Transparent method
The formula
Worked example
Example inputs
How to interpret the result
The deduction depends on a space being used exclusively and regularly for business, a stricter standard than simply having a desk somewhere in the house. A room that doubles as a guest bedroom or occasionally hosts family activity generally fails the exclusive-use test regardless of how much work actually happens there.
Before you rely on it
What to check
Confirm the claimed space meets both the exclusive-use and regular-use tests before applying its square footage to the deduction, not just that work happens there.
The common error
Where people go wrong with home office deduction calculator
Claiming a shared-purpose room as a home office simply because a desk sits in it. A space used for anything other than business, even occasionally, generally fails the exclusive-use requirement the deduction depends on.
Sensitivity evidence
How potential eligible deduction changes the estimated tax savings
| Potential eligible deduction | Estimated tax savings | After-tax expense cost |
|---|---|---|
| $4,000 | $960 | $3,040 |
| $4,500 | $1,080 | $3,420 |
| $5,000worked example | $1,200 | $3,800 |
| $5,500 | $1,320 | $4,180 |
| $6,000 | $1,440 | $4,560 |
Every input, tested
Which input moves the estimated tax savings most
| Input | Tested from | To | Estimated tax savings at each end | Swing |
|---|---|---|---|---|
| Potential eligible deduction | $4,500 | $5,500 | $1,080 to $1,320 | $240 (20%) |
| Marginal tax rate | 28.0% | 32.0% | $1,120 to $1,280 | $160 (13%) |
| Eligible business-use share | 78.0% | 82.0% | $1,170 to $1,230 | $60 (5.0%) |
Two variables at once
Estimated tax savings by potential eligible deduction and eligible business-use share
| Potential eligible deduction \ Eligible business-use share | 76.0% | 80.0% | 84.0% |
|---|---|---|---|
| $4,000 | $912 | $960 | $1,008 |
| $4,500 | $1,026 | $1,080 | $1,134 |
| $5,000 | $1,140 | $1,200 | $1,260 |
| $5,500 | $1,254 | $1,320 | $1,386 |
| $6,000 | $1,368 | $1,440 | $1,512 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Potential eligible deduction | $5,000 |
| Eligible business-use share | 80.0% |
| Marginal tax rate | 30.0% |
| Estimated tax savings | $1,200 |
| After-tax expense cost | $3,800 |
Where the inputs come from
Potential eligible deduction is the total of home costs you could deduct under the actual expense method, such as a share of rent or mortgage interest, utilities, insurance and repairs. The business-use share is the percentage of your home used regularly and exclusively for business, measured by square footage. The marginal tax rate estimates what a dollar of deduction saves. Only self-employed people can deduct a home office; employees cannot under current federal rules.
When the result stops applying
The space must be used regularly and exclusively for business, so a desk in the bedroom or a guest room used part time does not qualify. The deduction cannot exceed the business's income from that activity. Claiming it may create depreciation recapture when you sell the home. Rules differ for state taxes.
What to compare it with
See the full tax picture with the self-employment tax and QBI deduction calculators, and the business mileage page for another common deduction. The quarterly tax calculator helps pay tax on the resulting income. Keep a floor plan and photos as documentation.
People also ask
Frequently asked questions
Who can claim the home office deduction?
Self-employed people and business owners who use part of their home regularly and exclusively as their principal place of business. Employees cannot claim it.
What is the simplified method?
A deduction of $5 per square foot of office space up to 300 square feet, for a maximum of $1,500, without tracking actual expenses.
What does exclusive use mean?
The space is used only for business, not for personal purposes as well. A dedicated room or a clearly separate area qualifies.