Work From Home Tax Deduction 2025-26: The Complete Australian Guide

How much can you claim for working from home in 2025-26?

For the 2025-26 income year you can claim $0.70 per hour for every hour you worked from home, using the ATO's fixed rate method. This rate rose from $0.67 in previous years, so a claim of the same number of hours is now worth a little more.

The fixed rate is designed to bundle together your ongoing running costs. It covers:

• Electricity and gas (heating, cooling and lighting your work area)
• Home and mobile internet
• Home and mobile phone usage
• Stationery and computer consumables (paper, ink, etc.)

Because those costs are already inside the rate, you cannot claim them again separately. What the rate does not cover — and what you can claim on top — is the decline in value (depreciation) of office furniture and technology, such as a desk, office chair, monitor, or laptop.

Worked example: if you worked 600 hours from home over the year, your deduction is 600 × $0.70 = $420. At a 32% marginal rate that puts roughly $134 back in your pocket. The more hours you log accurately, the larger the claim.

Here is how common hours totals translate into a deduction and an approximate refund at a 32% marginal rate. Your actual benefit depends on your own income and tax rate:

As a rough guide, one full day a week from home across a working year is around 350 hours (about a $245 deduction), and two days a week is around 700 hours (about a $490 deduction). This is why even part-time home workers should bother to track their hours — it adds up to real money.

Fixed rate method vs actual cost method: which is better?

There are two ways to claim working-from-home running costs. Pick one for the year — you cannot mix them for the same expenses.

• Fixed rate method ($0.70/hour): simple. You only need a log of your hours. It bundles internet, phone, power and stationery into the one rate. Best for most people.
• Actual cost method: you claim the real work-related portion of each running cost. It can be worth more if your costs are high, but you must keep receipts and bills and work out a usage percentage for every expense.

A simple decision rule: if your actual running costs, divided by your work-use percentage, come to more than $0.70 per hour, the actual cost method may win. Otherwise, the fixed rate method is simpler and usually just as good.

Important: the proposed $1,000 instant deduction does not apply to 2025-26. It is a future change only. For this year, use the $0.70 fixed rate or the actual cost method.

What records does the ATO require?

The records you keep depend on the method you choose.

• Fixed rate method: a record of the total actual hours you worked from home across the whole year. This can be a diary, spreadsheet, roster, timesheet, or your Teams / Zoom / Outlook calendar history. The ATO no longer accepts a 4-week representative sample for the fixed rate method — you need real hours for the full year.
• Actual cost method: keep at least one bill for each expense type (phone, internet, power) plus evidence of how you calculated your work-use percentage.

Keep all of these records for 5 years from the date you lodge your return.

What you cannot claim

Even when you genuinely work from home, some costs are never deductible:

• Normal commuting costs (travel from home to your regular office)
• Rent or mortgage repayments for your home
• Coffee, snacks, tea or groceries you consume while working
• Anything your employer has already reimbursed
• The portion of any item used mainly for personal purposes

Can you claim a desk, chair or laptop as well?

Yes. Office furniture and technology are not included in the $0.70 rate, so you can claim them on top of your hourly claim. How you claim depends on the cost:

• Items costing $300 or less: claim the full work-related cost immediately in this year's return. For example, a $250 office chair bought and used for work is a $250 deduction now.
• Items costing more than $300: claim the decline in value (depreciation) gradually over the item's effective life, apportioned to your work use. For example, a $1,500 laptop used 60% for work is depreciated on the 60% work portion over its effective life.

Keep the receipt and a short note of how you worked out the work-use percentage. If an item is used partly for private purposes, you can only claim the work-related share.

How to calculate your hours accurately

The golden rule is to count actual hours worked, not your contracted hours and not an estimate. Every hour of genuine work done from home counts, including:

• Meetings and calls you took from home
• Emails you cleared from home before or after office hours
• Any work task completed from home, even on a day you also went in

Acceptable ways to capture this include a running diary, your work roster, a timesheet, or even screenshots of your video-call history. The key is that it reflects real hours, recorded as you go.

Common mistakes the ATO is looking for in 2026

The ATO publishes its focus areas each year. For work-from-home claims, watch for:

1. Double-dipping: claiming the $0.70/hour rate and a separate internet or phone bill. The rate already includes them.
2. Estimating instead of recording: rounding up to a tidy number rather than keeping a genuine log of hours.
3. Claiming occupancy costs without meeting the test: trying to claim rent or mortgage interest when your home is not a genuine place of business set aside exclusively for work.
4. Copy-pasting last year: reusing last year's figure instead of updating it for the hours you actually worked this year.