This week, I received this question twice, so I thought… let’s get to “tax talking”! Clients have been asking me, “I work from home now. Can I write off my home office, internet, and electricity?”
It makes sense! If you are using your personal space and utilities to do your job, you should get a tax break, right? Well, in the tax world, the answer is a resounding: It depends on how you are classified.
Here is the breakdown of how working from home impacts your Federal and Pennsylvania state taxes, and what you can (and cannot) deduct.
The Federal Level: W-2 vs. 1099
When it comes to the IRS, your ability to claim a home office deduction comes entirely down to whether you are a standard employee (W-2) or self-employed (1099/business owner).
For W-2 Employees: The Bad News
Under current federal tax law, standard W-2 employees cannot deduct unreimbursed employee expenses, including work-from-home costs.
Why? Back in 2017, the Tax Cuts and Jobs Act (TCJA) was signed into law. To simplify the tax code, the government nearly doubled the Standard Deduction. In exchange for giving everyone that larger standard deduction, they eliminated several specific itemized deductions — including the home office deduction for W-2 employees.
For 1099 Contractors & Self-Employed: The Good News
If you are a freelancer, independent contractor, or small business owner, the federal home office deduction is still very much alive and well! You can deduct a portion of your home expenses on your Schedule C.
To qualify, your home office must be used regularly and exclusively for business. (Working from your kitchen island doesn’t count, but a dedicated spare bedroom or desk area does.)
The Pennsylvania State Level: A Silver Lining for W-2 Workers!
Here is where living in Pennsylvania actually works to your advantage. While the Federal government says “no” to W-2 work-from-home deductions, Pennsylvania says “maybe.”
PA state tax law does not automatically conform to federal tax law. Pennsylvania has a form called PA Schedule UE (Unreimbursed Business Expenses).
As a W-2 employee in PA, you can deduct certain work-from-home expenses on your state return, but there is a major catch: Working from home must be an absolute requirement of your employer, not just for your convenience.
Does NOT qualify
Your office is open, but you choose to work from home on Fridays because you prefer it. (Convenience.)
DOES qualify
Your employer closed your local physical office and explicitly requires you to work from your house. (Requirement.)
So, What Deductions ARE Available?
If you are self-employed (Federal & PA) OR a qualifying W-2 employee required to work from home (PA only), what can you actually write off?
Here are the most common work-from-home deductions:
- Office Supplies: Pens, paper, printer ink, and postage.
- Technology: Computers, monitors, and software required for your job.
- Internet & Cell Phone: You can deduct the business percentage of these bills. (If you use your internet 50% for work and 50% for Netflix, you can only deduct 50%.)
- A Portion of Utilities & Rent/Mortgage Interest: (Primarily for self-employed individuals using the Federal Home Office Deduction.) This is calculated based on the square footage of your dedicated office space relative to your whole home.
The Bottom Line
Taxes are rarely one-size-fits-all. If you are spending your own money to work from home, you want to make sure you aren’t leaving money on the table — but you also want to make sure you aren’t claiming deductions that could trigger an audit.
Natalia Paich, CPA, CFP®
Founder of Nittany Tax Services, LLC in Beaver County, PA — 25+ years in accounting, wealth management and retirement planning. More about Natalia
This post is general information as of September 21, 2026 — not tax advice for your specific situation. The rules turn on your facts, and they change; ask before you file.
Tax Talk FAQ
Questions people ask about working from home and taxes
On your federal return, only if you’re self-employed — a freelancer, independent contractor or business owner filing a Schedule C. W-2 employees lost the deduction for unreimbursed employee expenses under the Tax Cuts and Jobs Act. In Pennsylvania, a W-2 employee may still deduct certain work-from-home costs on PA Schedule UE if the employer requires working from home.
Maybe. Pennsylvania doesn’t automatically conform to federal tax law, and PA Schedule UE (Unreimbursed Business Expenses) lets a W-2 employee deduct certain work-from-home expenses on the state return — with one major catch: working from home must be a requirement of your employer, not your own convenience. Choosing to work from home on Fridays doesn’t qualify; an employer that closed the local office and requires you to work from your house does.
A portion can be, primarily for self-employed people using the federal home office deduction. It’s calculated from the square footage of your dedicated office space relative to your whole home, along with a portion of utilities.
The business percentage. If you use your internet 50% for work and 50% for Netflix, you can only deduct 50%, and the same rule applies to your cell phone. The other common work-from-home deductions are office supplies — pens, paper, printer ink and postage — and the technology required for your job, such as computers, monitors and software.
No. To qualify for the federal home office deduction, the space must be used regularly and exclusively for business. A dedicated spare bedroom or desk area counts; the kitchen island doesn’t, because it’s also used for everything else.