With remote and hybrid work becoming more commonplace, many workers may assume they can claim a home office tax deduction. However, this tax break comes with some finer points to be aware of and primarily benefits self-employed individuals, not W-2 employees.
What you’ll learn
What you’ll learn
Key takeaways
- Home office deductions allow self-employed people to deduct a portion of household costs, like rent or mortgage, for a space used exclusively and regularly for their trade or business
- “Exclusive and regular use” is a key requirement, meaning the space must be used solely for business and on an ongoing basis
- The home office must be the “principal place of business” for self-employed people but you can have occasional outside meetings if the majority of your business activities occur in your home office
- W-2 employees are generally ineligible, even if they are full-time remote workers
- Be sure to adjust your deductions if your home office use significantly changes because your eligibility for the deduction may be affected
- Avoid common errors like recording incorrect square footage, misclassifying personal expenses as business expenses, and not documenting your expenses properly
It can be a lucrative tax break that allows you to deduct business-related expenses, including a portion of your rent or mortgage for the parts of your home you use exclusively — and in an ongoing fashion for your work.
If you’re like a lot of remote workers, you may have been wondering how to claim a home office tax deduction. Keep reading for a look at the home office tax deduction for 2025, including information on what office deductions you can claim, and how these differ for self-employed workers and W-2 employees.
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Do you qualify? Key requirements for the home office deduction
At first glance, the rules involved in claiming this tax deduction might seem daunting, but it really depends on a few specific requirements. To be eligible, the space in your home has to meet specific use-related criteria. Let’s take a look at them.
Exclusive and regular use
This is the most important consideration when claiming the home office tax deduction. The parts of your home you wish to claim as your office tax deduction must be used solely and exclusively for work related to your trade or business. So if you use a spare bedroom as an office during the day but your family uses it as a guest room at night, it typically won’t qualify. The use of the space must also be regular, meaning occasional work done in that space doesn’t meet the requirements.
Principal place of business
The home office deduction can be a big benefit when it comes to self-employment tax. If you’re self-employed and work almost exclusively out of your home office, that space qualifies as your principal place of business. Even if you occasionally meet clients at other locations or irregularly do business at another location, your home office will still qualify as your principal place of business if that’s where you spend most of your working hours and it’s where your most important work takes place.
Ineligibility for W-2 employees
The rules for home office tax deductions for W-2 employees changed significantly in 2017 with the Tax Cuts and Jobs Act. As the act stands now, W-2 employees can’t claim a home office tax deduction for any unreimbursed employee expenses. This is true even for full-time remote employees.
“With the recent passing of H.R.1 (also known as the Big Beautiful Bill), the TCJA changes are now permanent, and they will remain in effect for the foreseeable future.”
— Peggy James, CPA and OnPay contributor
Real-world scenarios: When you can (and can’t) claim the deduction
Let’s break down some common scenarios to clarify when claiming the home office tax deduction applies (and when it does not pass the test).
Likely a fit
If you’re a freelance writer with a home office that’s dedicated exclusively to writing and other business activities, that space would qualify. Likewise, if you run an online business selling handmade crafts and have a dedicated workshop in your basement or other area of your home, you would also be eligible for the deduction.
In both cases, the space is used exclusively and on a regular basis for business activities, and the home acts as the principal place of business.
Likely not a fit
If you only do occasional work at home using a non-dedicated space like a kitchen table, a guest room that doubles as an office, or any other space that either isn’t used regularly or isn’t exclusively used for business activities, it doesn’t qualify for the deduction.
Other scenarios
Separate structures, like a workshop outside of the home, can be claimed if they are only used for business purposes. If you work a side gig or second job, you can also deduct the area of your home you use for that purpose, provided it meets all of the other requirements for tax-deductible status.
Calculation methods for home-office tax deduction
There are two methods you can use to calculate your home office tax deduction, and each has its advantages and drawbacks.
Simplified method based on square footage
The simplified method is exactly what it sounds like — a straightforward way to calculate your deduction. Just multiply the square footage of the parts of your home that you use exclusively for business by a specific rate. This was $5 per square foot up to a maximum of $1,500 in 2024, but it is subject to change, so always check the latest IRS guidelines.
You don’t need to track your actual office expenses for the home itself, and you can still separately deduct the costs of office supplies. There are quite a few online home office tax deduction calculators based on the simplified method, which can make this process even easier.
Actual expenses method based on business use percentage
The actual expenses method is more complex because it requires you to determine your total tax-deductible household expenses. Using that figure, you would deduct the percentage of your home used for office space from your total tax liability.
For this, you would divide the square footage of your home office or workshop by the total square footage of your home. If your home office is 200 square feet and your home is 2,000 square feet total, your business use percentage would be 10%. Therefore, you can claim 10% of your housing expenses as a deduction.
Required IRS forms and documentation
You’ll need to file IRS Form 8829 with your tax return to claim the home office tax deduction using the regular method. If you’re using the simplified method, save documentation showing the square footage of your home office and total home space in case any questions arise later. For the actual expenses method, you’ll need detailed records of home-related expenses.
Simplified vs. actual expenses: How to choose the best deduction method
Which method you choose depends on your specific situation and how much effort you want to put in when filing for this deduction. The simplified method is the easiest way to go, as it involves minimal recordkeeping and pretty simple math.
While the actual expenses method is much by more complex, it might be a better fit for you if it results in a larger deduction and if you already keep the kind of records you need to calculate your total deduction (more on that in the next section).
When it comes to proving your home office qualifies for the tax deduction, make sure to include clear documentation that shows the space you’re claiming meets the exclusive and regular use requirements.
“You’re not required to submit documentation or receipts with your tax returns. Instead, taxpayers should retain documentation of these items in case of an audit or questions from the IRS.”
— Peggy James, CPA
Depreciation and recapture: Long-term tax effects of claiming a home office
If you’re a homeowner claiming deductions via the “actual expenses” method, you may need to depreciate the portion of your home used for business. Houses gradually decreases in value over time due to wear and tear, and this depreciation affects the amount you can claim on your taxes.
“Depreciation is a way of expensing the cost basis of your home over what the IRS considers its useful life, and it’s one of the components of the regular method for calculating the home office deduction.”
— Peggy James, CPA
If you decide to sell your home in the future, you may be subject to “depreciation recapture,” which means you’ll have to pay taxes on the amount of depreciation you previously claimed. This is an especially complex tax issue, so it may be best to check with a qualified tax professional for guidance.
What happens when business use changes: Adjusting your deduction over time
Keep in mind the requirements for exclusive and regular use of the space you’re claiming as deductible. If the way you use your home office changes significantly, your eligibility for the home office tax deduction may be affected. Be sure you adjust your claimed deduction in the year the change happens.
Avoid these common home office deduction errors
Some common errors can disqualify your deduction claim and can even result in an audit. To avoid this, make sure you pay especially close attention to the following pitfalls.
- Incorrect square footage: If you get this wrong, the total amount of your deduction will be off. Always double-check your measurements.
- Misclassified expenses: Allowable expenses are those solely related to your work or business. Make sure you’re not miscategorizing personal expenses as business expenses.
- Poor documentation: This is true of any claimed deduction, but is very important for any work-from-home deductions. If you don’t keep detailed and complete records, you might find yourself singled out for an audit.
Due diligence comes with home-office tax deductions
The home office tax deduction can offer valuable savings for eligible self-employed individuals and single-member LLCs who use part of their home regularly and exclusively for business. While the rules are specific and documentation is key, it’s worth exploring if you qualify. For complex situations involving depreciation or significant deductions, consulting a tax professional can help ensure you’re maximizing your benefits while staying compliant.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.