For your 2025-26 tax return, the ATO’s fixed rate for working from home is 70 cents per hour. It covers electricity and gas, internet, mobile and home phone, and stationery and computer consumables, and you need a record of every hour you worked from home. If your actual costs are higher, you can claim the actual cost of each expense instead. From 2026-27, eligible workers get a standard deduction of up to $1,000 for work expenses with no receipts needed, and can still claim more with records.
The rules have tightened meaningfully over recent years, and what was acceptable a few years ago, such as a rough estimate jotted down at tax time, no longer clears the bar. Before you claim, it is worth checking the ATO’s fixed rate method for working from home expenses, which explains the current record-keeping requirements and what the fixed rate does, and does not, cover.
Which year are you claiming for?
This matters more than it used to, because the rules changed on 1 July 2026.
For your 2025-26 return, nothing has changed. You can claim working from home expenses using the fixed rate or actual cost method, as explained further down this page.
What changes from 2026-27: the $1,000 standard deduction
From 2026-27, eligible Australian tax residents automatically receive a work expense deduction of up to $1,000, without needing to spend the money or keep receipts. It is capped at your eligible income from work; business and investment income do not count. The deduction reduces your taxable income, so the tax saving depends on your tax rate.
The deduction is law, under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, and the ATO sets out how it works on its page on the standard deduction for work-related expenses.
If your total covered work expenses exceed $1,000, you can claim the higher amount with supporting records. Count your working from home costs alongside your other covered work expenses when comparing the two. Some deductions, including eligible union and professional association fees, can be claimed separately.
If you claim less than $1,000 in covered expenses, the standard deduction tops up the difference. For example, a $400 claim leaves a $600 standard deduction.
Keep your records throughout the year so you can claim more if your expenses exceed $1,000. From 2026-27, the $300 general and $150 laundry exceptions to written evidence requirements have been removed. Separate record-keeping rules still apply to car expenses and certain allowances.
Claiming for 2025-26
The rate and the worked examples in this section are for the 2025-26 income year. The same two methods still apply in 2026-27, where your covered work expenses come to more than $1,000.
The two methods
You have a choice between the fixed rate method and the actual cost method, and the right one depends on how much you work from home, how high your actual running costs are, and how comfortable you are with detailed record-keeping throughout the year rather than just at the end of it.
Fixed rate method. For the 2025-26 income year, the rate is 70 cents per hour worked from home. That rate covers electricity and gas, internet, mobile and home phone expenses, and stationery and computer consumables, all bundled into a single per-hour figure. The rate rose from 52 cents in 2021-22 to 67 cents for 2022-23 and 2023-24, and 70 cents for 2024-25 and 2025-26, but the method changed along the way, so the figures are not a straight comparison. The old 52 cent method covered electricity and gas, cleaning and the decline in value of office furniture, needed a dedicated work area, and left phone, internet and stationery to be claimed separately. The revised method from 1 July 2022 bundles phone, internet, stationery and computer consumables into the rate alongside energy, no longer needs a dedicated area, leaves the decline in value of equipment and furniture to be claimed separately, and needs a record of every hour worked from home.
Actual cost method. This involves working out the genuine work-related portion of every individual expense: your actual electricity bill, your actual internet bill, each apportioned based on your real usage pattern. For a high-usage scenario, working from home 1,200 hours across the year, the fixed rate produces a claim of around $840, while the actual cost method for just the running-cost portion can produce a noticeably higher figure before depreciation is even added. It’s more work, but for people with genuinely high running costs or unusually concentrated work-from-home use, it can produce a meaningfully larger claim.
