The formulas
- Simplified = $5 x min(square feet, 300), limited to income
- Regular = direct + indirect x (office / home area), limited to income
- Income limit = gross income from the use - unrelated business expenses
How it works
Tax year: 2025 and 2026 (the $5 rate is unchanged).
The simplified method is $5 per square foot of office space, up to 300 square feet, so at most $1,500. The regular method is direct expenses plus the business percentage of indirect expenses, where the business percentage is office area over home area. Both methods are limited to gross income from the business use less business expenses unrelated to the home; regular-method excess carries over.
You choose the method each year on a timely filed original return. Under the simplified method no actual home expenses or depreciation are deducted for the space. Qualification as regular and exclusive business use is assumed.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
What is the maximum simplified deduction?
$1,500, which is 300 square feet at $5.
Can I switch methods each year?
Yes. You choose for each tax year on a timely filed original return, and the choice for a year is irrevocable.
What is the income limit?
The deduction cannot exceed gross income from the business use less business expenses not connected to the home.
Sources
Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.