Working From Home Tax Deductions Australia: 70c Rule

Australia tax guide for employees

Working From Home Tax Deductions Australia 2025-26: What You Can Claim, What You Can’t, and What May Change in 2026-27

If you are preparing your 2025-26 Australian tax return, your working from home deduction usually comes down to one practical choice: use the ATO fixed rate method or calculate your actual additional costs. This guide explains both methods in plain English, shows what can and cannot be claimed, and flags the 2026-27 Budget proposal that may simplify work-related expense claims in the following year.

Quick fixed-rate rule The ATO home office calculator now covers 2025-26. The latest ATO fixed-rate table available at the time of writing lists 70 cents per hour for 2024-25, with no separate 2025-26 or 2026-27 fixed-rate table shown yet.

Best for most employees The fixed rate method is easier if you have good hour records but do not want to split every electricity, internet and phone bill. Use the ATO calculator for the latest 2025-26 calculation before lodging.

Records matter Estimates are risky. Keep a diary, timesheet, roster, calendar log, employer login record or time-tracking app record for actual hours worked throughout 2025-26.

Important: This article is general information for Australian employees. Tax outcomes depend on your income year, employment arrangement, records, private use and reimbursements. Check the official ATO guidance or speak to a registered tax agent before lodging.

What are working from home tax deductions in Australia for 2025-26?

Working from home tax deductions are deductions for extra costs you incur because you perform employment duties from home. For 2025-26 returns, the ATO home office calculator covers the income year, and employees still choose between the fixed rate method and actual cost method. You need records and can only claim the work-related portion.

The official ATO rule is simple at the top level: you must be working from home to fulfil employment duties, incur additional running expenses, and keep records that show those expenses and your work-from-home activity. Occasional tasks, such as briefly checking emails or taking a short call, are not enough on their own. See the ATO’s working from home expenses guidance.

For Eduyush readers building a broader Australian tax plan, this article sits alongside our guides on capital gains tax in Australia, negative gearing in Australia, and the main Eduyush accounting blog hub.

Working from home tax deductions 2025-26 and 2026-27 update

For 2025-26, the ATO home office expenses calculator now covers the income year, so workers should use it before lodging. The public ATO fixed-rate table checked in May 2026 still showed 70 cents for 2024-25 and did not list a separate 2025-26 or 2026-27 fixed rate.

That means the safest wording for this blog is to guide 2025-26 taxpayers to the ATO calculator rather than hard-code an unpublished 2025-26 rate. If the ATO later publishes a 2025-26 fixed rate in the table, update the rate card, examples and FAQ immediately. The ATO home office expenses calculator states that it covers the 2013-14 to 2025-26 income years.

Income year	Status at May 2026	What workers should do
2024-25	The ATO fixed-rate table lists 70 cents per work hour.	Use 70 cents per recorded WFH hour if using the fixed rate method, plus eligible separate equipment claims.
2025-26	The ATO fixed-rate table lists 70 cents per work hour.	Use 70 cents per recorded WFH hour if using the fixed rate method, plus eligible separate equipment claims.
2026-27	The Budget announced a $1,000 instant tax deduction for workers from 2026-27, but this is not for 2025-26 returns.	Monitor final legislation and ATO instructions. Do not apply the 2026-27 measure to a 2025-26 return.

2026-27 Budget note: The Federal Budget says the Government is introducing a $1,000 instant tax deduction for workers from 2026-27, allowing workers to reduce taxable income from work by $1,000 without keeping receipts when lodging. This is a forward-looking Budget measure, not a 2025-26 WFH deduction rule. See the Budget 2026-27 cost of living page.

Who can claim working from home tax deductions?

You can claim working from home deductions if you work from home to perform your employment duties, pay extra running costs because of that work, and keep records. You cannot claim if your employer reimburses the expense, provides the item, or you only do minimal tasks from home.

Think of the claim in three checks. First, there must be real work, not just a few minutes of admin. Second, the cost must be additional to normal household living costs. Third, you need evidence. A deduction that looks reasonable but has no records can still fail.

