Home office and mileage: what you can actually deduct
The two deductions self-employed people ask about most, the tests they have to pass, the two ways to figure each one, and who cannot claim them at all.
Quick answers
- Can I deduct a home office if I work from home?
- Only if you are self-employed. W-2 employees cannot deduct a home office or unreimbursed work expenses on a federal return under current law, however much of the job happens at the kitchen table.
- What counts as a home office?
- A space used regularly and exclusively for your business that is your principal place of business, a place you regularly meet clients, or a separate structure. A dining table you clear at six o'clock does not qualify, and neither does a room that doubles as the guest room.
- Is my commute deductible?
- No. Driving from home to a regular place of work is personal, however far it is. Travel between work locations, to a client or job site, or to the bank for the business counts, and a qualifying home office makes the first trip of the day a business mile.
A home office and business miles are the two largest deductions on many self-employed returns, and the two most often claimed on the wrong facts. Both are available, both have a test in front of them, and both come in a simple version and a detailed one.
| Simplified home-office rate per square foot | $5 | 2025 Instructions for Schedule C, Simplified Method Worksheet |
|---|---|---|
| Maximum square footage, simplified method | 300 square feet | 2025 Instructions for Schedule C, Simplified Method Worksheet |
| Maximum simplified home-office deduction | $1,500 | 2025 Instructions for Schedule C, line 30 |
| Business standard mileage rate | 70 cents per mile | IRS notice IR-2024-312 |
| Deductible share of business meals | 50% | 2025 Instructions for Schedule C, line 24b |
The home office test
The space has to be used regularly and exclusively for your business, and it has to be your principal place of business — or a place you regularly meet clients, or a separate structure on the property.
"Exclusively" is the word that decides most of these. A spare bedroom that holds nothing but your desk qualifies. The dining table you clear at six o'clock does not, and neither does a room that is also the guest room. The space does not have to be a whole room, but the part you count has to be identifiable and used for nothing else. Storage of inventory and a licensed daycare have their own exceptions to the exclusive-use rule.
"Principal place of business" is more forgiving than it sounds. If you do your administrative work at home and have no other fixed location for it, a contractor who spends the day on job sites still qualifies.
Two ways to figure it
The simplified method multiplies the business-use square footage by $5, counting no more than 300 square feet, for a maximum of $1,500 a year. It goes straight onto the home-office line of Schedule C, needs no separate form, and asks nothing of you beyond a tape measure.
The actual expense method on Form 8829 takes the business percentage of rent or mortgage interest, property taxes, utilities, insurance and repairs, adds depreciation if you own the home, and deducts the total. It is usually larger and always more work, and depreciation on a home you own reduces your basis, which has consequences when you sell.
Either way the deduction is limited by the profit of the business. It cannot create a loss or deepen one; the excess carries forward under the actual method and is simply lost for the year under the simplified one. You choose which method to use each year, and the choice for a given year is locked once the return is filed.
Mileage
Business miles are deductible at 70 cents per mile for 2025 under the standard mileage rate. That rate is meant to cover gas, maintenance, insurance, registration and depreciation, so those costs are not deducted again on top of it; interest on a car loan and parking and tolls for a business trip are the usual additions.
Commuting is never a business mile. Driving from home to a regular place of work is personal, however far it is and however early it starts. What counts is travel between work locations, to a client or job site, to the bank or supply store for the business, and — once you have a qualifying home office — the trip from home to the first stop, because the home is then a work location.
The alternative is actual car expenses: total up gas, repairs, insurance, lease payments or depreciation, and deduct the business-use percentage. It requires the same mileage log to establish that percentage, so it is more work, not less. If you want the option in later years, take the standard rate in the first year you use the car for business; going the other way is restricted.
The log is the deduction
- Record the odometer at the start and end of the year.
- For each business trip, note the date, the destination, the purpose and the miles, on the day.
- Keep receipts for tolls, parking and any actual expenses you plan to use.
- Keep a note of total miles driven, so the business share can be computed.
A log rebuilt from memory a year later is the single weakest thing you can hand an examiner. A contemporaneous one — a phone app, a notebook in the glovebox — is worth more than a larger number without support.
While you are there: meals
Business meals are deductible at 50%, and only with a record of the date, the amount, the business purpose and who was present. Entertainment is not deductible at all, so a client dinner counts and the game afterward does not.