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

If you work from home, even one day a week, you can claim a tax deduction for running expenses. This guide explains the two available methods, what each covers, the records you need, and exactly how much you can expect to save.

Official ATO ratesUpdated FY2026-27Free foreverNo signup required
A woman in a green cardigan types on a laptop at a home desk by a window with autumn trees outside

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.

FeatureFixed Rate Method (70c/hr)Actual Cost Method
Rate70 cents per hour worked from home (2025-26)Calculate each expense separately
CoversElectricity, phone, internet, stationery, computer consumablesOnly what you calculate and claim
Records requiredRecord of total hours worked from home for the full yearBills, receipts, and a method to apportion work-use %
Dedicated office needed?NoNo (but needed for occupancy expenses like rent/mortgage interest)
Best forMost employees, simpler record-keepingHigh utility costs or significant work-use percentage
Can also claim separatelyOffice furniture depreciation, work-specific equipmentEverything is calculated individually

Calculate Your WFH Deduction

Enter your income and WFH hours to see the tax impact of claiming work from home deductions.

Use our Tax Return Estimator

What the Fixed Rate Covers

The 70 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 67 cents per hour from 1 July 2022, and rose to 70 cents per hour for the 2024-25 and 2025-26 income years. The higher rate since 2022 reflects the inclusion of phone and internet costs, which were previously claimed separately. The ATO has not yet published the rate for 2026-27.

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. Claim the 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 (70c/hour, 2025-26), based on a standard 7.6-hour work day across 48 working weeks per year. Tax saved uses the 2025-26 marginal rates and excludes the 2% Medicare levy.

WFH Days/WeekAnnual HoursDeduction (70c/hr)Tax Saved @ 16%Tax Saved @ 30%Tax Saved @ 37%Tax Saved @ 45%
1 day365$255$41$77$94$115
2 days730$510$82$153$189$230
3 days1,094$765$122$230$283$344
4 days1,459$1,021$163$306$378$459
5 days1,824$1,276$204$383$472$574

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 70c/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

The fixed rate is 70 cents per hour worked from home for the 2024-25 and 2025-26 income years (it was 67 cents from 2022-23 to 2023-24). It covers electricity and gas, phone, internet, stationery, and computer consumables, so you cannot claim those separately. You need a record of the actual hours you worked from home for the whole year.

No. You do not need a dedicated room or separate office space. Under the fixed rate method, you need only a workspace where you perform your work duties. This can be a kitchen table, spare room, or any area of your home. A dedicated office is only required if you want to claim occupancy expenses (rent, mortgage interest), which most employees cannot claim.

Acceptable records include timesheets, rosters, time-tracking apps (Toggl, Clockify), employer-provided login/logout reports, or a personal diary. The record must cover the entire income year, not just a representative period. Digital records are accepted. The ATO recommends starting your record from 1 July.

The fixed rate method suits most employees: it is simpler and requires less record-keeping. The actual cost method may produce a larger deduction if you have high electricity costs (e.g., running air conditioning), an expensive internet plan with high work-use, or other significant running costs. Calculate both methods and choose the higher deduction.

Yes. Even if your employer provides a laptop and other equipment, you can still claim the fixed rate for running expenses (electricity, internet, phone, etc.). You cannot claim a deduction for the employer-provided equipment itself, but the running costs of working from home are still your expense.

Yes. The fixed rate method is based on hours, not days. If you work from home for 4 hours in the morning and travel to the office in the afternoon, you claim 4 hours at 70 cents ($2.80). Only count actual working hours, not lunch breaks, personal errands, or time between tasks.

Yes. Each person claims separately based on their own hours worked from home. Under the fixed rate method, you each claim 70 cents per hour for the hours you individually worked from home. Under the actual cost method, you would each apportion expenses based on your individual work use. You cannot both claim 100% of the same bill.

Yes. Office furniture is claimed separately from the fixed rate. It is not included in the 70c/hr. Items costing $300 or less are an immediate deduction at the work-use percentage. Items over $300 are depreciated. A $500 office chair with 80% work use is depreciated at $40 per year (10-year effective life, 80% work use). Keep the purchase receipt.
How this guide works▼

Work from home deduction information is sourced from the Australian Taxation Office (ATO). The fixed rate is 70 cents per hour for FY2024-25 and FY2025-26 (67 cents for FY2022-23 and FY2023-24); the ATO has not yet published the FY2026-27 rate. Hours and savings calculations assume a 7.6-hour work day across 48 working weeks. Your individual circumstances, working hours, and marginal tax rate determine your actual savings.

Sources & References

  1. 1
    Working from home expenses, Australian Taxation Office
  2. 2
    Fixed rate method, Australian Taxation Office
  3. 3
    Actual cost method, Australian Taxation Office
  4. 4
    Income tax rates for individuals, Australian Taxation Office

Last verified: 9 October 2026. Our content is based on the latest information from official Australian government sources.

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