Question	If yes	If no
Are you doing employment duties from home?	Move to the next test.	A WFH deduction is unlikely for occasional emails or calls only.
Did you incur extra costs?	You may be able to claim using fixed rate or actual cost.	No extra cost usually means no deduction.
Do you have records?	Keep them with your tax file for the required period.	Start tracking now. Estimates are not enough for the fixed rate method.

Working from home tax deduction 2025-26: fixed rate method

The fixed rate method lets eligible employees claim a set amount for each hour worked from home. The latest ATO fixed-rate table checked in May 2026 listed 70 cents per hour for 2024-25, while the ATO calculator covers 2025-26. The rate covers electricity, gas, phone, internet, stationery and computer consumables.

The fixed rate method is usually the easiest option because you do not need to calculate the exact work percentage of every electricity, internet and phone bill. You do, however, need a record of the actual hours you worked from home across the income year. The ATO’s fixed rate method also requires at least one record for each type of covered expense you incurred. For 2025-26, confirm the rate in the ATO calculator before lodging.

Fixed rate claim = total actual WFH hours × ATO rate for that income year + eligible separate equipment or other non-covered deductions

What the 70 cents per hour rate covers

The fixed rate covers the additional running costs for home and mobile internet or data, home and mobile phone usage, electricity and gas for heating, cooling and lighting, and stationery or computer consumables such as printer ink and paper. If you use this method, do not add a separate phone, internet or electricity claim elsewhere in your return.

What you can still claim separately under the fixed rate method

You can still separately claim work-related use of technology and office furniture, such as a desk, chair, computer, laptop, monitor or software, if you bought them yourself and they are not reimbursed. If an eligible item costs $300 or less and is mainly used for work, it may be immediately deductible; higher-cost assets are generally claimed through decline in value over time.

Actual cost method for 2025-26 home office expenses

The actual cost method lets you claim the work-related share of actual extra costs, such as electricity, gas, phone, internet, stationery, computer consumables, cleaning for a dedicated office, and depreciation of work equipment. It can produce a higher deduction, but it needs stronger bills, receipts, usage records and apportionment calculations.

The actual cost method is useful where your home office costs are high, your work use is easy to prove, or the 70 cents per hour method understates your real additional costs. It is also more work. You need to split private and work use on a fair basis and keep written evidence of both the expenses and the calculation. The ATO’s actual cost method sets out the evidence required.

Actual cost formula for electricity

A practical electricity calculation uses your appliance power use, electricity cost per kWh and actual work hours. For example, if your air conditioner and lighting use 0.8 kWh per hour, your electricity price is 28 cents per kWh, and you work from home for 700 hours, the energy cost is 0.8 × $0.28 × 700 = $156.80. You then only claim the work-related portion that relates to additional work use.

When actual cost may be better

Actual cost may work better where you have a separate office, high energy costs, significant equipment, itemised phone usage, or a stable work pattern that can be supported by a four-week representative diary. It is less suitable if your work and private use are mixed, your records are weak, or other household members use the same space and services.

Fixed rate vs actual cost for 2025-26: which WFH method should you use?

For 2025-26, start by checking the ATO home office calculator. Use the fixed rate method if you want a simpler claim and have accurate hour records. Consider actual cost if you have a dedicated office, higher running costs, itemised bills and strong evidence. Choose the larger valid deduction you can prove.

Start with records. If you do not have actual WFH hours for the year, your fixed rate claim may be limited. Start a diary or time-tracking log immediately.

Estimate both methods. Calculate hours × the ATO fixed rate for the income year, then compare it with actual electricity, internet, phone, stationery, consumables and equipment calculations.

Check duplicate claims. If you choose fixed rate, remove separate claims for phone, internet, electricity, gas, stationery and computer consumables.

Choose what you can defend. A higher number is not better if it depends on assumptions, estimates or costs that were reimbursed by your employer.

