Work from home tax deductions 2026: What Australians can claim

If you worked from home this financial year, even just a few days a week, the ATO wants you to get your claim right. With hybrid work now the norm for millions of Australians, tax deductions for work from home have become one of the most closely watched areas at tax time.

Rules have tightened, record-keeping requirements are stricter, and a headline-grabbing new $1,000 instant deduction is generating plenty of confusion about when it actually applies. This blog covers exactly what work-from-home expenses you can claim, how to calculate them, which work-from-home tax deduction method suits your situation, and how to avoid the mistakes that attract ATO attention in 2026.

What are work-from-home tax deductions in Australia?

Not every expense you incur at home qualifies as a tax deduction, and not everyone who occasionally sends a work email from the couch qualifies to claim at all. To claim working from home expenses, you must meet all of the following conditions:

• You are working from home to fulfil actual employment duties
• You have incurred additional running expenses as a direct result
• You have records that prove those expenses were incurred

The ATO draws a clear line between incidental home working and genuine remote or hybrid arrangements. If your employer has a physical office you regularly attend, but you sometimes work from home by choice, you can still claim, but only for the hours you were genuinely performing employment duties from home, not hours spent on breaks or personal tasks.

It is also worth understanding what "additional" expenses mean in this context. The ATO is not interested in costs you would have incurred anyway. It is the extra cost attributable directly to your work that counts, which means apportioning bills based on actual usage:

• Your existing electricity bill does not count; only the extra usage from working at home does.
• A home internet plan you already pay for is not claimable on its own; only the work-related portion is.

The ATO's two methods for claiming tax deductions for work from home

There are two methods available to calculate your working from home claim:

• The fixed rate method and
• The actual cost method

You must pick any one method and apply it for the full income year. Switching mid-year is not allowed, so understanding which one works better for your situation before 30 June matters.

The fixed rate method: 70 cents per hour explained

The fixed rate deduction method is the simpler of the two methods and works well for people who do not have a dedicated home office or prefer not to track every individual bill. You can claim a fixed rate of 70 cents for each hour you work from home during the 2025-26 income year.

What the 70 cent rate covers — you cannot claim these separately:

• Home and mobile internet or data expenses
• Mobile and home phone usage expenses
• Electricity and gas for heating, cooling, and lighting
• Stationery and computer consumables such as printer ink and paper

What you can still claim separately on top of the fixed rate:

• The decline in value of depreciating assets such as chairs, desks, computers, and bookshelves
• Repairs and maintenance of those items
• If an item costs $300 or less and you use it mainly for work purposes, you can claim an immediate deduction for the full cost in the year you buy it

One important point that many people miss: If you use your mobile phone for work purposes on days when you are not working from home, you cannot claim a separate deduction for those mobile phone expenses under the fixed rate method. If you want to claim all of your work-related mobile phone expenses, you will need to switch to the actual cost method.

The actual cost method: Claim every dollar you spend

This method takes more effort but often delivers a larger deduction, particularly for people who work from home frequently and have a room set aside purely for work.

Using the actual cost deduction method, you work out your deduction by calculating the actual additional expenses you incur when working from home during 2025-26.

What you can claim under the actual cost method:

• The decline in value of depreciating assets such as home office furniture, desks, chairs, phones, computers, and laptops
• Electricity and gas for heating, cooling, and lighting
• Home and mobile phone, data, and internet expenses
• Stationery and computer consumables such as printer ink and paper
• Cleaning costs for your dedicated home office
• In limited circumstances, occupancy expenses such as mortgage interest or rent

An important rule on apportionment: Where you incur running expenses for both private and work purposes, you need to separate the two on a fair and reasonable basis. You can only claim the work-related portion as a deduction.

A household rule worth knowing: You cannot claim additional running expenses if other members of your household who are not working from home are in the same room as you while you are working. For example, if you are working from the lounge room while your family watches television, you cannot claim heating or lighting costs for that room.

For phone and internet, if you receive an itemised bill, you need to work out your work-related use over a continuous 4-week period. You can then apply that percentage to calculate your expenses for the full 2025-26 income year.

What expenses can you claim as tax deductions for work from home?

Not every cost you incur at home during work hours qualifies. The ATO is specific about what counts as an additional running expense and what does not. Here is a clear breakdown for the 2025-26 income year.

Running expenses you can claim

These are expenses you can claim as a direct result of working from home:

• Electricity or gas for heating, cooling and lighting in the area you work from
• Home and mobile internet or data expenses
• Mobile and home phone expenses
• Stationery and office supplies
• The decline in value of depreciating assets you use for work, such as office chairs, desks, computers, laptops, and software
• Repairs and maintenance of those depreciating assets

If you have a dedicated home office, you may also be able to claim:

• Occupancy expenses such as mortgage interest or rent
• Cleaning expenses for the room used as your home office

These occupancy expenses are only available in limited circumstances. As an employee working from home, you generally cannot claim occupancy expenses unless your home has an area that genuinely functions as a place of business, meaning it is exclusively or almost exclusively used for work, not readily available for private use, and necessary because your employer does not provide you with an alternative place of work.

If you do qualify to claim mortgage interest as a deduction, be aware that this triggers capital gains tax implications on your home when you eventually sell it. You will not be able to claim the full main residence exemption.

What expenses can you not claim?

