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Simplified Amount: Home Office Deductions (2025 IRS Guide)

This guide covers “Simplified Amount” within home office deductions. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 587 (2025), Business Use of Your Home, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. In most cases, you will figure your deduction by multiplying $5, the prescribed rate, by the area of your home used for a qualified business use. The area you use to figure your deduction is limited to 300 square feet. See Simplified Amount, later, for information about figuring the amount of the deduction.

For more information about the simplified method, see Revenue Procedure 2013-13, 2013-06 I.R.B. 478, available at IRS.gov/irb/2013-06_IRB#RP-2013-13.

Simplified Amount

Your deduction for the qualified business use of a home is the sum of each amount you figure for a separate qualified business use of your home. To figure your deduction for the business use of a home using the simplified method, you will need to know the following information for each qualified business use of the home.

  • The allowable area of your home used in conducting the business. If you did not conduct the business for the entire year in the home or the area changed during the year, you will need to know the allowable area you used and the number of days you conducted the business for each month.

  • The gross income from the business use of your home.

  • The amount of the business expenses that are not related to the use of your home.

  • If the qualified business use is for a daycare facility that uses space in your home on a regular (but not exclusive) basis, you will need to know the percentage of time that part of your home is used for daycare.

To figure the amount you can deduct for qualified business use of your home using the simplified method, follow these three steps.

  1. Multiply the allowable area by $5 (or less than $5 if the qualified business use is for a daycare that uses space in your home on a regular, but not exclusive, basis). See Allowable area and Space used regularly for daycare, later.

  2. Subtract the expenses from the business that are not related to the use of the home from the gross income related to the business use of the home. If these expenses are greater than the gross income from the business use of the home, then you cannot take a deduction for this business use of the home. See Gross income limitation, later.

  3. Take the smaller of the amounts from (1) and (2). This is the amount you can deduct for this qualified business use of your home using the simplified method.

If you are a partner or you use your home in your farming business and file Schedule F (Form 1040), you can use the Simplified Method Worksheet, near the end of this publication, to help you figure your deduction. If you use your home in a trade or business and you file Schedule C (Form 1040), you will use the Simplified Method Worksheet in your Instructions for Schedule C to figure your deduction.

Allowable area.

In most cases, the allowable area is the smaller of the actual area (in square feet) of your home used in conducting the business and 300 square feet. Your allowable area may be smaller if you conducted the business as a qualified joint venture with your spouse, the area used by the business was shared with another qualified business use, you used the home for the business for only part of the year, or the area used by the business changed during the year. You can use the Area Adjustment Worksheet (for simplified method), near the end of this publication, to help you figure your allowable area for a qualified business use.

Area used by a qualified joint venture.

If the qualified business use of the home is also a qualified joint venture, you and your spouse will figure the deduction for the business use separately. Split the actual area used in conducting business between you and your spouse in the same manner you split your other tax attributes. Then each spouse will figure the allowable area separately. For more information about qualified joint ventures, see Qualified Joint Venture in the Instructions for Schedule C.

Shared use.

If you share your home with someone else who uses the home to conduct business that also qualifies for this deduction, you may not include the same square feet to figure your deduction as the other person. You must allocate the shared space between you and the other person in a reasonable manner.

Example.

Lindsey and Tracy are roommates. Lindsey uses 300 square feet of their home for a qualified business use. Tracy uses 200 square feet of their home for a separate qualified business use. Lindsey and Tracy both share 100 square feet for their respective qualified businesses in their mutual home. In addition to the portion that they do not share, Lindsey and Tracy can both claim 50 of the 100 square feet or divide the 100 square feet between them in any reasonable manner. If divided evenly, Lindsey could claim 250 square feet using the simplified method and Tracy could claim 150 square feet.

More than one qualified business use.

If you conduct more than one business qualifying for the deduction, you are limited to a maximum of 300 square feet for all of the businesses. Allocate the actual square footage used (up to the maximum of 300 square feet) among your qualified business uses in a reasonable manner. However, do not allocate more square feet to a qualified business use than you actually use for that business.