Reader situation	Likely better method	Why
You work from home 1-2 days per week and have a calendar or timesheet.	Fixed rate	Simple, quick and avoids splitting bills line by line.
You have a dedicated office, high energy costs and itemised bills.	Compare actual cost	Actual expenses may exceed 70 cents per hour if records are strong.
You bought a desk, chair, monitor or laptop for work.	Fixed rate plus equipment, or actual cost	Equipment can often be claimed separately if eligible and not reimbursed.
You work at the kitchen table while the family uses the same room.	Usually fixed rate	Actual additional energy costs can be hard to prove when the room would be lit, heated or cooled anyway.

What can you claim when working from home?

You may claim extra work-related running costs such as electricity, gas, phone, internet, stationery, computer consumables, work equipment, office furniture, repairs and certain dedicated-office cleaning costs. You cannot claim private household costs, reimbursed expenses, employer-provided items, children’s school costs, or duplicate amounts already covered by the fixed rate.

Expense	Can you claim it?	Best way to handle it
Electricity and gas for heating, cooling and lighting	Yes, if additional and work-related.	Included in the fixed rate. Under actual cost, calculate work-related additional use.
Home internet and mobile data	Yes, for work-related use.	Included in fixed rate. Under actual cost, use bills and a reasonable work-use percentage.
Mobile and home phone	Yes, for work calls/data.	Included in fixed rate. Under actual cost, use itemised bills or a representative usage period.
Stationery, printer ink and paper	Yes, if work-related.	Included in fixed rate. Under actual cost, keep receipts and apportion private use.
Desk, chair, monitor, keyboard, mouse, laptop or software	Yes, if bought by you and used for work.	Claim immediately if eligible and $300 or less, or depreciate over time if higher cost.
Repairs to work equipment	Yes, work-related portion only.	Keep repair invoices and usage records.
Cleaning a dedicated home office	Sometimes.	More common under actual cost. Apportion by floor area and work/private use.
Coffee, tea, milk and general household items	No.	These remain private household costs, even if an employer might provide them at work.
Children’s school iPads, desks or online learning subscriptions	No.	These are not your employment expenses.
Employer-provided laptop or phone	No.	You did not incur the cost.
Reimbursed expenses	No.	You cannot claim a cost your employer paid back.
Travel from home to your normal workplace	Usually no.	Commuting is generally private. Treat travel claims separately from WFH deductions.

Home office equipment and the $300 rule

If you buy a work-related home office item costing $300 or less and use it mainly for work, you may be able to claim an immediate deduction. Items above $300, or sets costing more than $300, are generally claimed over time through decline in value. Private use must be apportioned.

Common items include a chair, desk, monitor, keyboard, mouse, headset, desk lamp, printer, docking station, power board, laptop and software. Keep the invoice, payment evidence, purchase date and a note of how you worked out work use. If a laptop is used 70% for work and 30% for streaming, gaming or study, only the work portion belongs in the claim.

Item	Cost	Work use	Simple treatment
Ergonomic mouse	$89	100%	Potential immediate deduction if eligible.
Office chair	$299	100%	Potential immediate deduction if eligible.
Laptop	$1,600	70%	Generally decline in value over time, claim only 70% work use.
Two monitors bought as a set	$240 each, $480 total	90%	May need depreciation because the set exceeds $300.

Can you claim rent or mortgage interest if you work from home?

Most employees cannot claim rent or mortgage interest merely because they work from home. Occupancy expenses are only available in limited circumstances, usually where a dedicated part of the home has the character of a place of business. Claiming occupancy costs can also create tax complications for homeowners.

This is where workers often make the wrong assumption. A spare room used as a home office is not automatically a business premises. If you are an employee working remotely a few days a week, your safer focus is usually running expenses and eligible equipment, not rent or mortgage interest.

If you own your home and claim occupancy expenses, there may be future capital gains tax consequences because part of the main residence may have been used to produce income. Read Eduyush’s capital gains tax Australia guide before treating your home as an income-producing space.

