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Augusta Rule Tax Savings Calculator

Model the rent, entity-side deduction value, possible nonconforming-state tax, and net annual benefit, then check the rate and records before money moves.

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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%.

State treatment scenario

Estimated annual net benefit

$6,300

Total rent$18,000
Potential business deduction$18,000
Modeled federal deduction value (35%)$6,300
Modeled state tax$0
Net modeled 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 guide

Book your free 30-minute tax fit call to talk through your next steps.

Tax planning slots are limited before year-end.

Worked example

12 documented meetings at $1,500 a day, paid by an S corporation

An S corporation owner holds 12 documented business meetings at the residence during the year. Comparable venue quotes support $1,500 per day. The owner is in the 35% federal bracket and lives in a state that follows the federal exclusion. These are the calculator's prefilled inputs.

Inputs

Worked example inputs
Fair-market daily rental rate$1,500
Total residence rental days12
Paying entityS corporation
Owner marginal federal rate35%
State follows the federal exclusionYes

Calculator output

Worked example calculator output
Total rent$18,000
Potential business deduction$18,000
Modeled federal deduction value (35%)$6,300
Modeled state tax$0
Net modeled benefit$6,300

The S corporation deducts the rent, which flows through to the owner at 35%, and the owner excludes the same rent because the residence was rented fewer than 15 days. If the state did not follow the exclusion at a 5% rate, the same inputs show $900 of state tax and a $5,400 net modeled benefit. The result assumes the rate and business purpose hold up; it is not a promised outcome.

Methodology

How this calculator works

The calculator multiplies the documented daily rate by the rental days, values the payer's deduction at one marginal rate, and subtracts state tax only when you select a nonconforming state. It refuses to calculate at 15 or more days or for a sole proprietor or disregarded LLC.

Formulas

  • Total rent = daily rate x rental days.
  • Federal deduction value = total rent x modeled rate (owner's marginal rate for an S corporation or partnership, 21% for a C corporation).
  • State tax = total rent x owner state rate, only if the state does not follow the exclusion.
  • Net modeled benefit = federal deduction value minus state tax.

Assumptions

  • The rent is a reasonable, fully deductible business expense supported by comparable venue quotes.
  • The residence is rented fewer than 15 days in total for the year, counting every rental, not just the business meetings.
  • The deduction is used in full at the single rate you select.

What it ignores

  • QBI deduction, payroll, basis, distributions, and alternative minimum tax effects.
  • Local tax and state pass-through entity tax.
  • Whether the rate or business purpose would hold up on examination.

Sources

Primary sources

  1. 26 U.S. Code Section 280A: disallowance of certain expenses in connection with business use of home, rental of vacation homes: Section 280A(g) fewer-than-15-days rule
  2. IRC Section 280A, current preliminary U.S. Code (Office of the Law Revision Counsel)
  3. 26 U.S. Code Section 162: trade or business expenses: ordinary and necessary expense test for the paying business
  4. 26 U.S. Code Section 11: tax imposed on corporations: 21% corporate rate used for the C corporation model
  5. Rev. Proc. 2025-32: 2026 inflation adjustments: 2026 individual brackets behind the 10% to 37% rate choices
  6. IRS Publication 527, Residential Rental Property: rental of a residence for fewer than 15 days
  7. IRS Tax Topic 415, Renting residential and vacation property

Written by Bryan Martin, CPA, Managing Partner and Founder of Taxstra. Last reviewed October 20, 2026. Taxstra is a CPA firm for high income earners, business owners and real estate investors, serving 1,000+ clients in all 50 states.

Educational, not individualized tax advice.

Read the result correctly

The 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

OutputTotal rent
FormulaRental days × documented daily rate
What it meansCash paid by the business to the owner
OutputPotential business deduction
FormulaTotal rent
What it meansSubject to business purpose, reasonableness, timing, and substantiation
OutputFederal deduction value
FormulaTotal rent × modeled business rate
What it meansEstimated reduction in federal tax before omitted interactions
OutputState tax scenario
FormulaTotal rent × owner state rate
What it meansIncluded only when nonconformity is selected
OutputNet modeled benefit
FormulaFederal deduction value − state tax scenario
What it meansPlanning 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.

Watch Out

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

What does the Augusta Rule calculator estimate?

It estimates total rent, the value of the payer's potential federal deduction, possible state tax if the state does not follow the federal exclusion, and the resulting net modeled benefit. It does not decide whether the transaction qualifies or establish fair market value.

Why does the calculator stop at 14 rental days?

IRC Section 280A(g) applies when a residence is actually rented for fewer than 15 days during the tax year. At 15 or more rental days, the short-rental exclusion no longer applies and ordinary rental reporting rules must be analyzed.

Can a sole proprietor use the Augusta Rule with their Schedule C business?

The calculator blocks this arrangement because a sole proprietor and a disregarded single-member LLC are not separate federal income-tax taxpayers from the owner. Paying rent to yourself does not create the same owner-versus-entity transaction modeled for a separate corporation or partnership.

How should I choose the daily rental rate?

Use contemporaneous quotes for genuinely comparable meeting or event venues. Match the date, duration, capacity, privacy, equipment, and location, then document any adjustments. The calculator accepts the rate you enter; it does not prove that rate is reasonable.

Does every state follow the federal Augusta Rule?

Do not assume so. State starting points, conformity dates, additions, and reporting rules can differ. The state toggle is a planning scenario, not a conclusion about any particular state.

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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.

Tax planning slots are limited before year-end.