The ATO is equally clear about what falls outside the scope of a legitimate work-from-home deduction. You cannot claim:

• Coffee, tea, milk, or other general household items, even if your employer supplies these at a physical workplace
• Equipment or subscriptions purchased for your children's education, such as iPads, desks, or online learning platforms
• Items your employer has provided to you, such as a work laptop or mobile phone
• Any expense your employer has already reimbursed you for
• Additional running expenses for a room where other household members who are not working from home are present at the same time. For example, if you work from the lounge room while your family watches television, you cannot claim the heating or lighting for that room

One more rule worth noting: If your employer pays you an allowance to cover your working-from-home expenses, that allowance must be declared as income on your tax return. You can then claim the actual expenses against it, but you cannot ignore the allowance and claim the expenses as though you paid them entirely out of pocket.

Record keeping for tax deductions for work from home

Good records are not optional. If you do not have the right documentation to support your claim, the ATO expects you not to claim the expense at all. Here is exactly what you need to have ready depending on the method you use.

Fixed rate method record-keeping requirements

You will need:

• A record of all the hours you worked from home for the entire income year, such as timesheets, rosters or a diary
• Evidence that you paid for the expenses covered by the fixed rate method, for example, if you use your phone and electricity when you work from home, keep at least one bill for each of these expenses
• Records for any depreciating assets you claim as a separate deduction, such as a computer or office furniture

Actual cost method record-keeping requirements

You will need:

• A record that represents the hours you work from home, such as timesheets, rosters or a diary showing at least a 4-week regular pattern of work
• Evidence for every expense you claim, including receipts, bills or invoices that show the supplier, amount of the expense, nature of the goods, date it was paid and date of the document
• Evidence of your personal and work-related use of the items or services you buy and use

Note: In most cases, a bank or credit card statement on its own is not enough evidence of a work-related expense under either method.

Claiming decline in the value of assets (both methods)

For any depreciating asset you claim, you will also need records showing:

• When and where you bought the item and its cost
• When you started using the item for a work-related purpose
• How you worked out your percentage of work-related use, such as a diary showing the purpose and use of the item for work
• Which method did you choose to work out the decline in value

Don't wait until June to realise your records are incomplete. With the end of the financial year approaching fast, our professional bookkeepers can get everything in order so your work-from-home claim is ready to go.

Common mistakes to avoid when claiming tax deductions for work from home in 2026

Even well-intentioned taxpayers make errors that reduce their refund, increase their audit risk, or both. These are the ones our business tax return professionals see most regularly.

Mistake 1: Claiming employer-provided equipment. If your employer gave you a laptop, monitor, headset or phone to use for work, you cannot claim the decline in value of that equipment. You did not purchase it, and it is not yours to depreciate.

Mistake 2: Overstating work use without evidence. A computer used 80% for personal purposes and 20% for work, can only generate a deduction on that 20% work-related fraction. The same principle applies to phone, internet and electricity. The ATO scrutinises apportionment claims, and inflated percentages without documented evidence are a compliance risk.

Mistake 3: Defaulting to the fixed rate without comparing both methods. Many taxpayers choose the fixed rate method simply because it involves less paperwork, without ever checking whether actual costs would produce a meaningfully larger refund. This is particularly costly for people with high electricity bills, expensive work equipment or a dedicated home office.

Mistake 4: Claiming the same expense twice. Some taxpayers accidentally claim an expense under the fixed rate and then attempt to claim it again as a separate deduction. For example, claiming internet costs as part of the 70-cent hourly rate and then listing it again as an additional expense. Each expense can only be claimed once and only through one method.

Mistake 5: Forgetting to declare a working-from-home allowance as income. If your employer pays you an allowance specifically to cover your working-from-home costs, that amount must be declared as income on your return before you claim any expenses against it. Skipping this step and claiming expenses as though you paid them entirely out of pocket is an error the ATO picks up regularly during reviews.

How CleanSlate helps you maximise tax deductions for work from home?

Most Australians who work from home are either claiming too little because they do not know what they are entitled to, or claiming incorrectly because they picked the wrong method without comparing both options. Either way, they are losing money that should rightfully come back to them at tax time.

Here is what working with CleanSlate looks like in practice:

• You stop guessing which method is better and start knowing, because we run the actual numbers for your situation and tell you exactly which approach puts more money in your pocket
• You never miss a legitimate deduction again, whether that is equipment depreciation you did not know you could claim, a phone usage split you have been underestimating, or a home office cost sitting unclaimed in your bills
• You walk into tax time with records that are already ATO-ready, so there is no last-minute scramble, no anxiety about a compliance review, and no amended assessments down the track
• You get a return that reflects your actual working life, not a generic calculation built on assumptions, because we take the time to understand how and where you work before we touch your numbers
• We lodge your tax return on your behalf, handling every step of the submission process so you never have to deal with the ATO portal, missed deadlines or lodgement errors

Tax time does not have to be stressful or uncertain. With our tax experts handling your work-from-home deductions and lodgement, you get clarity on what you are owed, confidence that everything is correct, and more time to focus on what actually matters to you.

Ready to claim every dollar you are entitled to? Get in touch with our team today, and we will make sure your 2025-26 tax return is handled correctly, completely, and with your maximum refund in mind.

Final thoughts on work from home tax deductions

Working from home has changed the way Australians work, but most people are still claiming like it's 2019. Wrong method, missed deductions, incomplete records. The ATO has tightened its scrutiny, and doing it without proper guidance just doesn't cut it anymore.

The good news? You don't have to figure this out alone.

At CleanSlate, we work through your actual numbers, your hours, your bills, your equipment, and tell you exactly what you're owed. Not an estimate. Not a rough figure. Your number.

Most of our clients are surprised by how much they've been underclaiming. A few are surprised they were claiming things they shouldn't have been. Either way, they leave knowing their return is right.

If you worked from home this year, even part of the time, it's worth a conversation. Book a quick call with our team before 30 June, and we will make sure your 2025–26 return works as hard as you did.