How to keep 2025-26 WFH tax records: apps, diaries and tools

Keep two kinds of records: time records and expense records. Time records prove actual hours worked from home, while expense records prove the bills, receipts and work-use calculations behind your claim. Useful tools include the ATO app’s myDeductions tool, the ATO home office calculator, spreadsheets, calendar logs and time-tracking apps.

The ATO says the record you need depends on the method chosen. For the fixed rate method, actual hours for the year are critical. For the actual cost method, you need expense evidence and either full-year actual hours or a continuous four-week representative record, depending on the claim. You can use the ATO home office expenses calculator, which now covers 2025-26, to estimate deductions and the ATO myDeductions tool to track receipts and expenses.

Tool	Best used for	How to use it well
ATO app myDeductions	Receipts, expenses and deductions	Photograph receipts as you buy items and label them by category.
ATO home office expenses calculator	Testing fixed rate vs actual cost	Run both methods before lodgment and save your calculation notes.
Spreadsheet diary	Actual WFH hours	Track date, start time, finish time, breaks, total hours and work task.
Google Calendar or Outlook Calendar	Contemporaneous work pattern	Create a recurring “WFH work block” and update it when hours change.
Employer timesheets, rosters or system logs	Independent work-hour evidence	Export or save monthly records before systems are archived.
Time-tracking apps such as Toggl Track, Clockify or Harvest	Project-based WFH hours	Use clear task names and export reports at year end.
Receipt folder in Google Drive, OneDrive or Dropbox	Back-up evidence	Store bills, receipts, invoices and calculation worksheets by income year.

Simple WFH diary template

Date	Start	Finish	Breaks	Actual WFH hours	Work performed
4 July 2025	8:30 am	5:00 pm	45 minutes	7.75	Client reporting, team calls, month-end review
7 July 2025	9:00 am	3:30 pm	30 minutes	6.0	Analysis, emails, documentation

Working from home tax deduction examples for 2025-26

Example 1: fixed rate method for a hybrid employee

A marketing manager works from home two days a week for 46 weeks. Each WFH day is 7.5 hours after excluding lunch breaks.

2 days × 7.5 hours × 46 weeks = 690 hours
690 hours × ATO fixed rate for the income year = fixed-rate deduction before separate eligible equipment claims

If the ATO calculator confirms a 70 cents rate for the relevant year, the running-expense part would be 690 × $0.70 = $483. If she also bought a $250 desk and $299 chair used only for work, and those items meet the immediate deduction rules, her total claim could be $483 + $250 + $299 = $1,032. She should keep receipts, hour records and proof of covered expenses such as an electricity or internet bill.

Example 2: actual energy cost calculation

An analyst works in a dedicated home office for 720 hours. The room uses a computer setup and lighting averaging 0.6 kWh per hour. Electricity costs 26 cents per kWh.

720 hours × 0.6 kWh × $0.26 = $112.32 energy cost

This is only one part of the actual cost method. The analyst must also consider whether the cost is additional, whether anyone else uses the room, and how to support phone, internet, stationery, equipment and private-use percentages.

Example 3: laptop used for both work and private life

A project coordinator buys a $1,500 laptop and uses it 80% for employment work and 20% for personal use. The full cost is not claimed upfront if it must be depreciated, and only the work-related portion is deductible.

Work-related cost base for deduction purposes = $1,500 × 80% = $1,200

The final deduction depends on the decline-in-value calculation and the period owned during the income year. Keep the invoice and a short usage diary to support the 80% work-use estimate.

Example 4: why estimates can reduce your claim

A finance employee worked from home every Friday but did not track hours from July to February. In March, he started recording actual hours in a spreadsheet. For the fixed rate method, the unrecorded earlier months are risky because estimates are not accepted as a substitute for actual hour records. He may only be able to use the period supported by contemporaneous records.