Rental use.

The simplified method does not apply to rental use. A rental use that qualifies for the deduction must be figured using actual expenses. If the rental use and a qualified business use share the same area, you will have to allocate the actual area used between the two uses. You cannot use the same area to figure a deduction for the qualified business use as you are using to figure the deduction for the rental use.

Part-year use or area changes (for simplified method only).

If your qualified business use was for a portion of the year (for example, a seasonal business, a business that begins during the year, or you moved during the year) or you changed the square footage of your qualified business use, your deduction is limited to the average monthly allowable square footage. You calculate the average monthly allowable square footage by adding the amount of allowable square feet you used in each month and dividing the sum by 12. When determining the average monthly allowable square footage, you cannot take more than 300 square feet into account for any 1 month. Additionally, if your qualified business use was less than 15 days in a month, you must use -0- for that month.

Example 1.

Jay owns a home and files federal income taxes on a calendar year basis. On July 20, Jay began using 420 square feet at the home for a qualified business use. Jay continued to use 420 square feet of the home until the end of the year. The average monthly allowable square footage is 125 square feet, which is figured using 300 square feet for each month, August through December, divided by the number of months in the year ((0 + 0 + 0 + 0 + 0 + 0 + 0 + 300 + 300 + 300 + 300 + 300)/12).

Example 2.

Jessie owns a home and files federal income taxes on a calendar year basis. On April 20, Jessie began using 100 square feet of the home for a qualified business use. On August 5, Jessie expanded the area of qualified use to 330 square feet. Jessie continued to use the 330 square feet until the end of the year. The average monthly allowable square footage is 150 square feet, which is figured using 100 square feet for May through July and 300 square feet for August through December, divided by the number of months in the year ((0 + 0 + 0 + 0 + 100 + 100 +100 + 300 + 300 + 300 + 300 + 300)/12).

Example 3.

Guadalupe owns a home and files federal income taxes on a calendar year basis. From January 1 through July 16, Guadalupe used 300 square feet of the home for a qualified business use. On July 17, Guadalupe moved to a new home and immediately began using 200 square feet for the same qualified business use. While preparing a 2025 tax return, Guadalupe decided to use the simplified method to deduct the qualified business use of the first home and files Form 8829 to deduct the qualified business use of the second home. The average monthly allowable square footage is 175 square feet, which is figured using 300 square feet for January through July, divided by the number of months in the year ((300 + 300 + 300 + 300 + 300 + 300 + 300 + 0 + 0 + 0 + 0 + 0)/12).

Caution: If you moved during the year, your average allowable square footage will generally be less than 300.

Gross income limitation.

Your deduction for business use of the home is limited to an amount equal to the gross income derived from the qualified business use of the home reduced by the business deductions that are unrelated to the use of your home. If the business deductions that are unrelated to the use of your home are greater than the gross income derived from the qualified business use of your home, then you cannot take a deduction for this qualified business use of your home.

Business expenses not related to use of the home.

These expenses relate to the business activity in the home, but not to the use of the home itself. You can still deduct business expenses that are unrelated to the use of the home. See Where To Deduct, later. Examples of business expenses that are unrelated to the use of the home are advertising, wages, supplies, dues, and depreciation for equipment.

Space used regularly for daycare.

If you do not use the area of your home exclusively for daycare, you must reduce the prescribed rate (maximum $5 per square foot) before figuring your deduction. The reduced rate will equal the prescribed rate times a fraction. The numerator of the fraction is the number of hours that the space was used during the year for daycare and the denominator is the total number of hours during the year that the space was available for all uses. You can use the Daycare Facility Worksheet (for simplified method), near the end of this publication, to help you figure the reduced rate.

Tip: If you used at least 300 square feet for daycare regularly and exclusively during the year, then you do not need to reduce the prescribed rate or complete the Daycare Facility Worksheet.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.

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