Home office deduction still $5 per sq ft after all these years?

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1

Just wondering if anyone else uses this deduction? I’ve been using it since it was introduced in 2013, and it’s still set at $5 per square foot! With property taxes and rent going up, it feels like this deduction doesn’t go as far anymore. Anyone know if there’s a group or agency where we can suggest changes to these kinds of rules?

2

While you’re at it, see if they’d increase the capital loss deduction cap. It’s been $3,000 for ages.

3

Zimri said:
While you’re at it, see if they’d increase the capital loss deduction cap. It’s been $3,000 for ages.

$3k capital loss cap started in 1978. Adjusted for inflation, that would be around $14,723 now.

Other limits that haven’t been adjusted:

  • $3000 dependent care credit since 1976. With inflation, $16,551
  • Social Security thresholds ($25K/$32K) since 1984. Adjusted, it’d be $75,256/$96,328
  • $25 gift limit since 1962. With inflation, $255
  • Passive loss limit ($25K) since 1987. Adjusted, $68,962
  • Passive income threshold ($150K) since 1987. With inflation, $413,776
  • SALT deduction limit ($10K) since 2018. Adjusted, $12,375
  • FBAR reporting ($10K) since 1970. Adjusted, $82,096
  • Additional Medicare tax threshold ($200K/$250K) since 2013. Adjusted, $266K/$333K
  • Educator expense deduction ($300) since 2002 (originally $250). With inflation, $433
  • SE Tax threshold ($400) since 1951. Adjusted, $4,831
  • Credit for other dependents ($500) since 2018. Adjusted, $619
  • F8879 threshold ($50/$14) since 1986? Adjusted, $140/$39
4

@Breck
Employee Stock Purchase Plan limit has been $25k since at least 1964. With inflation, it would be $254,275 now.

And the Net Investment Income Tax ($200K/$250K) hasn’t changed since it started in 2013. Adjusted, that would be $270,700/$330,375.

These limits can add up, especially for anyone getting hit by NIIT and Medicare surcharges in 2025.

It’s easy to miss these details when talking about tax limits. Sometimes people think they’re in the middle income range even when they’re higher, and these caps start adding up.

5

@Breck
Good points! They should also look at some of the income phaseouts, like the American Opportunity Credit cut-off at $90k/$180k, or the student loan interest cap at $90k/$185k.

6

@Breck
Not only is the dependent care credit outdated, but it’s $5k whether you have one kid or several. Seems like an easy update that would help a lot of people.

7

@Breck
Right?

But Congress makes sure to adjust their own salaries every so often!

8

Ari said:
@Breck
Right?

But Congress makes sure to adjust their own salaries every so often!

Actually, they haven’t raised their pay in 15 years.

9

@Isle
They don’t need a raise with all the special interest money coming in.

10

@Breck
It’s wild to see how many tax limits haven’t kept up. This one and others feel a bit outdated now :frowning:

11

@Breck
Not paying taxes is priceless

12

@Breck
$1200 slot threshold for W2G hasn’t budged either.

13

Zimri said:
While you’re at it, see if they’d increase the capital loss deduction cap. It’s been $3,000 for ages.

I’m right there with you. Without active trader status, it’s hard to work around the capital loss cap.

14

If your real expenses are higher, the simplified method may not be worth it.

15

Consider reaching out to your local representatives.

16

The $250k primary home exclusion has been around forever too!

17

Social Security tax brackets haven’t been adjusted either… it’s a huge issue for older folks who live mostly on SS and small pensions.

18

Same for the $5k dependent care deduction. That hasn’t been updated since the late 80s.

19

Why not just use your actual expenses? The simplified method is just an option. It may not be the best choice if you’re spending a lot more.

20

Have you ever been through an audit?