Working from your kitchen table, spare room or home office can be convenient. But when your home becomes part of your working routine, you may also start paying for things that help you do your job.
This is where work from home tax deductions can come into the picture.
Australian employees who work from home may be able to claim certain additional expenses when completing their tax return. However, the amount you can claim isn’t simply based on how much you spend at home.
You need to use an approved calculation method, keep suitable records and make sure the expense is genuinely connected with your work.
If you’re preparing your 2025–26 tax return, here’s what you should know about claiming working-from-home expenses.
Potentially, yes.
If you perform your employment duties from home and personally incur additional costs because of that arrangement, you may be able to claim an eligible portion of those costs.
For example, working from home could mean using more electricity, internet or phone services than you otherwise would.
But there is an important distinction:
Having a job that allows you to work from home doesn’t automatically make your household bills tax deductible.
The expense needs to meet the relevant requirements and you need evidence to support your calculation.
For the 2025–26 financial year, the fixed-rate option uses 70 cents for each hour you actually work from home.
Here’s a simple example.
Imagine you worked from home for:
750 hours during the financial year
Your calculation would be:
750 × $0.70 = $525
That gives you a starting deduction of $525 under the fixed-rate approach.
There may also be other eligible expenses you can claim separately, depending on the item and the applicable rules.
So don’t assume that the hourly amount represents every possible work-related cost.
The hourly rate is intended to account for several common expenses that arise when you work from home.
These include certain costs associated with:
This is important because you shouldn’t claim these same costs again separately when they’re already covered by the fixed-rate calculation.
For instance, if you use the fixed-rate method, you can’t calculate your internet bill separately and simply add the entire work-related amount to your hourly claim.
Some expenses aren’t included in the hourly rate and may potentially be claimed separately.
One example is the decline in value of eligible work-related equipment.
Depending on your circumstances, this could include things such as:
The tax treatment depends on the particular asset, how much it cost, how you use it and the relevant depreciation rules.
If you use an item partly for personal reasons, you generally can’t treat the entire cost as work-related.
For this reason, keep your purchase receipts and other relevant documentation.
Not automatically.
This is one of the biggest areas of confusion around home-based work expenses.
An employee working from home can’t simply calculate a percentage of their rent and add it to their tax return.
Occupancy costs such as rent and certain property-related expenses have additional requirements.
The situation can also be different for someone operating a business from their home.
So if you’re thinking about claiming rent, mortgage interest or similar costs, don’t assume that working remotely is enough to make them deductible.
For eligible taxpayers, there are two main ways to calculate working-from-home expenses for the 2025–26 financial year.
They are:
1. Fixed-rate method
2. Actual-cost method
The best option isn’t necessarily the same for everyone.
Your choice should depend on your work arrangements, expenses and the records you have available.
The fixed-rate approach is based on the number of hours you actually worked from home.
For 2025–26, the rate is:
70 cents per hour
For example:
1,000 hours × $0.70 = $700
The calculation is straightforward, but the record keeping still matters.
You need evidence showing how many hours you actually worked from home during the relevant income year.
This could include your:
You should also retain evidence relating to the expenses covered by the rate and any assets you’re claiming separately.
The second approach is to calculate the additional expenses you actually incurred because of working from home.
Instead of applying a standard hourly figure, you work through your relevant expenses and determine the portion connected with your employment.
For example, if your electricity is used for both personal and work purposes, you would need a reasonable way to determine the work-related component.
The same principle can apply to other shared expenses.
This approach can involve more calculations and record keeping, but it may be worth considering where your eligible costs are substantial.
There isn’t a universal answer.
Someone with relatively simple work-from-home arrangements may find the fixed-rate method easier to manage.
Another taxpayer with higher eligible expenses and detailed records may want to compare the actual-cost approach.
Rather than choosing a method based purely on convenience, look at:
A comparison can help you avoid overlooking a legitimate deduction.
Your records are just as important as the calculation itself.
If you’re using the fixed-rate method, make sure you have a reliable record of the hours you worked from home.
Don’t rely on a rough memory at the end of the financial year.
For example, saying:
“I normally worked from home two days a week”
isn’t the same as having a record of your actual hours.
You should also retain documents supporting relevant expenses and purchases.
If you use the actual-cost method, you’ll generally need additional information showing how you calculated the work-related portion of your expenses.
It’s easy to assume that anything you use while working at home can be claimed.
That’s not how tax deductions work.
Normal private household spending doesn’t become deductible simply because you’re working from your home.
You also need to watch out for:
If your employer has reimbursed you for an expense, you generally can’t claim that same amount as your own deduction.
A laptop, phone or other item used for both work and personal activities may require the private component to be excluded.
Don’t claim an expense separately if it has already been accounted for within the fixed-rate calculation.
If you don’t have appropriate records, it can be difficult to substantiate the deduction you’re claiming.
If you’ve read an older article about working from home, you may have seen references to an 80-cent-per-hour shortcut method.
That information relates to the COVID-era rules and shouldn’t be used as the current calculation for your 2025–26 tax return.
This is exactly why relying on old work-from-home tax articles can cause confusion.
If you’re preparing your return now, make sure you’re using information that applies to the relevant financial year.
Potentially.
Furniture and equipment used for employment purposes can have different tax treatments depending on the item and its use.
For example, if you’ve purchased a desk or chair specifically to perform your job from home, the work-related portion may need to be considered under the relevant rules.
The same applies to technology such as computers and monitors.
Don’t automatically assume that the entire purchase price can be deducted immediately.
The cost, useful life, work-related use and applicable depreciation rules can all matter.
There’s another important distinction.
An employee who occasionally or regularly works remotely for their employer isn’t necessarily treated the same way as someone who operates a business from their home.
If you’re a sole trader or small business owner, different considerations may apply to your home-based business expenses.
You may also need to consider your bookkeeping, business structure, GST, BAS and other financial obligations.
If you’re running a business from home, getting advice early can help you avoid treating personal and business expenses incorrectly.
For broader business support, you can explore our accounting services in Perth.
For the 2025–26 financial year, an eligible taxpayer using the fixed-rate method can multiply their eligible work-from-home hours by 70 cents.
The actual-cost method is calculated differently and is based on relevant expenses and their work-related use.
Internet costs may be taken into account when calculating your deduction.
However, the treatment depends on the method you’re using. If an expense is already covered by the fixed-rate calculation, you shouldn’t claim it again separately.
Electricity can be relevant to your working-from-home deduction.
Under the fixed-rate method, eligible electricity and gas costs are represented within the hourly rate. Under the actual-cost method, you calculate the relevant work-related portion.
A desk or other office equipment may potentially be claimed separately where the relevant requirements are met.
The treatment can depend on its cost and how it is used.
Not simply because you work remotely.
Occupancy expenses have additional requirements, so check your circumstances before including rent or similar costs in your claim.
Also read: Claimed the Wrong Tax Deduction? Here’s What to Do Next
Working from home can create genuine tax deductions, but getting the details right matters.
The biggest mistake is often not failing to find a deduction — it’s claiming an amount without understanding the rules or keeping the evidence needed to support it.
If you’re preparing your individual tax return and aren’t sure what you can claim, getting professional assistance can make the process much easier.
At Palladium Financial Group, we help individuals with their individual tax returns, including reviewing eligible work-related deductions.
If you’re looking for tax return services in Perth, speak with our team about your situation.
Need help with your 2025–26 tax return? Get in touch with Palladium Financial Group today.
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