The Home Office Deduction (2025)

Short answer: if you are self-employed and use part of your home regularly and exclusively for business, you can deduct it two ways: the simplified method ($5 per square foot, up to 300 sq ft = $1,500 max), or the regular method (the business-use percentage of your actual rent or mortgage interest, utilities, insurance, and depreciation). Renters qualify too. Pick whichever gives the larger deduction.

Who qualifies

Two tests must be met. Regular use: you use the space for business on a continuing basis, not occasionally. Exclusive use: the space is used only for business, a spare room set up as your office qualifies; the corner of the living room where the family also watches TV does not. The space must also be your principal place of business or a place you regularly meet clients. Self-employed people, freelancers, and 1099 contractors qualify; W-2 employees generally cannot claim it federally since 2018.

The two methods

	Simplified	Regular
How it works	$5 per sq ft	Business-use % of actual costs
Cap	300 sq ft ($1,500)	No fixed cap
Records needed	Just the square footage	Rent/mortgage, utilities, insurance, etc.
Form	Schedule C worksheet	Form 8829

Worked example

Your office is 150 sq ft in a 1,500 sq ft home, a 10 percent business-use share. Simplified: 150 × $5 = $750. Regular: if your rent, utilities, and renters insurance total $24,000 for the year, 10 percent = $2,400. Here the regular method wins by $1,650, which is why it pays to compare.

What you can deduct under the regular method

The business-use percentage of rent or mortgage interest
Utilities (electric, gas, water), and internet used for the space
Homeowners or renters insurance
Repairs and maintenance for the home (business share)
Depreciation, if you own the home

Keep the bills and a record of your square-footage calculation. NeoReceipt stores the receipts and bills that support these costs, so your home office figure is documented if the IRS ever asks.

See what your deductions save you, then track them automatically all year.

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Frequently asked questions

Who qualifies for the home office deduction?+

Self-employed people and independent contractors who use part of their home regularly and exclusively for business. 'Exclusively' means the space is used only for work, not a kitchen table that doubles as personal space. It must also be your principal place of business or where you regularly meet clients. W-2 employees generally cannot claim it on a federal return since 2018.

What is the simplified home office deduction?+

The simplified method deducts $5 per square foot of qualifying office space, up to 300 square feet, for a maximum of $1,500. You do not track actual home expenses or depreciation. It is quick and low-risk, though the regular method sometimes yields a larger deduction.

Simplified vs regular method, which is better?+

The simplified method ($5/sq ft, max $1,500) is easiest and needs no expense records. The regular method deducts the business-use percentage of actual home costs (rent or mortgage interest, utilities, insurance, repairs, depreciation), which is often larger for bigger spaces or higher-cost homes. You can choose whichever gives the bigger deduction each year.

Can renters claim the home office deduction?+

Yes. Renters and homeowners can both claim it. Under the regular method, renters deduct the business-use percentage of their rent, utilities, and renters insurance; the simplified method works the same for both.

How do I calculate the business-use percentage?+

Divide the square footage of your office space by the total square footage of your home. If your office is 150 sq ft and your home is 1,500 sq ft, that is 10 percent, so you can deduct 10 percent of eligible home expenses under the regular method.

Does the home office deduction trigger an audit?+

No. The home office deduction is a legitimate, common write-off for the self-employed and does not by itself trigger an audit. What matters is that the space genuinely meets the regular-and-exclusive-use test and that you keep records supporting your calculation.

Can I deduct a home office if I also work elsewhere?+

Often yes, if the home office is your principal place of business, meaning where you do your administrative or management work, even if you also perform services at client sites. Many contractors and trades qualify on this basis.

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See how freelancers document the home office with NeoReceipt.

NeoReceipt saved me during tax season. As a freelance graphic designer, I had receipts scattered across emails and folders. In just three months, NeoReceipt automatically categorized over 400 receipts and helped me identify nearly $2,300 in deductible expenses I would have otherwise missed.

SMSarah MitchellFreelance Graphic Designer

I drive for Uber and DoorDash full-time, and tracking gas and maintenance receipts was a nightmare. After switching to NeoReceipt, I reduced my bookkeeping time from 4 hours a week to less than 20 minutes and had every expense ready for my accountant.

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As a real estate agent, I'm constantly on the road and collecting receipts from multiple vendors. NeoReceipt helped me recover over $4,100 in business deductions last year by ensuring nothing slipped through the cracks.

JPJessica ParkerReal Estate Agent

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