It looks to me like that space could be incorporated into the closet.

May I comment on the mudroom? I assume that is the entrance from the garage? I would move the door to the left - where you show the closet now. Mud rooms work best when you go through them, without having to detour. Depending on how many are in your family, I see the mudroom door to the garage as a bit of a bottleneck.

Put the closet on the inside wall (where I think you have a bench), and put the bench in the corner, where the door is now.

Since I suspect the door from mud room to laundry room will be open most of the time, I'd out a pocket door there.

Agree 100% with Ann.

Also I'd create a door from your closet to the laundry room so you have a quick way in and out and you're not walking clear around to bring laundry to the mudroom.

Your electrician should be using LED fixtures or you can add LED bulbs to traditional cans. You can worry about accessing the lights 10+ years from now.

Steps need 80" of headroom so using the standard 7.5" riser and 11" treads, you'll need approximately 11 steps to descend enough to get 80" of headroom. That equates to 121" of run length (or a little over 10'). Therefore, you should be able to incorporate about 2' of that stairwell into your closet.

You can also have a stair lighting design that doesn't create any hard to reach lights. You could have a ceiling light at the very top and one at the bottom and stair lights mounted in the wall to light the walking surface for instance.

I think you will find the experience of entering the house from the garage daunting. I would make the hallway four feet wide and open the mud room up more to the hallway.

I know you did not ask for this advice, but seeing poor design is torturous.

Ditto on LEDs!

I don't know how high your attic will be ,but that would be a good place to put stairs up to the attic instead of a PIA hatch in the ceiling. It makes it easier to store holiday decorations.