What Can You Write Off on Taxes If You Work From Home?

If you work from home, what you can write off on your taxes depends almost entirely on how you’re paid. Self-employed workers — sole proprietors, freelancers, independent contractors, and gig workers — can deduct a portion of rent or mortgage interest, utilities, internet, insurance, and repairs tied to a dedicated workspace, plus the full cost of business equipment, supplies, and mileage from that office to other work locations. W-2 employees get nothing on their federal return, no matter how many hours they log at the kitchen table.

If You’re a W-2 Employee, the Federal Deduction Is Gone

The Tax Cuts and Jobs Act suspended miscellaneous itemized deductions starting in 2018, which wiped out the unreimbursed employee expense category that used to cover home office costs. The One Big Beautiful Bill Act removed the expiration date, making the prohibition permanent.¹ Employees receiving a W-2 cannot deduct home office expenses on a federal return, period.

There is one workaround, and it depends on your employer. Under an accountable plan, your employer reimburses you for legitimate home office expenses, and the money stays off your W-2, so it isn’t taxed. To qualify, the arrangement must tie each expense to a business purpose, require documentation submitted within a reasonable time, and force you to return any reimbursement that exceeds actual costs.² If your employer doesn’t offer one, ask.

A handful of states still allow W-2 workers to deduct unreimbursed home office expenses on the state return because they didn’t adopt the federal suspension. Rules and forms vary, so check your state tax agency’s guidance or ask a preparer familiar with your state.

Self-Employed Workers: Who Qualifies for the Home Office Deduction

The home office deduction is for people who report business income on Schedule C.³ Because it reduces net business profit, it lowers both income tax and self-employment tax. To claim it, your workspace has to pass two IRS tests.

Exclusive and Regular Use

A specific area of your home has to be used only for business, on a consistent basis.⁴ The dining table where your kids do homework after work doesn’t count. A spare bedroom you use every workday does. You don’t need a room with a door — a dedicated corner works, as long as nothing personal happens there. Storage of inventory or product samples and licensed daycare operations get narrow exceptions to the exclusive-use rule.⁵

Principal Place of Business

The space must also be your primary place of work, or somewhere you regularly meet clients in person. The usual way to qualify: you handle the administrative side of your business — invoicing, scheduling, bookkeeping, correspondence — from that space, and you have no other fixed location where you do that work.⁴ A photographer who shoots on location but runs the business from home meets the test. A detached structure on your property, like a converted garage or backyard studio, qualifies if you use it exclusively and regularly for business, even if it isn’t your principal workplace.

The Two Ways to Calculate the Deduction

You have a choice between tracking actual expenses or taking a flat rate.

Regular Method

The regular method uses Form 8829.⁶ Divide your office’s square footage by your home’s total square footage to get a business-use percentage. A 200-square-foot office in a 1,600-square-foot house gives you 12.5%.

Apply that percentage to indirect expenses — costs that run the whole home. These include rent or mortgage interest, property taxes, homeowner’s or renter’s insurance, utilities, and general repairs. Direct expenses, such as repainting only the office, are fully deductible. Costs that have nothing to do with the office area, like landscaping the front yard, aren’t deductible at all.⁴ Homeowners can also deduct depreciation on the business portion of the property, which has consequences at sale time (covered below).

One important limit: your home office deduction cannot exceed the gross income of the business it supports. If your freelance work earned $8,000 and calculated home expenses total $10,000, this year’s deduction is capped at $8,000. The $2,000 excess carries forward to a future year when income is high enough to absorb it.⁷

Simplified Method

The simplified method skips Form 8829 and expense tracking entirely. You claim $5 per square foot, up to 300 square feet, for a maximum of $1,500 per year.⁸ Enter it directly on Schedule C. No depreciation, no allocating utility bills, no separating direct from indirect costs.

The tradeoffs: the $1,500 ceiling stays put regardless of actual expenses, and there’s no carryforward if your business income is too low to use the deduction.⁷ If you used the office only part of the year, you average monthly square footage across all 12 months, counting only months where you used the space at least 15 days.⁹ Starting in August with 300 square feet through December averages 125 square feet, or a $625 deduction.

One more difference: under the simplified method, mortgage interest and property taxes aren’t split between business and personal. You deduct them in full on Schedule A if you itemize. Under the regular method, the business share moves to Form 8829 instead.

