Home Office Cost Calculator
If you work from home, the IRS offers two ways to value a home office deduction, and the better one depends on your numbers. This calculator computes both. The simplified method multiplies your office area by a set rate per square foot, capped at a maximum area. The actual-expense method deducts the business-use percentage (your office area divided by total home area) of your annual home costs. Enter your areas, the IRS rate and cap, and your home expenses to compare the two deductions side by side.
Home office cost formula
Eligible area = min(office area, IRS maximum area)
Simplified deduction = eligible area * IRS rate per sq ft
Business-use % = office area / total home area * 100
Actual-expense deduction = annual home costs * business-use % / 100
Larger deduction = max(simplified, actual)
The simplified method caps the area used. The actual-expense method scales your home costs by the share of your home used for business. The calculator reports which method gives the larger deduction.
Home office deduction context
- The IRS simplified method uses a set rate per square foot up to a maximum area you enter.
- The actual-expense method requires records of home costs and the business-use percentage.
- The space generally must be used regularly and exclusively for business to qualify.
- Rate and cap figures come from IRS Publication 587 and can change year to year.
- This tool does the arithmetic only; confirm eligibility with current IRS guidance.
Home office cost: frequently asked questions
How does the simplified home office deduction work?
The IRS simplified method multiplies the square footage of your home office by a set rate per square foot, up to a maximum allowable area. You enter the rate and the cap, which come from current IRS guidance, so the calculator stays correct if those figures change.
How does the actual-expense method work?
The actual-expense method deducts the business-use percentage of your home costs. The business percentage is your office area divided by your total home area. Multiply that percentage by your annual home expenses (utilities, insurance, and so on) to get the deductible amount.
Which method should I use?
This calculator shows both so you can compare. The actual-expense method can yield a larger deduction for high home costs but requires record keeping. The simplified method is easier but capped. Always confirm eligibility and rules in the current IRS publication.
Why are the rate and cap editable inputs?
Because they are set by the IRS and can change. Rather than hardcode a figure that might be out of date, the calculator lets you enter the current rate per square foot and the maximum area from IRS Publication 587.
Does this calculator give tax advice?
No. It performs the arithmetic of both methods so you can compare them. Eligibility, exclusive-use rules, and limits are set by the IRS. Consult the current IRS guidance or a tax professional before claiming a deduction.
Official sources
- Internal Revenue Service: Home Office Deduction.
- Internal Revenue Service: Publication 587, Business Use of Your Home.
Reviewed by the CalculatorHub team, edited by James Graham, 16 June 2026. See our methodology.