Tax Deduction for Home Office Expenses & Work from Home? 2025–26 Guide

Updated for the 2025–26 income year (tax returns lodged from 1 July 2026), with 2026–27 changes noted. Reviewed 19 October 2026.

Can I claim working from home on tax? Yes, if you work from home to perform your job and you incur additional running costs as a result. There are two ATO methods: the fixed rate method and the actual cost method. You choose the one that suits your records.

1. Fixed rate method: 70 cents per hour

For 2024–25 and 2025–26 the fixed rate is 70 cents for each hour you work from home. The ATO sets the rate in PCG 2023/1 and confirms it each year, so check the rate for the year you are claiming.

The rate covers your additional running expenses for:

• electricity and gas for heating, cooling and lighting
• home and mobile internet and data
• mobile and home phone usage
• stationery and computer consumables (for example, printer ink and paper)

You can't claim those items separately as well. You can separately claim the decline in value of equipment and furniture (for example, a laptop, desk or chair) and other costs the rate doesn't cover, such as repairs to equipment. Items costing $300 or less that you use mainly for work (for example, a keyboard, desk lamp or power board) can be claimed in full in the year you buy them; dearer items are depreciated.

Records you must keep:

• a record of the actual hours you worked from home for the whole year – timesheets, rosters, a diary or similar made at the time (an estimate or a 4-week sample isn't accepted)
• at least one record for each type of expense the rate covers (for example, one electricity bill and one phone bill)

You don't need a dedicated home office room to use this method.

Example (illustrative figures only): Ana works from home 2 days a week, 7.5 hours a day, for 46 weeks: 690 hours × $0.70 = $483. She also claims $250 for the work-use portion of a desk and monitor she bought herself, for a total of $733. (A laptop supplied by her employer can't be claimed.)

2. Actual cost method

You claim the actual work-related portion of each additional running cost: electricity and gas for the area you work in, phone and internet, stationery and computer consumables, and the decline in value of equipment and furniture. This method takes more effort but can suit people with higher costs.

Records you must keep under the actual cost method:

• a record of your hours worked from home: either the actual hours for the whole year (timesheets, a spreadsheet) or a diary covering a continuous 4-week period that represents your usual pattern of working from home;
• receipts, bills and other documents for each running expense, and a record of how you worked out the work-related portion;
• for an itemised phone or internet bill, the work-related percentage over a continuous 4-week period, which you can apply to the whole year.

You generally don't incur additional running expenses if other members of your household who aren't working are using the same room at the same time (for example, working in a shared lounge room that would be heated anyway).

3. Occupancy expenses

Employees generally can't claim rent, mortgage interest, council and water rates, land tax or home insurance. An employee can only claim these "occupancy expenses" in limited cases where all of the following apply:

• your work requires a place of business;
• your employer doesn't provide one, so you have to work from home (being allowed to work from home isn't enough);
• the area is used exclusively, or almost exclusively, for work and isn't readily usable for anything else.

Claims are usually apportioned by floor area. If you are eligible, your home's main residence CGT exemption is reduced. This applies whether or not you have a mortgage, so get a valuation when you start using the area for work, and keep property records for as long as you own the home plus 5 years. Sole traders, see our home-based business guide.

4. What you can't claim

• Tea, coffee, milk and other household items
• Costs your employer pays or reimburses, including items they provide (such as a work laptop)
• Expenses for children's education or general household use

5. Earlier years (for amended returns)

6. What changes from 1 July 2026

For 2026–27, eligible employees receive an automatic standard deduction of up to $1,000. Working-from-home expenses you claim reduce it dollar for dollar (union fees, donations and tax agent fees don't). If your WFH and other work expenses add up to more than $1,000, you can still claim them in full – with records. The removal of the $300 record-keeping exception also applies from 1 July 2026.

Full guide: working from home deductions. Related: computers and laptops, mobile phones, printers and scanners.