Augusta Rule Tax Savings Calculator
Model the rent, entity-side deduction value, possible nonconforming-state tax, and net annual benefit—then pressure-test the rate and records before money moves.
A guide by Taxstra Tax & Accounting · CPA-led tax strategy for business owners
Written by Bryan Martin, CPA, Managing Partner and Founder of Taxstra. Rebuilt August 10, 2026.
Planning estimate
Model the annual benefit
Use a market rate you can document. This tool models a scenario; it does not create a deduction or validate a related-party price.
Enter a rate supported by comparable venues—not a target tax result.
Count every actual rental day for this residence. Section 280A(g) requires fewer than 15.
Used as the pass-through deduction rate. The C-corporation model uses 21%.
Estimated annual net benefit
$6,300
Model assumes a fully deductible, reasonable business rent payment and a qualifying federal owner exclusion. It does not model QBI, payroll, basis, distributions, related-party timing, alternative minimum tax, local tax, or state entity tax.
The number is not the documentation
Keep the business purpose, agreement, agenda, attendees, minutes, invoice, payment proof, comparable venue quotes, and one residence-level rental-day log.
See the documentation checklist in the Augusta Rule guideThe headline is the modeled value of the payer's federal deduction minus state tax entered for a nonconforming-state scenario. For an S corporation or partnership, the model uses the owner's marginal rate. For a C corporation, it uses the 21% corporate rate. The real result can be lower or different once the complete return is modeled.
How the Calculation Works
| Output | Formula | What it means |
|---|---|---|
| Total rent | Rental days × documented daily rate | Cash paid by the business to the owner |
| Potential business deduction | Total rent | Subject to business purpose, reasonableness, timing, and substantiation |
| Federal deduction value | Total rent × modeled business rate | Estimated reduction in federal tax before omitted interactions |
| State tax scenario | Total rent × owner state rate | Included only when nonconformity is selected |
| Net modeled benefit | Federal deduction value − state tax scenario | Planning estimate, not guaranteed savings |
Qualification and Fair-Market-Value Gates
There are two separate questions. Section 280A(g) governs the homeowner's short-rental exclusion. The paying business must separately show an ordinary and necessary business expense and a reasonable related-party price. Passing one test does not prove the other.
The Tax Court's analysis in Sinopoli v. Commissioner, T.C. Memo. 2023-105, is the warning behind the $2,000 prompt. The dispute illustrates how unsupported related-party rent can be reduced even when business meetings occurred. Comparable-rate evidence and meeting evidence solve different parts of the file; retain both.
Use the IRC 280A technical guide for the authority chain and the Augusta Rule pillar for implementation context.
Documentation Before the First Meeting
Start with the business decision the meeting must produce. Collect same-date venue comparisons, prepare an agenda, and execute the agreement before use. Afterward, complete the attendance and minutes, issue an invoice, pay it from the entity account, and update the property-level day log.
Do not reverse-engineer 14 meetings at year-end
A repeated round-number transfer with generic minutes and no dated comparables is a weak file. Contemporaneous records should show why the business used the residence, what happened there, and how the rate was established.
Augusta Rule Calculator FAQs
Turn the estimate into a defensible transaction
We can test the entity, purpose, day count, market rate, state treatment, and records before your business makes the first payment.
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