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Business Tax5 min readMar 17, 2026
Home-Based Business Tax Deductions
Running a business from home unlocks powerful deductions. Learn exactly what qualifies and how to calculate your home office deduction correctly.
Home-Based Business Tax Deductions
Home Office Deduction Requirements
To qualify, your home office must be:
- Used regularly and exclusively for business
- Your principal place of business, OR a place where you meet clients
Two Calculation Methods
Simplified Method
- Deduct $5 per square foot
- Maximum 300 square feet ($1,500 max deduction)
- No depreciation recapture when you sell
Regular Method
- Calculate the percentage of home used for business
- Example: 200 sq ft office / 2,000 sq ft home = 10%
- Deduct 10% of: mortgage interest/rent, utilities, insurance, repairs, depreciation
Additional Home-Based Business Deductions
- Dedicated business phone line: 100% deductible
- Internet: Proportional to business use
- Office supplies and equipment: 100% if used for business
- Business software and subscriptions: 100%
Record-Keeping Tips
- Measure your office and document it with photos
- Keep utility bills, insurance statements, mortgage/rent records
- Separate business calls from personal
Important Caveat
Employees who work from home (W-2) generally cannot deduct home office expenses under current law.
Work from home? Make sure you're claiming every deduction you're entitled to.