Working From Home Tax Deductions: The 2025-26 Rates and Rules

If you work from home, you can claim a deduction using one of two methods: the fixed rate method, currently 70 cents per hour for both the 2024-25 and 2025-26 income years, or the actual cost method, where you calculate and substantiate the real additional cost of working from home. This guide covers both, what each one includes, and the records the ATO expects you to keep either way.

The fixed rate method: 70 cents per hour

The fixed rate bundles several running costs into a single per-hour figure, multiplied by the actual hours you worked from home during the year:

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  Electricity and gas for heating, cooling and lighting
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  Home and mobile phone usage
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  Home and mobile internet
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  Stationery and computer consumables

You cannot claim a separate deduction for any of these four items if you use the fixed rate method, they are already inside the 70 cents. You can, separately, claim depreciation on technology and office furniture, desks, chairs, monitors, and the repairs and maintenance of that equipment, since those sit outside the rate entirely.

The actual cost method

The actual cost method lets you claim the genuine additional cost you incurred working from home, potentially a larger deduction if you have high running costs, but it requires far more substantiation: itemised calculations for each expense type, a representative four-week diary to establish your usual pattern, and a receipt or bill for every cost claimed. It generally suits someone with unusually high electricity or internet costs, or a dedicated, largely work-only space at home, more than someone with a typical, modest claim.

Records the ATO expects for the fixed rate method

Whichever method you use, the ATO's expectations are specific, and an estimate of hours is not accepted:

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  A record of the actual number of hours you worked from home for the entire income year, a timesheet, roster, diary, calendar log or time-tracking app entry all qualify
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  At least one record for each additional running expense the rate covers, for example, one electricity bill and one receipt for stationery
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  Purchase records for any depreciating assets claimed separately, showing the date bought, cost and supplier

Records generally need to be kept for five years from the date you lodge, consistent with the ATO's standard record-keeping requirements.

What you cannot claim

Regardless of method, the following are never deductible for an employee working from home:

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  Coffee, tea, milk and other general household items your employer might otherwise supply at the office
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  Costs related to a child's schooling, devices or online learning subscriptions
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  Items your employer provides you with, or reimburses you for, directly or indirectly
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  Occupancy expenses, mortgage interest, rent, council rates and home insurance, unless you are running a business from home and a specific area is used exclusively for that purpose

An alternative worth knowing about

If your total work-related claims are modest, it is also worth comparing against the $1,000 standard deduction, available without receipts from the 2026-27 return, which can be simpler than itemising a working-from-home claim if your genuine costs sit under that figure.