Working from Home? Know Your Tax Deductions
If you worked from home during the 2025-2026 Financial year, you may be eligible to claim a deduction for additional expenses you incurred while performing work duties. Understanding what you can claim and keeping the correct records can help you make sure you don’t miss out on deductions that you are entitled to.
Who is eligible?
Working from home deductions are available to employees who work from home to fulfill their employment duties, incur additional expenses as a result and keep records to support their claims. Occasionally checking emails or taking a phone call from home is generally not enough on their own. You must be performing your employment duties from home and incurred additional costs.
What can you claim?
The ATO provides two ways to calculate you’re working from home deductions: the fixed rate method or the actual cost method.
Fixed Rate Method
Under the fixed rate method, for the 2026 financial year you can claim 70 cents for each hour worked from home. This rate covers certain running expenses, with some expenses claimable separately.
Expenses included in the 70 cent rate and cannot be claimed separately:
· Electricity and gas
· Phone and internet
· Stationery and computer consumables
Expenses that may be claimed separately:
· Office equipment and furniture: You can claim a deduction for the work-related use of items such as computers, desks, chairs and bookshelves. These are generally depreciating assets and are claimed over their effective life. Repairs and maintenance may also be deductible.
· Cleaning expenses: You can claim a separate deduction for cleaning costs associated with the area of your home used for work, such as a dedicated home office.
· Occupancy expenses: Expenses such as rent, mortgage interest, rates and home insurance are not covered by the fixed rate. These may only be deductible under the actual cost method if you meet the relevant eligibility requirements.
Actual Cost Method
Under the actual cost method, you can claim the work-related portion of eligible expenses. You must incur additional running expenses as a result of working from home. This method requires detailed records and calculations.
Eligible expenses may include:
· Electricity and gas: You can claim the additional work-related portion of electricity and gas costs incurred from working from home.
· Phone and internet: You can claim the work-related portion of your phone and internet expenses.
· Stationery and computer consumables: Work-related stationery and consumables, such as printer ink and paper, may be deductible.
· Office equipment and furniture: Items such as computers, monitors, desks and chairs may be claimed separately, with any private use excluded.
· Cleaning expenses: Cleaning costs relating to a dedicated home office or work area may be claimed based on the work-related portion.
· Occupancy expenses: You may be able to claim the work-related portion of expenses such as rent, mortgage interest, rates and home insurance if your home has an area that qualifies as a place of business. This generally requires the nature of your work to require a place of business, your employer not providing an alternative workplace, and the area being used exclusively for work.
What can’t you claim?
· Household items such as coffee, tea and milk.
· Equipment or expenses provided or reimbursed by your employer.
· Private portion of expenses that have both work and personal uses.
What records do you need?
Fixed rate method: Keep a record of the actual hours you worked from home for the entire financial year. This could include timesheets, rosters or a diary. You must also keep evidence that you incurred the expenses covered by the fixed rate. For separately claimed equipment, keep receipts and records showing how you calculated your work-related use.
Actual cost method: Keep detailed records of your work from home hours, either for the full financial year or for a continuous four week period that represents your usual pattern. You must also keep evidence of the additional running expenses incurred, such as receipts and bills, and records showing how you calculated the work-related portion and your deduction.
Common mistakes to avoid
· Estimating your work from home hours at tax time instead of keeping records throughout the year.
· Double claiming expenses such as internet or electricity when using the 70 cents per hour fixed rate.
· Claiming the full cost of an expense when it is also used privately.
KEY TAKEAWAYS
If you work from home, you may be entitled to valuable deductions, but good record keeping is essential. Keeping records of your work hours and expenses throughout the year will also make it easier to determine whether the 70 cents per hour fixed rate or actual cost method is most appropriate for you.
Need help? If you’re unsure whether a deduction or expense applies to you or what records you need to keep, contact our team.
General information only. This article does not constitute tax or financial advice and may not apply to your individual circumstances. Please contact our office for advice specific to your situation.
