If you clocked in from the kitchen table, a home office, or the couch with a laptop balanced on a cushion at any point during 2025–26, you’ve likely got a legitimate deduction sitting there. But working from home claims are one of two things the ATO has openly named as a compliance focus this tax time, right alongside omitted income, which means the days of a rough guess scrawled in October are well and truly over. This guide breaks down Working From Home Tax Deductions 2025-26, the way it actually works, not the oversimplified version doing the rounds.
The fixed rate is 70 cents per hour for 2025–26. It bundles your running costs into one number, but it does not remove the need for records. The ATO wants a genuine, contemporaneous hours log, not an estimate.
What’s bundled into the 2025–26 fixed rate, you can’t claim these again separately.
How the 70c fixed rate actually works
The fixed rate method is straightforward on paper: multiply your total hours worked from home during 2025–26 by 70 cents. But there are two things almost everyone misses.
The rate is bundled, no double-dipping:
Electricity, gas, internet, phone, and stationery are all baked into that 70 cents. If you use the fixed rate, you cannot then go and claim your internet bill again separately. That’s the single most common mistake the ATO catches, and it’s an easy one to catch because it shows up as two claims for the same cost.
Equipment depreciation sits outside the rate:
Your laptop, monitor, desk, office chair, and other equipment aren’t covered by the 70c; you claim those separately as decline in value (or in full if they cost $300 or less and you use them mainly for work). This is genuinely extra money most remote workers forget to add on top.
A real example, from the ATO’s own guidance
Yang is a software engineer who started working from home two days a week in December 2025. Across the rest of 2025–26, he logs 567 hours. His fixed-rate claim is 567 × 70c = $396.90. He also bought a desk ($250) and an office chair ($299), used only for work, both under $300, so both are claimed in full—total deduction: $945 (cents disregarded, not rounded). The equipment more than doubled his running-cost claim; that’s the bit people leave on the table.
What you actually need in writing
This is where most working from home tax claims fall over. The ATO has been explicit since the 2022–23 income year: estimates are not acceptable, and a “representative” four-week diary no longer covers the whole year. You need a genuine record for the entire period you’re claiming.
- A timesheet, roster, or diary logging your actual WFH hours, kept as you go, not reconstructed in October.
- A spreadsheet or app log with dates and hours, updated regularly throughout the year.
- At least one bill or invoice for each expense category the rate covers, such as electricity, phone, and internet, to prove you genuinely incur those costs.
- Purchase receipts for any equipment you’re claiming separately as depreciation.
- A rough guess of “about 3 days a week” is written up when you sit down to lodge.
- A single representative four-week sample was used to estimate the other 48 weeks.
No hours record means no fixed-rate claim at all, not a reduced one. If you can’t produce evidence of the hours, the ATO can disallow the entire deduction, not just trim it back. Starting a log today, for the rest of the year, is worth more than trying to reconstruct 2025–26 from memory.
Fixed rate vs actual cost: which one wins for you
The 70c method isn’t automatically your best option; it’s just the simplest one. The actual cost method lets you claim the real work-related portion of every running expense (plus occupancy costs in rare cases). Still, it demands full bills, a defensible work-use percentage, and considerably more admin.
Situation | Better fit |
WFH 1–3 days a week, laptop and phone, no dedicated office | Fixed rate (70c/hr) |
WFH most of the week, dedicated office, high energy or internet bills | Actual cost, worth comparing |
Shared household internet/power with family, casual use | Fixed rate (simpler to defend) |
Already keeping detailed bills and floor-area records | Actual cost may pay off |
Worked example from current guidance: a WFH year of around 1,200 hours can land near $840 under the fixed rate versus roughly $1,400 under actual cost for running costs alone, but only if every bill, floor-area calculation, and work-use percentage holds up under review. A registered tax agent can run both numbers for you and use whichever is genuinely higher and defensible.
Not sure which method wins for your situation?
We’ll run both the fixed rate and actual cost calculations side by side and lodge whichever gets you the bigger, defensible refund. Walk into your nearest AAD Taxation office or book online.
