Work From Home Tax Deductions — What You Can Claim in 2025-26

Two Methods for Claiming WFH Expenses

The ATO provides two methods for claiming work from home running expenses: the revised fixed rate method and the actual cost method. You choose one method per financial year — you cannot mix methods for different expenses within the same year.

What the Fixed Rate Covers

The 67 cents per hour fixed rate is a single rate that bundles the running costs of working from home. You cannot claim separate deductions for any of these expenses if you use the fixed rate method:

• Electricity and gas — for heating, cooling, and lighting your workspace
• Phone usage — work-related calls and data on your personal phone plan
• Internet usage — your home broadband used for work activities
• Stationery and computer consumables — printer ink, paper, pens, USB drives

The rate was revised from the former 52 cents per hour (which covered a narrower range of expenses) to the current 67 cents per hour effective 1 July 2022. The higher rate reflects the inclusion of phone and internet costs, which were previously claimed separately.

What You Claim Separately (Under Either Method)

Certain WFH expenses are not included in the fixed rate and can be claimed as separate deductions regardless of which method you choose:

• Office furniture: Desks, chairs, bookshelves. Items costing $300 or less are an immediate deduction (work-use %). Items over $300 are depreciated over their effective life.
• Technology and equipment: Monitors, keyboards, webcams, headsets, printers. Same $300 threshold for immediate vs depreciation.
• Computer software and subscriptions: Microsoft 365, Adobe Creative Cloud, antivirus — work-use percentage of the annual subscription.
• Repairs to home office equipment: Repair costs for work-related equipment are immediately deductible at the work-use percentage.

Occupancy expenses (rent, mortgage interest, property insurance, land tax, rates) are only deductible if you have a dedicated home office used exclusively or primarily for work — and you run a business from home. Most employees working from home for an employer cannot claim occupancy expenses.

Record-Keeping Requirements

The ATO has specific record-keeping requirements for each method. Failure to keep adequate records means the ATO can disallow your entire WFH claim.

Fixed Rate Method Records

• A record of the total number of hours you worked from home during the income year. Acceptable records include timesheets, rosters, time-tracking apps, or a diary maintained for the entire year.
• A record for each separate expense you claim on top of the fixed rate (e.g., receipts for furniture, equipment purchases).

Actual Cost Method Records

• All bills and receipts for expenses you are claiming (electricity, gas, internet, phone bills).
• A reasonable basis for apportioning work-use vs personal-use percentage. For electricity, this could be based on floor area of your workspace relative to the whole house, or the wattage and usage hours of work-related appliances.
• A 4-week representative diary for phone and internet to establish your work-use percentage, which you then apply to the full year.

How Much Will You Save?

The table below shows annual deduction amounts and tax savings using the fixed rate method (67c/hour), based on a standard 7.6-hour work day across 48 working weeks per year.

These figures use the fixed rate method only. If you also claim office furniture, a monitor, or other separately deductible items, your total WFH deduction and tax savings will be higher. A $600 office chair depreciated over 10 years adds $60 per year in deductions (at 100% work use). Use our Income Tax Calculator to model your total deductions against your income.

Common WFH Deduction Mistakes

The ATO flags WFH claims as a key audit focus area. These are the most common errors that lead to disallowed deductions or penalties:

• Claiming phone/internet separately under the fixed rate method. The 67c/hr rate already includes phone and internet costs. Claiming them again separately results in double-counting and ATO adjustment.
• No record of hours. You must maintain a record of hours worked from home for the entire income year. A 4-week representative period is not sufficient under the revised fixed rate method — the ATO requires a full-year record.
• Claiming occupancy expenses as an employee. Rent, mortgage interest, and property rates are only deductible for home-based businesses, not employees working from home for their employer.
• Claiming 100% of shared expenses. If you share your home with a partner who also works from home, each person can only claim their own proportion of expenses or hours.
• Not adjusting for leave periods. You cannot claim WFH deductions for hours when you were on annual leave, sick leave, or public holidays — even if your home office equipment was still set up.

Frequently Asked Questions