If part of your home is where your business actually happens, some of what the home costs you is a business expense. For 2026 there are two ways to claim it: a simplified method worth $5 a square foot, up to $1,500, and the regular method, which takes the office’s share of your real costs and is usually worth more. Both depend first on one rule: the space has to be used for the business regularly, and for nothing else.
Does your space qualify?
The IRS test has two parts, and both have to be true.
Exclusive and regular use. A specific area — a room, or a clearly separate part of one — is used for the business on a regular basis and for nothing personal. The spare bedroom that is an office all week and a guest room twice a year fails; the dining table you clear every evening fails. A desk corner can qualify if that corner is only ever the business.
A business reason to be there. Usually that means it is your principal place of business. It also counts if you do the administrative and management work there (billing, books, scheduling) and have no other fixed place where you do that work — which is why a plumber or a photographer who works on site all day can still have a qualifying home office. Space where you regularly meet clients, and a separate structure such as a detached studio, qualify too.
Two uses skip the “exclusive” part: storing inventory or product samples when your home is the business’s only fixed location, and running a licensed daycare.
The simplified method
Multiply the office’s square footage by $5, up to 300 square feet. The most it can be is $1,500. You enter the square footage on Schedule C and there is no Form 8829 to fill in.
What you give up: you can’t deduct depreciation on the home, and you can’t deduct the office’s share of mortgage interest or property tax as a business expense (you still claim those in full as itemized deductions if you itemize). If the deduction would be more than the business earned, the extra is simply lost; it does not carry to next year.
The regular method
Work out the office’s share of the home, usually by area: a 200-square-foot office in a 1,600-square-foot home is 12.5%. Then apply that share to what the home cost you during the year:
- Renting: rent, utilities, renter’s insurance, and repairs to the whole home.
- Owning: mortgage interest, property tax, homeowner’s insurance, utilities, repairs, and depreciation on the building’s share (not the land), over 39 years.
- Repairs to the office itself count in full, not at the percentage.
It goes on Form 8829, and the result carries to Schedule C. More paperwork, and more records to keep: a lease or mortgage statement, the utility bills, and a note of how you measured the space.
The same office, both ways
A designer rents a 1,600-square-foot apartment for $2,000 a month and uses a 200-square-foot room only for work. Utilities run $3,000 a year and renter’s insurance $300.
- Simplified: 200 × $5 = $1,000.
- Regular: ($24,000 rent + $3,000 + $300) × 12.5% = $3,412.50.
On a self-employed income in the 12% bracket, each dollar of deduction saves roughly 26 cents: about 14 cents of self-employment tax and up to 12 cents of income tax. Here that is around $260 one way and around $890 the other. In a small apartment with low rent, or a single desk corner, the simplified method often comes out close enough to be worth the saved paperwork. You can choose each year, on the original return.
The catches
It can’t create a loss. The deduction is limited to what the business earned after its other expenses. Under the regular method the unused part carries forward to next year; under the simplified method it is gone.
Depreciation comes back when you sell. If you own and use the regular method, the depreciation you were allowed is taxed when the home is sold, at up to 25%, whether or not you actually claimed it. That is a reason homeowners sometimes choose the simplified method, which has no depreciation to recapture.
Keep the evidence. A floor plan with measurements and a photo of the space, dated, settles the exclusive-use question if anyone ever asks. Your Schedule C is where the deduction lands, on line 30.
If you are an employee
A W-2 employee who works from home can’t take this deduction. Unreimbursed employee expenses were suspended from 2018 through 2025, and the 2025 tax law made that permanent. If you have a job and a business, only the business’s space counts, and only for the business.
Questions, answered
How much is the simplified home office deduction for 2026?
$5 per square foot of the area used for business, up to 300 square feet, so the most it can be is $1,500. You report the square footage on Schedule C and skip Form 8829.
Can I take the home office deduction if I rent?
Yes. Under the regular method the office’s share of your rent, utilities, renter’s insurance and repairs is deductible. Under the simplified method renting or owning makes no difference.
Does a corner of a room count as a home office?
It can, if that specific area is used regularly and only for the business. A table you also eat at, or a room that doubles as a guest room, does not meet the exclusive-use test.
Can W-2 employees deduct a home office in 2026?
No. Unreimbursed employee expenses, including a home office, were suspended from 2018 through 2025 and the 2025 tax law made the suspension permanent. The deduction is for self-employed people using the space for their own business.
Can I switch between the simplified and regular method?
Yes, year by year, by choosing on that year’s original, timely filed return. If you go back to the regular method after a simplified year, depreciation is figured from the optional IRS tables.
Sources
- Simplified option for home office deduction — IRS. $5 a square foot, 300 square feet, no depreciation or carryover under the simplified option.
- Topic no. 509, Business use of home — IRS. Exclusive and regular use, principal place of business, the storage and daycare exceptions, Form 8829 and the gross-income limit.
- Publication 587, Business Use of Your Home — IRS. Working out the business percentage, depreciation and recapture.
- About Form 8829, Expenses for Business Use of Your Home — IRS. The regular-method form.
- One Big Beautiful Bill tax changes for the 2026 tax year — TurboTax. Unreimbursed employee expenses permanently disallowed from 2026.
