Working From Home Tax Deductions 2025–26: The 70c Fixed Rate vs Actual Cost

Working from home is the single most common deduction on Australian tax returns, and it is also the one the ATO checks most carefully. For the 2025–26 return you are lodging now, the fixed rate is 70 cents per hour and the rule that trips people up hasn't changed: you need a record of the actual hours you worked from home for the whole year, not an estimate. This guide explains the two methods, which one usually wins, what you can't claim, and the records to have ready before you see us in Frankston or Ringwood East.

The two ways to claim working from home in 2025–26

1. The fixed rate method: 70 cents an hour

You multiply the hours you worked from home during the year by 70 cents. That one rate covers:

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

Because those costs are bundled into the rate, you can't claim any of them separately if you use the fixed rate. You can, however, still claim the decline in value of equipment you bought to work from home (a desk, chair, monitor or laptop) and any repairs to it, on top of the 70 cents.

You don't need a dedicated home office to use the fixed rate. Working at the kitchen table counts, as long as you were genuinely working and not just checking emails.

Worked example: three days a week at home, eight hours a day, for 46 working weeks is 1,104 hours. At 70 cents an hour that is a $773 deduction, plus depreciation on any equipment. For someone on the 30% marginal rate that is roughly $250 back in your refund.

2. The actual cost method

Instead of a flat rate, you work out the actual additional running costs you incurred because you worked from home, and claim the work-related portion. That means:

• •Keeping every bill for electricity, gas, internet and phone
• •Working out the work-related percentage of each (for example, by floor area of a dedicated office and hours of use)
• •Keeping receipts for stationery, consumables and equipment
• •Keeping a record of hours: either the full year, or a representative four-week diary if your pattern of work is regular

The actual cost method usually produces a bigger deduction only if you have a dedicated home office and high running costs, and you are prepared to keep detailed records. For most employees who work from home part of the week, the fixed rate is simpler and the difference is small.

Which method should you use

A quick rule of thumb from our accountants:

• •Two or three days a week at the kitchen table, average bills: fixed rate
• •A dedicated office, working from home full-time, running heating or cooling most of the day, paying for a business-grade internet plan: run the numbers on actual cost
• •You bought a laptop, monitor or ergonomic chair this year: claim depreciation under either method (assets costing $300 or less are deductible in full in the year you bought them)

Try both methods with our free working from home deduction calculator before your appointment, or simply bring your records and we'll pick the one that gives you the larger deduction.

What you can't claim

The ATO's data-matching now flags working-from-home claims that don't fit the pattern of your job or your employer's records. The most common mistakes we correct:

• •Occupancy expenses (rent, mortgage interest, council rates, home insurance) are not deductible for employees. They are only available when your home is a genuine place of business, and claiming them can affect the capital gains tax exemption on your home
• •Coffee, tea, milk, toilet paper and other household items your employer would normally supply
• •Costs your employer reimbursed or paid directly
• •Phone and internet on top of the fixed rate: that is double-dipping and the ATO specifically looks for it
• •Hours you didn't work: lunch breaks, school pick-ups and days you were on leave don't count
• •Items used by the whole family: a family laptop or the household Netflix plan needs a realistic work-use percentage, not 100%

The records the ATO expects to see

Since the fixed rate method was revised, the ATO has been clear that it no longer accepts estimates. If your claim is reviewed, you will be asked for:

• •A record of the actual hours worked from home for the full year: a timesheet, roster, calendar entries, a diary or a logbook app. Your employer's flexible work agreement is helpful supporting evidence but is not a record of hours on its own
• •At least one bill or receipt for each type of running expense covered by the fixed rate (one electricity bill, one internet bill, one phone bill) to show you actually incurred the cost
• •Receipts for any equipment you are depreciating, with the date of purchase and the work-use percentage

If you didn't keep a full-year hours record for 2025–26, we can still help you reconstruct a defensible claim from calendars, employer records and login data, but the sooner you start a proper record for 2026–27 the better. A simple recurring calendar entry marked "WFH" on your home days is enough.

Sole traders and home-based businesses

If you run your business from home, the rules are broader. As well as running costs, you may be able to claim a portion of occupancy costs where your home is a place of business (for example, a dedicated workshop, consulting room or studio that clients visit). The trade-off is that the same portion of your home may lose the main residence exemption from capital gains tax when you sell, so this needs to be a deliberate decision rather than an afterthought. Our business tax return team runs that comparison for home-based clients every year.

Get your 2025–26 return done before 31 October

Self-lodgers must lodge by 31 October 2026, which is a Saturday this year. If you become a client of a registered tax agent like Counting Beans A.F. before 31 October, most individuals get until 15 May 2027. Read our guide to the 2026 tax return deadline, then book a tax appointment at our Frankston office on 03 9769 6431 or our Ringwood East office on 03 9870 1477. In person, by phone or by video, and fees are quoted before we start.

Frequently asked questions

Can I claim working from home if I only do it one day a week

Yes. There is no minimum. One day a week for 46 weeks is around 368 hours, or about $258 at the fixed rate, provided you have a record of those hours.

Do I need a separate room to claim

Not for the fixed rate method. A dedicated room only matters if you want to use the actual cost method and apportion running costs by floor area, or if you are a business owner claiming occupancy expenses.

Can I claim my desk, chair and monitor

Yes, under either method. Items costing $300 or less are claimed in full in the year of purchase; more expensive items are depreciated over their effective life, apportioned for work use.

I didn't keep a record of hours. Can I still claim

An estimate alone will not survive an ATO review. We can help you build a record from calendars, rosters and employer correspondence for 2025–26, and set up a simple system so next year is easy.

This article is general information only and does not take into account your personal circumstances. Deduction rules depend on your occupation and records; we confirm what applies to you when we prepare your return.