Tax Deductions Guide — Work-Related Deductions That Reduce Your Tax

How Tax Deductions Work

A tax deduction reduces your taxable income, not your tax bill directly. When you claim a $1,000 deduction, you save tax equal to $1,000 multiplied by your marginal tax rate. An employee in the 30% bracket saves $300 on a $1,000 deduction; someone in the 45% bracket saves $450 on the same claim.

The ATO applies three golden rules to every work-related deduction claim. All three must be satisfied for a deduction to be allowed:

1. You must have spent the money yourself and not been reimbursed by your employer. If your employer paid for the expense or reimbursed you, it is not deductible.
2. The expense must be directly related to earning your assessable income. There must be a clear connection between the expense and your work duties. Private or domestic expenses are not deductible.
3. You must have a record to prove it. The ATO requires receipts, invoices, bank statements, or diary entries for all claims. For total work-related expenses of $300 or less, you do not need written evidence but must be able to show how you calculated the amount.

Deductions are claimed in your annual tax return. Your employer does not need to approve your deductions — they are between you and the ATO. Use our Income Tax Calculator to model how deductions affect your take-home pay.

Common Work-Related Deductions

The following categories represent the most frequently claimed work-related deductions by Australian employees. Each category has specific ATO rules about what qualifies and what records you need.

Vehicle and Travel Expenses

You can claim the cost of travel between separate workplaces, travel for work duties (such as visiting clients), and travel to attend conferences or training. Home-to-work commuting is not deductible except in limited circumstances (carrying bulky tools with no secure storage at work, or itinerant workers). The two methods for car expenses are:

• Cents per kilometre: Claim 85 cents per km up to a maximum of 5,000 business kilometres per year ($4,250 maximum). No written evidence of kilometres is required, but you must be able to show how you calculated the distance.
• Logbook method: Keep a logbook for a continuous 12-week period to establish the work-use percentage of your car. Claim actual running costs (fuel, registration, insurance, servicing, depreciation) multiplied by the business-use percentage. The logbook is valid for 5 years provided your driving pattern remains similar.

Clothing and Laundry

Only three types of clothing are deductible: occupation-specific clothing (chef's checked pants, nurse's uniform), protective clothing (steel-capped boots, high-vis vests, sun protection for outdoor workers), and clothing with your employer's logo that is compulsory to wear. Conventional clothing — even if you only wear it for work — is not deductible. Laundry of eligible work clothing can be claimed at $1 per load (if washed with other items) or $2 per load (exclusive wash), up to $150 without written records.

Tools, Equipment and Technology

Work-related tools and equipment costing $300 or less can be claimed as an immediate deduction. Items costing more than $300 must be depreciated over their effective life. Common claims include laptops, tablets, software subscriptions, professional tools, and safety equipment. If an item is used for both work and personal purposes, only the work-related percentage is deductible.

Working From Home

If you work from home, you can claim running expenses using the revised fixed rate method at 67 cents per hour, which covers electricity, phone, internet, stationery, and computer consumables. Alternatively, the actual cost method lets you calculate each expense separately. Office furniture (desks, chairs) costing over $300 is depreciated. See our detailed Work From Home Deductions Guide for a full comparison of methods.

Self-Education Expenses

Course fees, textbooks, stationery, and student union fees are deductible when the education is directly related to your current employment — either maintaining or improving your skills in your current role, or the course leads to an increase in income from your current job. Study that enables you to move into a new occupation is not deductible. A nurse studying for a postgraduate nursing qualification can claim; a nurse studying to become an accountant cannot.

Phone and Internet

The work-related portion of your personal phone and internet plans is deductible. You need to determine the work-use percentage by keeping a diary of usage for a representative 4-week period. If your work-use percentage is 40%, you claim 40% of your annual phone and internet costs. Employer-provided phones used solely for work are not a personal deduction (they are an employer expense).

Union Fees and Professional Memberships

Membership fees for trade unions, professional associations, and registration boards required for your employment are fully deductible. This includes fees for organisations like CPA Australia, the Law Society, medical boards, and teaching registration bodies. The fees must relate to your current employment — joining a professional body for a career you do not yet work in is not deductible.

How Much Will Deductions Save You?

Your tax savings depend on your marginal tax rate — the rate applied to the last dollar you earn. Higher-income earners save more per dollar of deductions because their marginal rate is higher. The table below shows exact savings at each FY2025-26 tax bracket for common deduction amounts.

These savings include only the income tax reduction. Deductions also reduce the Medicare levy (2% of taxable income), adding approximately $10 per $500 of deductions. For employees with HECS-HELP debt, deductions can also reduce your compulsory repayment amount by lowering your repayment income below a threshold. Review the current Tax Brackets Guide to identify your marginal rate.

Deductions You Cannot Claim

The ATO specifically disallows these common claims that taxpayers frequently attempt:

• Home-to-work commuting: The cost of travelling between your home and your regular workplace is a private expense, regardless of the distance or whether you work irregular hours.
• Conventional clothing: Suits, business shirts, dresses, and shoes worn for work but not unique to your occupation are not deductible. The clothing must be occupation-specific, protective, or have a compulsory employer logo.
• Childcare costs: Childcare, babysitting, and school fees are not deductible work-related expenses, even when required to enable you to work.
• Personal grooming: Haircuts, cosmetics, and personal hygiene products are private expenses even in customer-facing roles.
• Fines and penalties: Traffic fines, parking fines, and late fees are not deductible even if incurred while travelling for work.
• Entertainment expenses: The cost of meals and entertainment with colleagues is generally not deductible for employees (different rules apply to businesses).
• Expenses reimbursed by your employer: Any expense your employer has already paid for or reimbursed cannot be claimed again as a deduction.
• Study for a new career: Self-education expenses are only deductible when the course is directly related to your current employment, not to enable a career change.

The ATO uses sophisticated data matching to compare your claims against others in the same occupation and income bracket. Claims that are significantly higher than the norm trigger automated reviews. Use our Tax Refund Guide for guidance on how deductions flow through to your refund.

Frequently Asked Questions