Business Use of Home - What expenses can be deducted?

If you're self-employed and claim business income on Schedule C, you may be able to deduct certain expenses related to the business use of your home.

For the 2026 tax year, the Business Use of Home deduction is generally available only to eligible self-employed taxpayers. Employees who receive a Form W-2 generally cannot claim a home office deduction as an itemized deduction on their federal return.

Before calculating your deduction, you'll need to determine whether each expense is a direct expense or an indirect expense.

Direct Expenses

Direct expenses apply only to the part of your home used for business.

Because these costs relate exclusively to your business area, they may generally be fully deductible.

Examples of direct expenses include:

• Painting a home office
• Repairing a wall, floor, or window in the business-use area
• Maintenance performed only in the office space

If the expense benefits only your home office, it's typically considered a direct expense.

Indirect Expenses

Indirect expenses help maintain or operate your entire home.

Since these costs benefit both your personal and business use of the home, only the business portion may be deductible.

Common indirect expenses include:

• Homeowners or renters insurance
• Utilities such as electricity, gas, water, and internet
• General home repairs and maintenance
• Security system costs that cover the entire home

Your deduction for indirect expenses is usually based on the percentage of your home that is used for business.

Expenses That May Qualify for the Business Use of Home Deduction

When completing the Business Use of Home section, you may see categories such as:

• Casualty losses
• Mortgage interest
• Real estate taxes
• Excess mortgage interest
• Insurance
• Rent
• Repairs and maintenance
• Utilities and services
• Security systems
• Depreciation expense

The way these expenses are treated depends on whether they are direct expenses, indirect expenses, or otherwise limited under IRS rules.