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KEY TAKEAWAYS
- Although remote or hybrid work was still prevalent in 2024, employees cannot deduct home office expenses from their taxes like they used to be able to.
- The Tax Cuts and Jobs Act eliminated the ability for remote employees to deduct home office expenses through at least 2025.
- Although employees who work from home cannot deduct home office expenses, experts said many companies offer reimbursements that are typically tax-free.
Once tax season starts, taxpayers will begin to look for ways to reduce what they owe, including remote workers who found they spent a lot to maintain their home offices in 2024.
Although many companies began calling their employees back into the office, hybrid and remote work was still prevalent last year. More than one-third of workers were still fully remote or hybrid in 2024, according to Owl Lab’s annual State of Hybrid Work report.
Yet, remote employees who have incurred expenses such as an increased electricity bill or purchased a new office chair cannot deduct those costs from their taxes. In 2018, the Tax Cuts and Jobs Act broadly eliminated the ability for remote employees to deduct home office expenses. This policy lasts through 2025 when the TCJA expires, but incoming President Donald Trump has promised to extend the tax act.
However, tax experts said there may be other things remote workers can do to recoup their costs.
Remote Worker Still Have Options to Recoup Home Office Expenses
While remote workers employed by a company cannot deduct home office expenses, they can request tax-free reimbursements from their employers.
Many companies will offer subsidies to remote workers; in 2024, 56% of companies offered reimbursement for work equipment, according to the Society for Human Resource Management’s Employee Benefits Survey.
Although the federal government does not require reimbursements unless the home office expenses lower the employee’s income to below minimum wage, 11 states do require companies to compensate employees for necessary expenses, according to People Keep.
If the company policy is an accountable plan, these reimbursements are tax-free. These plans include a formal spending policy, and employees are required to provide documentation about the expenses to their company.
Taxpayers should be cautious when using this strategy and carefully examine the terms of the employee contract to understand the company’s reimbursement policy.
“If your employer is reimbursing you for that, then technically, the monitor, the desk, the chair, it actually belongs to your employer,” Crystal Stranger, an enrolled agent and chief executive officer of Optic Tax. “So what’s going to happen if you leave your employment?”