Common WFH tax deduction mistakes to avoid

Mistake	Why it is a problem	Better approach
Claiming 70 cents per hour and then also claiming phone or internet separately	The fixed rate already covers phone and internet.	Only separately claim expenses not covered by the rate, such as eligible equipment.
Using rough estimates for the full year	ATO fixed-rate records require actual hours, not estimates.	Keep a diary, timesheet, roster, calendar or time-tracking export.
Claiming employer-provided equipment	You did not incur the cost.	Only claim items you paid for and were not reimbursed for.
Including lunch breaks or school supervision time	Only work time counts.	Record net working hours after breaks.
Claiming rent because you work at home	Occupancy expenses are only allowed in limited circumstances.	Focus on running expenses unless your home genuinely has business-premises characteristics.
Ignoring employer allowances	WFH allowances may need to be included as income.	Check your income statement and include allowances correctly.

SEO quick guide: matching the 2025-26 questions workers actually ask

Search behaviour around this topic is practical. People ask “how much is the working from home tax deduction,” “how to calculate work from home tax deductions,” “what work from home expenses are tax deductible,” and “can I claim internet if I work from home.” This page is structured to answer those questions directly and then show the supporting records, examples and ATO links.

For related Australian tax planning topics, continue with Eduyush’s guides on property investment structures in Australia, discretionary trust tax changes, and trust distribution tax in Australia.

Working from home tax deductions 2025-26 FAQs

Can I claim tax deductions for working from home?

Yes, if you work from home to perform employment duties, incur additional running expenses, and keep records. You must use either the fixed rate method or actual cost method. You cannot claim costs reimbursed by your employer or items your employer provided.

How much is the WFH tax deduction in Australia for 2025-26?

Your 2025-26 WFH deduction depends on the method you choose, your actual recorded hours, and eligible separate claims such as equipment. The ATO calculator covers 2025-26, while the fixed-rate table checked in May 2026 listed 70 cents for 2024-25 and did not separately display 2025-26.

How do I calculate work from home tax deductions?

For the fixed rate method, multiply actual WFH hours by the ATO rate for the income year and add eligible separate equipment deductions. For the actual cost method, calculate the work-related portion of actual electricity, gas, phone, internet, stationery, consumables, equipment and eligible dedicated-office costs.

Can I claim internet separately if I use the fixed rate method?

No. Internet and data expenses are included in the fixed rate. If you want to claim a separate work-related internet amount, you need to consider the actual cost method and keep records supporting your work-use percentage.

Can I claim a laptop for working from home?

You may be able to claim the work-related portion if you paid for the laptop and were not reimbursed. If it costs more than $300, it is generally claimed through decline in value rather than as an immediate full deduction.

Can I claim rent if I work from home?

Most employees cannot claim rent simply because they work from home. Occupancy expenses are only available in limited circumstances, usually where part of the home has the character of a place of business. Homeowners should also consider possible capital gains tax consequences.

Can two people in the same house claim working from home deductions?

Yes, each person may claim their own eligible WFH deduction if they individually meet the rules and keep records. Each person should maintain their own hours, expenses and work-use evidence rather than relying on one shared estimate.

Are coffee, tea and milk deductible when working from home?

No. Coffee, tea, milk and general household items remain private expenses, even if similar items may be available in an office workplace. They should not be included in a WFH deduction calculation.

Is travel from home to work tax deductible?

Usually no. Travel between home and your normal workplace is generally private commuting. Working from home on some days does not automatically convert travel to your usual office into a deductible work expense.

What is the best recordkeeping app for WFH deductions?

The ATO app’s myDeductions tool is the most tax-specific option for receipts and expenses. For hours, a spreadsheet, calendar log, employer timesheet, roster or time-tracking app can work if it records actual WFH hours at the time you work them.

Is there a new $1,000 instant deduction for workers in 2026-27?

The 2026-27 Federal Budget announced a $1,000 instant tax deduction for workers from 2026-27, designed to reduce taxable income from work without receipts. It is not a 2025-26 return rule, so workers should wait for final ATO instructions before relying on it.

Need the bigger Australian tax picture?

Start with the Eduyush accounting and tax blog hub, then read the related guides on capital gains tax and negative gearing if your work-from-home setup overlaps with property or investment decisions.

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