More Americans want home offices. There may be a tax reason for that.

Medora Lee, USA TODAY

Tue, February 10, 2026 at 7:02 PM GMT+9 6 min read

Ever notice in those reality shows, like House Hunters, focused on residential real estate and home renovations that everyone wants a home office? There’s good reason for that.

That extra home office space can be tax deductible every year – as long as you meet all the requirements to claim it.

There are a lot of rules around what home office expenses can and can’t be deducted and how they can be deducted, but you must know first if you even qualify. The IRS has a clear line to determine that: if you receive a W-2 for your work, you are not eligible.

On the federal level, home office deductions are “not for an employee (of a company who) is a remote worker,” said Hannah Cole, an IRS enrolled agent and author of Taxes for Humans. Hybrid workers are also out.

Some states like Pennsylvania allow W-2 employees to take deductions for some work-related expenses the company doesn’t reimburse. Check your state’s rules.

But the federal government generally reserves home office deductions for those who receive a 1099 for their work. They typically include people who are self-employed, freelancing or working on a contract. If you have a side hustle in addition to a W-2 job, then you may be able to take the home office deduction.

About 72.9 million Americans, were self-employed freelancers, consultants, and contractors managing their own businesses in some capacity last year, according to MBO partners, which provides tools for independent workers.

How does the home office tax deduction work?

The rules are strict, and calculating your deductions can be complicated.

Here’s a step-by-step guide for figuring out what to consider in your calculations: (delete, if you qualify for home office deductions:)

If you’re self-employed and use your home office exclusively and regularly for that work, you may be able to deduct from your federal taxes a portion of home-related expenses, such as mortgage interest, property taxes, homeowners’ insurance, and utilities.

But be mindful of details, experts say.

“If you work on your dining table, you can’t deduct that because it’s not used exclusively for work,” said Therese Tippie, EP Wealth Advisors’ tax manager and financial planner. “But you could purchase a desk and have it in a corner of your house and if that’s used exclusively and regularly for work, you can deduct that space.”

There are two ways to take a deduction for your home office space: simplified or regular.

Simplified home office deduction

You can deduct $5 per square foot, up to $1,500 or 300 square feet, a year for your exclusive home office space - - if it’s used for the full year. If you only use that space part of the time, then you prorate that amount, Tippie said.

Story Continues  

Regular direct home office deduction

This could result in a larger deduction. However, it requires you to track all your home office expenses, including any costs for repairing and maintaining the space.

“If you have a spare bedroom and made repairs to turn it into an office – added built-in shelving, painted it to get it ready for Zoom meetings … all that can be counted toward home office expenses,” Tippie said.

You can also claim deductions for a portion of other expenses such as rent or property taxes, home depreciation, and utilities – based on the proportion of the space to the rest of your house.

For example, if your office is 250 square feet and your home is 1,000 square feet, you’d deduct 25% of your allowable expenses (250/1,000 = 0.25). If you had $10,000 in eligible home-related expenses, you could claim up to $2,500 in deductions. There isn’t a limit on how much you can deduct.

Can I deduct supplies?

Yes, if they are both common to your industry and necessary to help your business- and you have receipts.

Items you might deduct include cell phones, laptops, printers, and other office supplies.

“Given the value of these items, you can just write off the entire amount and expense it,” Tippie said. “You don’t need to capitalize it. It would go on Schedule C as office or supplies expense in the other expense section.”

Remember, though, if you also use any of these items for personal things, only the proportion used for work should be deducted. For example, if you buy a $2,500 laptop but use it 40% of the time for work, you can write off $1,000.

Business lunch and entertainment tax deductions

As of Jan. 1, 2023, companies had to go Dutch. The business lunch deduction reverted to the pre-pandemic 50% in 2023.

Note, entertainment expenses are not deductible and haven’t been since the Tax Cuts and Jobs Act that became law in 2017, the IRS said. If you take someone to an establishment that offers entertainment and food, you must separate the food from the entertainment cost and only deduct that portion.

What if my side gig is driving?

If you use your car for business, you may be able to take a deduction based on the mileage used for that purpose. There are two ways to calculate the deduction:

**Actual use**: Workers must determine what it actually costs to operate the car by dividing expenses between business and personal use. "Keep receipts for everything, like oil changes, insurance, repairs," Cole said. Check your mileage to determine the ratio you use the vehicle for business and personal and apply that to all the expenses to calculate the deduction amount. For example, if you drive 2,000 miles and 1,000 are for work, then you can deduct 50% of your expenses, she said.

**Standard mileage rate**: Workers track the mileage used for business and multiply the number of miles by the IRS' 2025 rate of $0.70 per mile for the allowable deduction amount. "This is much easier bookkeeping and a better deduction," Cole said. "It's a super generous rate and includes cost of deprecation, repairs, insurance,. And it's cool because if you have an electric car, the rate is based on gas and you spend no money on gas."

Is there any way for W-2 wage workers to get some money back for business expenses?

Not through your taxes, but you might be able to ask your employer.

"You can try to get your company to pay for it if they require you to work from home,” Tippie said. "They can reimburse you and deduct it, but then, some might just require employees to come to the office.”

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.

This article originally appeared on USA TODAY: Home office tax deductions benefit only some workers. Are you one?

Terms and Privacy Policy

Privacy Dashboard

More Info