Fixed rate or actual cost: a side-by-side comparison
| Fixed rate method | Actual cost method | |
|---|---|---|
| Rate or basis | 70 cents per hour worked from home (2025-26) | The genuine work-related portion of each actual expense, apportioned on real usage |
| Expenses the method covers | Electricity and gas, internet and data, mobile and home phone, stationery and computer consumables – bundled into the hourly rate | Each of those expenses calculated individually from your actual bills |
| Record of hours | A contemporaneous record of all hours worked from home across the full income year – timesheet, roster or diary. Estimates are not accepted | A representative diary establishing your usage pattern |
| Evidence of expenses | At least one bill for each expense category you are claiming | All utility bills for the full year |
| Claimable separately on top | Decline in value of assets such as computers and furniture, repairs and maintenance of those assets, and cleaning of a dedicated home office area | The same assets and costs, claimed alongside the actual running costs |
| Dedicated work area required | No | No |
| Worked example: 1,200 hours | About $840 for the year | Can be noticeably higher for running costs alone, before depreciation is added |
| Best suited to | Most claims – simpler to calculate and usually easier to substantiate | High running costs, or unusually concentrated work-from-home use |
Fixed rate by income year
| Income year | Fixed rate | Method |
|---|---|---|
| 2021-22 | 52 cents per hour | Original fixed rate method |
| 2022-23 | 67 cents per hour | Revised fixed rate method |
| 2023-24 | 67 cents per hour | Revised fixed rate method |
| 2024-25 | 70 cents per hour | Revised fixed rate method |
| 2025-26 | 70 cents per hour | Revised fixed rate method |
These are the fixed rates. A separate temporary COVID shortcut method of 80 cents per hour was also available up to 30 June 2022, so for 2020-21 and 2021-22 there was a choice of methods rather than one rate.
What the fixed rate does and doesn’t cover
If you use the fixed rate method, you can’t claim a separate deduction for any expenses covered by the rate, such as phone and internet, stationery, and energy. Claiming the 70 cent rate and then also claiming a separate phone bill on top is double-dipping, and it’s one of the more common errors the ATO identifies in WFH claims, often made innocently by people who don’t realise the rate is meant to be comprehensive for those categories.
What you can still claim separately, on top of the fixed rate: decline in value for assets like computers and office furniture, repairs and maintenance of those assets, and cleaning of a dedicated home office area.
Record-keeping, the part that has tightened the most
This is where most people fall short, and it’s the area the ATO has been most explicit about over recent years. From recent income years onwards, the ATO has required a real-time record of your actual work-from-home hours, not an estimate written up the night before you lodge.
You need to work out the total number of hours you worked from home during the income year using your records, such as timesheets, rosters, a diary, or a similar document kept at the same time as when you actually worked. A four-week representative diary used to be accepted as a stand-in for the full year, but that’s no longer sufficient on its own. The ATO won’t accept estimates such as a four-week representative diary; records of hours worked from home must be kept as they occur, in any form, provided they’re contemporaneous, things like timesheets, rosters, or a diary kept across the full year rather than reconstructed afterwards.
You also need a record of the expenses covered by the rate that you’ve actually incurred, with at least one bill for each category for which you’re claiming the fixed rate. Practically, this means keeping at least one electricity bill, one internet bill, and one phone bill (if claiming phone use) across the year, so you can show you genuinely incurred those running costs, even though you’re claiming the fixed rate rather than calculating actual amounts for each one.
It’s worth being clear-eyed about what counts as work for these purposes. You can’t claim for minimal tasks such as occasionally checking emails or taking calls. The work needs to be substantive and directly related to your employment duties or income-producing activities, and you need to have incurred additional running expenses.
Depreciating assets
If you bought a desk, chair, monitor, or laptop for work use, you can claim the decline in value over the item’s effective life, separately from whichever WFH method you use. Standard effective lives set by the ATO include laptops depreciating over two years, monitors over four years, ergonomic chairs over seven years, and standing desks over ten years. Items under $300 can simply be claimed in full in the year of purchase, no depreciation schedule required.
Choosing between the methods
The fixed rate method offers practical simplicity. If the records of hours are sound, the calculation is straightforward and usually easier to defend than a rough actual-cost estimate. The actual cost method takes more effort but can be worth it where your genuine running costs, particularly electricity, given recent price increases, are well above what the fixed rate assumes.
What’s not deductible
Employees generally cannot claim occupancy expenses such as rent, mortgage interest, council rates and home insurance. Limited exceptions can apply depending on the circumstances. Where part of a home qualifies as a place of business, there may also be capital gains tax consequences when the property is sold.
Working from home deductions, frequently asked questions
Is there a standard deduction for work related expenses?
Yes, from the 2026-27 income year, under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026. The ATO applies a standard deduction of up to $1,000 for work related expenses automatically, with no requirement to have spent the money and no records needed to receive it. It is available to Australian tax residents with eligible assessable labour income, so it does not reach everyone, and business or investment income does not count towards it. The maximum is the lower of $1,000 and that labour income. It is a deduction from taxable income rather than $1,000 back in your pocket.
