The $1,000 instant work-related deduction is now law, receiving royal assent on 26 June 2026. It applies to the 2026-27 income year — the return you lodge from July 2027, not the one due this October — letting 6.2 million workers deduct up to $1,000 with no receipts at all.
Key facts
| What changed | Detail |
|---|---|
| Deduction amount | Up to $1,000, no receipts |
| Applies to income year | 2026-27 (1 July 2026 – 30 June 2027) |
| First claimable on return lodged | From 1 July 2027 |
| Legal status | Law — royal assent 26 June 2026 |
| Workers benefiting | 6.2 million, average saving $205 |
What the deduction actually is
Instead of keeping receipts and itemising every uniform, tool, subscription or work-related purchase, eligible employees can simply claim a flat $1,000 deduction against their taxable income for the 2026-27 income year — no substantiation required. It became law under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which passed Parliament and received royal assent on 26 June 2026.
When you can claim it — and when you can't
This is the detail that trips people up: the $1,000 deduction applies to the 2026-27 income year, which started on 1 July 2026. You claim it on the tax return you lodge from 1 July 2027 — it does not apply to the 2025-26 return most people are lodging right now, between July and October 2026. That return still uses the normal substantiation rules; see our tax time 2026 roundup for what's actually new this year.
Choosing between the flat rate and itemising
The $1,000 deduction isn't compulsory. If your genuine work-related expenses for 2026-27 add up to more than $1,000, you can still substantiate and claim the higher, itemised amount the usual way with receipts and records. You choose whichever option gives the better outcome when you prepare that return — you can't do both for the same expenses.
For most workers, the flat $1,000 deduction will be the simpler and better option. Treasury estimates it will benefit 6.2 million workers with an average tax saving of $205, and cut overall compliance costs by around $380 million a year by removing the need to keep receipts for smaller work-related purchases like uniforms, small tools, phone and internet use, or professional subscriptions. If you're a tradesperson, frequent traveller for work, or someone with genuinely large annual work expenses, itemising is still likely to leave you better off — run both numbers before you lodge.
What else you can still claim
The instant deduction only replaces work-related expense substantiation. Non-work deductions — donations to deductible gift recipients, union and professional association fees, income protection insurance premiums and investment-related expenses — aren't capped by the $1,000 figure and remain fully claimable on top, using your normal records.
Sole traders with labour income are also eligible, alongside employees, provided the income qualifies as work-related. The deduction sits alongside — not instead of — the broader tax cuts also landing in the 2026-27 income year, including the 16% to 15% rate cut on income between $18,201 and $45,000; see our tax cut from 1 July 2026 explainer for how the two measures interact on the same return.
What this means for your pay
The deduction won't change your pay packet or PAYG withholding during 2026-27 — its benefit shows up as a smaller tax bill or bigger refund when you lodge in 2027. For now, estimate your 2026-27 position with our income tax calculator, and use the tax return calculator closer to lodgement time to compare the flat $1,000 claim against your actual work expenses.