🏡 Home-Based Business Deductions: What’s New (and What’s Actually Deductible) Under OBBB

Working from home is here to stay—and the new One Big Beautiful Bill (OBBB) just made it even better for small business owners and side hustlers who want to claim more for their space, improvements, and even that “she-shed” in the backyard.

If you’ve ever wondered, “Can I deduct this?”—read on for the latest (plus a few funny scenarios you might not have considered).

🍌 What’s Actually Changed?

The OBBB clarifies and expands home office deductions for 2025 and beyond (see OBBB §70421 and related IRS guidance):

• Wider definition of “home office improvements”:
  You can now expense (under Section 179 or bonus depreciation) more improvements to your home workspace—including certain HVAC, security, lighting, and built-in tech upgrades.

• Detached structures count:
  Sheds, garages, studios—if used exclusively and regularly for your business, they qualify for the deduction.

• Utility deductions clarified:
  You can now claim a broader range of “business portion” utilities—including some smart home systems, internet upgrades, and even energy used for production or video shoots.

• Hybrid and multi-use rules are clearer:
  The IRS and Treasury will release guidance on how to allocate costs for spaces used partly for business and partly personal, but the rules remain strict about “exclusive and regular use.”

🤔 What’s Deductible Now? Funny (But Real) Scenarios

1. The Home Gym—Deductible?

Maybe! If you film fitness videos for your business, and the gym space is used exclusively for content creation (no personal sets or family treadmill runs), you can deduct a portion of improvements and utilities.
If it doubles as your actual gym: Sorry, still not deductible!

2. The She-Shed or Backyard Office

Yes, if used 100% for business!
Install a prefab office shed, run your consulting, art, or e-commerce biz from there? Deduct construction, improvements, utilities, and equipment (based on exclusive business use and proper allocation).
Just don’t store lawnmowers or host backyard BBQs in there—keep it all business.

3. The Guest Room/Office Hybrid

Partial deduction.
You can only deduct the portion of the room used exclusively for business.
If you set up a desk in a guest room, you’ll need to measure square footage and allocate expenses (and, as always, keep records).

4. Smart Home Tech & Utilities

Deductible if used for business!
If you install a second Wi-Fi router or extra power for production lights, and it’s only for your home-based business, that’s a legitimate expense.

🦔 Hedgi’s Home Office Deduction Tips

• Document everything: Take photos of your space, keep invoices, and save energy bills.

• Use Hedgi to tag and track expenses: Assign categories for improvements, utilities, and supplies right from your transactions.

• Be honest: The IRS loves a good audit story, but hates creative fiction. “Exclusive and regular use” means just that.

• Consult a pro: Still not sure? Your CPA or Hedgi can help you get it right.

🦍 Bottom Line

With the OBBB, home-based business owners can write off more than ever—but only if you play by the rules.
If you’re building your dream office, filming workouts, or running the next big Etsy shop from your she-shed, it pays to know what’s really deductible.

Questions about your unique space, or want a checklist of what to claim? Drop a comment or message Hedgi—no deduction left behind!