Plenty of business owners skip the home-office deduction because they figure their space is too small to count. The tax law says otherwise. A home office does not have to be a whole room. If you use a clearly defined area exclusively for business, you can qualify even if it is only a few square feet.
Here is the part most people miss: the biggest benefit often is not the deduction for a slice of your home expenses. It is that a qualifying home office can become your principal place of business. When it does, trips between your home office and other work locations can turn from non-deductible commuting into deductible business mileage. Over a year, that can add up to far more than the office deduction itself.
To qualify, you have to use the space regularly and exclusively for administrative or management work such as bookkeeping, billing, scheduling, ordering supplies, or preparing reports, and you cannot have another fixed location where you do substantial administrative work. In 2026 this is available to self-employed individuals, partners, and S-corporation owners whose corporations properly reimburse the expense. W-2 employees generally cannot claim it under current law.
There are two ways to figure the deduction. The simplified method gives you a flat amount per square foot of office space, up to a capped area, with no depreciation and almost no recordkeeping. The actual-expense method prorates your real costs (a share of rent or mortgage interest, utilities, insurance, repairs, and depreciation) by the percentage of your home used for business. The actual method usually produces the larger deduction, especially where housing costs are high, but it asks for better records. You can generally pick whichever method helps most in a given year.
Getting the details right is what protects the deduction. The space must be used regularly and exclusively for business, so the kitchen table does not count, but a dedicated desk and shelves in a corner can. Keep something simple on file, like a sketch or a photo, showing the area and how it is used. If you run an S corporation, you do not claim the office on your personal return. Instead, the corporation reimburses you under an accountable plan, which keeps the deduction clean and the reimbursement tax-free to you. That extra step is exactly where S-corporation owners most often leave money on the table.
What this means for you: If you run any part of your business from home, even occasionally, it is worth checking whether you qualify, especially for the mileage angle. Ask us to walk through it. A small dedicated corner could unlock real deductions.