Does the standard deduction apply to my 2025-26 return?
No. The ATO rule is that the standard deduction starts with the 2026-27 income year, so it does not apply to the 2025-26 return most people are lodging now. For 2025-26 you choose between the fixed rate method and the actual cost method as before.
Should I still claim working from home in 2026-27?
Compare all of your covered work expenses together against $1,000, rather than your working from home costs on their own, because the standard deduction is reduced by the covered expenses you claim. A $400 working from home claim still matters if other covered expenses take your total past $1,000. Below $1,000 you land in the same place either way, since the standard deduction makes up the difference, so what you save by not claiming is the paperwork rather than the tax. Some deductions, including eligible union and professional association fees, can be claimed separately without reducing it. Keep your records through the year, because you will not know which side of $1,000 you land on until it is over.
What is the working from home fixed rate for 2025-26?
The current ATO rate for the 2025-26 income year is 70 cents for every hour you work from home. It was also 70 cents for 2024-25. The fixed rate was 67 cents for 2022-23 and 2023-24, and 52 cents before that under an earlier method that covered a different set of expenses. A separate temporary 80-cent COVID shortcut method was also available until 30 June 2022. Use the rate for the year you are claiming, not the rate in force when you lodge.
How do I work out my working from home deduction for 2025-26?
Under the fixed rate method, multiply the hours you worked from home during the year by 70 cents. Someone who worked from home for 1,200 hours would calculate a fixed-rate deduction of $840. You may also be able to claim separately for the decline in value of work equipment, repairs and maintenance of those assets, and cleaning costs for a dedicated home office.
What does the 70 cents an hour cover?
The ATO rule is that the rate covers electricity and gas, internet and data, mobile and home phone, and stationery and computer consumables. All of those are bundled into the one hourly figure.
Can I claim my internet and phone on top of the fixed rate?
No. The ATO rule is that those costs already sit inside the 70 cents, so claiming a phone or internet bill separately is double dipping. It is one of the more common errors the ATO picks up, and it is usually made innocently by people who do not realise the rate is meant to cover those categories in full.
What records do I need to keep?
The record keeping requirement is a record of every hour you worked from home across the whole year, kept as you go. A timesheet, a roster or a diary all work. An estimate written up the night before you lodge does not, and neither does a four week sample standing in for the year. You also need at least one bill for each category you are claiming, so one electricity bill, one internet bill, and a phone bill if you are claiming phone use.
Can I claim if I do not have a separate home office?
Yes. The eligibility rule does not require a dedicated room under either method. What matters is that you were doing substantive work at home and incurring real running costs while you did it. Checking email or taking the odd call outside work hours does not count.
Get in touch
If you’re not sure if something’s deductible get in touch with our team. We can review your situation, identify the deductions that may apply and help you approach tax time with more confidence.
Your working from home checklist for 2025-26
This covers a 2025-26 return. For 2026-27, start by working out whether all your covered work expenses together come to more than $1,000, because below that the standard deduction gets you to the same place without the paperwork.
Choose your method
- Decide between fixed rate (70c/hour) and actual cost based on your circumstances
- Note: you cannot mix methods for the same expense category
Hours record (required for fixed rate method)
- Timesheet, roster, diary, or calendar record of actual hours worked from home
- Kept contemporaneously throughout the year, not reconstructed at tax time
- Covers the full period you’re claiming for, not just a sample period
Evidence of expenses incurred (required even under fixed rate)
- At least one electricity bill
- At least one internet bill
- At least one phone bill, if claiming mobile or home phone use
Separately claimable on top of the fixed rate
- Receipts for desk, chair, monitor, laptop, or other equipment purchases
- Repair and maintenance costs for that equipment
- Cleaning costs for a dedicated home office space
If using the actual cost method instead
- All utility bills for the full year
- A representative diary establishing your usage pattern
- A reasonable, documented basis for the work-use percentage claimed
Not deductible for most employees
- Rent or mortgage interest
- Council rates
- Home and contents insurance
This article is general in nature and does not constitute financial, tax, or legal advice. Individual circumstances vary and you should speak with a qualified adviser before making decisions based on your specific position.