Utilities, Internet, and Phone

Internet works like any other utility. If your business-use percentage is 15%, you deduct 15% of the monthly bill.⁴ Same for electricity, gas, water, and trash collection — indirect expenses, business portion only.

Phones follow different rules. The base charge for the first landline into your home is always personal, regardless of business use. Business long-distance calls on that line are deductible, and a second line used only for business is fully deductible.⁴ For a cell phone, estimate the business share of your usage and deduct that portion. Phone and internet deductions go on Schedule C directly, not on Form 8829.

Equipment and Supplies

Computers, monitors, printers, desks, chairs, networking gear, and software are deductible when they’re ordinary and necessary for your work. These are standalone business expenses on Schedule C, claimable whether or not you take a home office deduction. Items used for both business and personal purposes get deducted only for the business share.

Two provisions let you write off the full cost of equipment in the year you buy it rather than depreciate it over several years. Section 179 lets you expense up to roughly $2.56 million of qualifying property placed in service during 2026, with a phase-out beginning around $4.09 million — limits that a home-based business will almost never approach. Bonus depreciation is now permanently at 100% for eligible property acquired after January 19, 2025 under the One Big Beautiful Bill Act, so the entire cost of qualifying assets can be written off the year they go into service.¹⁰

Day-to-day supplies — paper, ink, pens, postage, shipping materials — are simply deducted as expenses in the year you pay for them.

Mileage From Your Home Office

A qualifying home office turns trips to other work locations into deductible business travel instead of nondeductible commuting. Under IRS guidance, when your home is your principal place of business, daily transportation to another work site is deductible regardless of distance or whether the destination is regular or temporary.¹¹ Without a qualifying home office, those same drives would be commuting, which is never deductible.

For 2026, the standard business mileage rate is 72.5 cents per mile.¹² A designer who works from home and drives to client meetings, print shops, and photo shoots can log every one of those miles. Five thousand business miles at 72.5 cents comes to $3,625 — potentially more than the simplified home office deduction itself.

The Catch If You Own and Sell Your Home

If you claim depreciation under the regular method, understand what happens at sale. The Section 121 exclusion lets homeowners exclude up to $250,000 of gain ($500,000 married filing jointly) on a primary residence, but gain attributable to depreciation you claimed (or were allowed to claim) after May 6, 1997 cannot be excluded.¹³

That portion is taxed at up to 25% as unrecaptured Section 1250 gain and may also be hit with the 3.8% net investment income tax.¹³ If you claimed $15,000 in depreciation over several years, you’ll owe tax on that $15,000 when you sell, even if the rest of the gain is fully excluded. The simplified method avoids this because it doesn’t involve depreciation. Run the numbers before committing to the regular method if you own an appreciating home and plan to stay a while.

Records to Keep

A home office deduction that’s large relative to business income can draw scrutiny.¹⁴ Good records are the defense.

Save receipts, bank statements, and invoices for every deducted expense: rent or mortgage payments, utility bills, insurance premiums, repairs, equipment purchases.¹⁵ For mileage, log the date, destination, business purpose, and miles for each trip. Photograph or sketch your office layout with measurements in case the IRS questions the square footage.

Keep tax records at least three years from the filing date, which is the standard assessment window. If you claimed depreciation, keep the property records until you sell and the limitations period for that year’s return expires.¹⁵ The IRS reduces your home’s basis by depreciation you were allowed to claim, whether or not you can prove you actually claimed it — losing those records years later is an expensive mistake.

1
Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions
2
Internal Revenue Service. Publication 463, Travel, Gift, and Car Expenses
3
Internal Revenue Service. About Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)
4
Internal Revenue Service. Publication 587, Business Use of Your Home
5
Office of the Law Revision Counsel. 26 USC 280A – Disallowance of Certain Expenses in Connection With Business Use of Home
6
Internal Revenue Service. Instructions for Form 8829
7
Internal Revenue Service. Topic No. 509, Business Use of Home
8
Internal Revenue Service. Simplified Option for Home Office Deduction
9
Internal Revenue Service. FAQs – Simplified Method for Home Office Deduction
10
Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One Big Beautiful Bill
11
Internal Revenue Service. Revenue Ruling 99-7 – Traveling Expenses
12
Internal Revenue Service. 2026 Standard Mileage Rates (Notice 2026-10)
13
Internal Revenue Service. Property (Basis, Sale of Home, Etc.) 5
14
Internal Revenue Service. IRS Audits
15
Internal Revenue Service. Topic No. 305, Recordkeeping