The Home Office Deduction in 2026: Simplified vs. Actual Method

The Two Methods

The IRS gives you two ways to calculate the home office deduction. Pick the one that gives you the larger deduction.

Method 1: Simplified

$5 per square foot, up to 300 square feet = maximum $1,500 deduction.

No receipts needed. Just measure your dedicated workspace and multiply.

A 200 sq ft home office = $1,000. A 300 sq ft office (the max) = $1,500.

Good for: anyone who doesn't want to track receipts or whose actual costs wouldn't exceed $1,500.

Method 2: Actual Expenses

Calculate the percentage of your home used for business, then apply it to actual housing costs.

**Formula:** Office sq ft ÷ Total home sq ft = Business %

Example:** 200 sq ft ÷ 1,800 sq ft = **11.1%

Apply to:

If total housing costs are $24,000/year: 11.1% = **$2,664 deduction** — beats the simplified cap.

The Key Requirement: Exclusive Use

The space must be used **exclusively and regularly** for business. A dedicated room qualifies. A dining table where you also eat does not.

Renters qualify just as much as homeowners.

Common Mistakes

**The "couch office" mistake** — Shared spaces don't qualify. Exclusive use is required.

**Overclaiming the percentage** — Keep it accurate.

**Forgetting internet** — Your internet bill is deductible, often at 100% if used primarily for work.

**Not running both calculations** — Run both every year. The better one changes based on your rent and workspace size.

The Bottom Line

If you have a dedicated workspace, you're leaving money on the table by not taking this deduction. The simplified method takes 5 minutes. The actual method often saves more. Both are legitimate.