Washington, DC –U.S. Senators Barbara Boxer (D-CA), Jeff Merkley (D-OR), Joe Lieberman (ID-CT) and Evan Bayh (D-IN) today introduced the Home Office Deduction Simplification Act of 2009, legislation that would make it easier for home-based small businesses to claim an existing tax deduction.

The IRS instruction manual for the current home-based small-business tax deduction is 32 pages long, and the process is so complex and burdensome that the National Small Business Association estimates that only 2.7 million of 8 million eligible taxpayers claim the deduction.  This bill would simplify it by creating a standard deduction indexed to inflation of $1,500 or the home-business’s annual gross income, whichever is less.

Senator Boxer said, “Small businesses are critical to the American economy, and this legislation will help them thrive.  This bill cuts the red tape that prevents many small businesses from claiming this tax deduction.  By making it easier to claim the deduction, more small businesses can invest these funds to expand and create much-needed jobs.”

Senator Merkley said, “We have an opportunity to transform the current cumbersome process into a simple and straightforward deduction that boosts small businesses.  This bill will make a real difference for the millions of entrepreneurs who make up a vital and growing sector of our economy."

Senator Lieberman said, “Small business owners and entrepreneurs truly embody the American Dream.  This simplified tax deduction process would give home-based small businesses the federal support they need to continue their role as drivers of innovation and job creation.”

Senator Bayh said, “Many enterprising Americans have started their own home-based businesses to make ends meet during the economic downturn.  However, like much of the current tax code, the federal tax deduction available to these small business owners is too complicated and burdensome, which winds up costing them an important tax benefit.  This legislation offers accessible tax relief to entrepreneurs who are utilizing their skill sets across a range of fields to support their families, whether it’s operating a landscaping business, providing child care services, or starting their own online business from home.”

The bill is supported by the U.S. Chamber of Commerce, the National Small Business Association, the National Federation of Independent Businesses and the National Association for the Self-Employed. 

Similar legislation was introduced in the House by Representative Kurt Schrader (D-OR).