Tax deductions for remote workers: the extras people miss
Beyond the fixed rate itself, there’s a handful of genuinely valuable claims that sit alongside it, all still available if you’re one of the growing number of fully or partly remote employees.
- Equipment depreciation: laptops depreciate over roughly 2 years other items like monitors, chairs, and desks each have their own ATO-determined effective life (use the ATO’s Depreciation and Capital Allowances Tool at ato.gov.au to confirm the correct figure for each item), or claim the full cost immediately if the item was $300 or less and you use it mainly for work. Note: if you buy multiple identical or similar items where the combined cost exceeds $300, the immediate deduction may not apply, check with your tax agent.
- Repairs and maintenance on that equipment (a printer service, a chair repair) is claimable separately, on top of the 70c rate.
- Self-education is directly connected to your current remote role, courses, subscriptions, and professional memberships.
- What you can’t claim: rent, mortgage interest, council rates, or home insurance. These “occupancy expenses” are only deductible in narrow cases where your home is genuinely your principal place of business, and claiming them can create a capital gains tax headache when you eventually sell.
- What doesn’t count as WFH time: checking a work email or taking one call from the couch on a day off isn’t “working from home” for these purposes. The ATO expects substantive work that actually generates the running costs you’re claiming for.
Quick gut-check before you lodge
- Do I have an actual hours log for the whole year, not a guess?
- Have I picked one method, fixed rate or actual cost, and stuck to it consistently?
- Am I only claiming equipment and depreciation on top, not internet or power again?
- If my employer reimburses part of my phone or internet, have I excluded that portion?
the ATO cross-checks WFH claims against employer reporting, industry averages for your occupation, and your own claim history year to year. A sudden jump with no change in your work pattern is exactly the kind of thing that gets a return pulled aside for a closer look.
Conclusion
Working From Home Tax Deductions 2025-26 aren’t complicated once you strip away the noise: 70 cents per hour, backed by a genuine record of the hours you actually worked, plus whatever equipment you can separately depreciate on top. The only real trap is treating the fixed rate as a free pass to claim internet, power, or phone again; that’s the fastest way to turn a legitimate working-from-home tax claim into an ATO review. Contact AAD Taxation today to find out which method best suits your situation, and walk into tax time with a claim you can confidently stand behind.
Frequently Asked Questions
What is the working from home tax deduction rate for 2025–26?
The ATO fixed rate for the 2025–26 income year is 70 cents per hour worked from home. It covers electricity, gas, internet, phone, and stationery/computer consumables, and you can still separately claim decline in value on items like your laptop, desk, or monitor.
Do I need a diary to claim working from home expenses?
Yes. You need a record of your actual hours for the entire period you’re claiming a timesheet, roster, diary, or app log made as you go. The ATO no longer accepts a four-week representative sample as proof for the full year.
Can I claim my internet bill on top of the 70c rate?
No. If you use the fixed rate method, internet, phone, electricity, gas, and stationery are already built into the 70 cents per hour; claiming them again separately is double-dipping and is one of the ATO’s most common audit findings.
What can I claim in addition to the 70c fixed rate?
You can still separately claim the decline in value (depreciation) of equipment like your laptop, monitor, desk, and chair, plus repairs and maintenance on that equipment. Items costing $300 or less can usually be claimed in full in the year you buy them.
Should I use the fixed rate method or the actual cost method?
The fixed rate suits most employees working from home occasionally with modest bills, it’s simple and needs fewer records. The actual cost method can produce a bigger deduction if you work from home most of the week with high running costs and a dedicated office, but it demands full receipts and a defensible work-use percentage for every bill.
Can I claim my rent or mortgage for working from home?
Almost never for employees. Occupancy expenses like rent, mortgage interest, and council rates are only deductible where your home is your principal place of business and a room is set aside exclusively for work, and claiming them can trigger capital gains tax on part of your home later.
What records does the ATO actually want to see for a WFH claim?
A full-year, contemporaneous log of hours worked from home, plus at least one bill or invoice for each expense category the rate covers (electricity, phone, internet), and receipts for any equipment you’re depreciating separately.
Get your working from home claim right the first time
Bring your hours log and bills, we’ll turn them into a defensible, maximised deduction and lodge it properly.