· Charles Trautman, EA
The home office deduction: what actually qualifies
Most of the people asking us about this one are W-2 employees whose company told them to work from home, and who reasonably assumed that if the job requires a home office, the IRS lets them deduct it. It doesn't, and hasn't for a while now, and this year that became permanent.
The rule that closes the door for W-2 employees
The 2017 tax law suspended the deduction for unreimbursed employee expenses, home office included, for tax years 2018 through 2025. That was supposed to be temporary. This year's One Big Beautiful Bill Act removed the expiration date entirely, so the suspension is now permanent law rather than a pause. If your only income is a W-2, the home office deduction is not coming back for you regardless of how much of the year you spent working from your kitchen table.
There's one workaround worth knowing: an employer can set up an accountable reimbursement plan and pay you back for home office costs tax-free. That's your employer's decision to make, not something you can claim on your own return.
Who still gets it
Self-employed people, full stop. If you file a Schedule C, whether as a sole proprietor or a single-member LLC, the home office deduction is still available to you under the same rules it always has been. And if you have a W-2 job plus a side business, you can still claim the deduction against that side business, for the portion of your home used for it, even though your W-2 income can't touch it.
The test that actually matters
The space has to be used regularly and exclusively for business. Exclusively is the word people trip over. It doesn't need to be a separate room with a door, but it can't be the corner of the living room where the kids also do homework and you also watch television. If the space does double duty, it doesn't qualify, no matter how many hours a week you spend working there.
Two ways to calculate it
The simplified method: five dollars per square foot of the qualifying space, capped at 300 square feet, for a maximum deduction of $1,500. No depreciation, no allocating utility bills, one number.
The regular method, filed on Form 8829: you measure the percentage of your home's square footage the office takes up, then apply that percentage to your actual costs: mortgage interest or rent, utilities, homeowners insurance, and depreciation on the business-use portion of the home. More paperwork, but it can beat the simplified cap by a wide margin. A 150-square-foot office gets you $750 the simple way; that same office in a 1,500-square-foot home is 10 percent of the house, so once rent, utilities, and insurance run past $7,500 a year, the long form pays for the effort.
Which one wins depends on your numbers. We run both ways for clients before filing, because guessing which is more advantageous is exactly the kind of thing that costs people money.
Where this shows up on your return
For a Schedule C filer, the home office deduction reduces your business's net profit, which also reduces the self-employment tax calculated on that profit. It's worth more than an itemized deduction of the same dollar amount would be, because it comes off before that second layer of tax gets calculated. The home office is one line of many on that schedule; the full list is in our small business deductions checklist.
Common questions
Can a W-2 remote employee take the home office deduction?
No. The 2017 tax law suspended unreimbursed employee expense deductions through 2025, and the One Big Beautiful Bill Act made that suspension permanent. A W-2 employee cannot deduct home office costs even when an employer requires remote work.
Who can still claim the home office deduction?
Self-employed people filing a Schedule C, including a single-member LLC. A W-2 employee who also runs a side business from a separate qualifying space can claim it for that business portion.
What is the simplified home office deduction rate?
Five dollars per square foot of the space used for business, up to 300 square feet, for a maximum deduction of $1,500. No separate depreciation calculation is required under this method.
Does the home office have to be a separate room?
No. It has to be a specific, identifiable space used regularly and exclusively for business, but it does not need its own walls or door as long as the area is clearly defined and not used for anything personal.
General information from Tax Shop in Lone Tree, Colorado, current as of August 20, 2026. Tax rules change and every return is different, so this is not advice about your own situation. Ask us about your return.