-13, lets you deduct $5 per square foot of your home office, up to 300 square feet and a maximum of $1,500 per year. No depreciation tracking or expense receipts are required. The rate is not inflation-adjusted, so it has been $5/sqft since 2013.
How does the actual expense method work?+
The actual method deducts the business-use percentage of your real home costs: rent or mortgage interest, utilities, insurance, and repairs. Business-use percentage is your office square footage divided by your total home square footage. Use IRS Form 8829 to calculate and claim actual home office expenses.
Which method saves more: simplified or actual?+
It depends on your home size and expenses. The simplified method is always capped at $1,500, so if your actual business-use share of home costs exceeds $1,500, the actual method wins. For a small office in a large home with low rent, the simplified method can sometimes win. Run both numbers: that is exactly what this calculator does.
What counts as exclusive and regular use?+
The IRS requires the home office space to be used exclusively for business on a regular basis. It cannot double as a guest room or personal space. You do not have to use the space every day, but it must be your regular place of business, not an occasional workspace.
What expenses can I include in the actual method calculation?+
Deductible home costs for the actual method include rent, mortgage interest (not principal), homeowners or renters insurance, utilities (electricity, heat, water), and repairs that benefit the whole home. Home depreciation is also deductible but adds recordkeeping complexity. Capital improvements that benefit only the office area can be deducted fully.
How does the home office deduction reduce self-employment tax?+
The deduction is taken on Schedule C, which reduces your net profit before SE tax is calculated. Because SE tax is 15.3% applied to 92.35% of net profit, every $1 in home office deduction saves roughly $0.1413 in SE tax alone. The combined savings including income tax is typically $0.25 to $0.50 per dollar deducted, depending on your tax bracket.
Does the home office deduction work in all states?+
Most states that start from federal AGI or Schedule C net profit automatically recognise both methods. Pennsylvania and New Jersey are exceptions: they do not adopt the federal simplified method ($5/sqft) and require actual, documented home office expenses instead. Florida has no state income tax, so the deduction only saves federal taxes there.
Related calculators
Self Employment Tax Calculator
Work out your Social Security and Medicare tax from net profit, with the deductible half and a full breakdown.
Freelance Take-Home Pay Calculator
See what you actually keep after self employment tax, income tax, and business expenses.
Quarterly Estimated Tax Calculator
Figure out what to send the IRS each quarter — income tax plus self employment tax, with due dates and safe harbor tips.