Work From Home Deduction Calculator 2025-26 Australia

How the ATO 2025-26 Work From Home Deduction Works

The Work From Home Deduction is the amount an Australian employee or eligible contractor can claim as a tax deduction for running expenses while working from home during the 2025-26 financial year (1 July 2025 – 30 June 2026). The ATO offers two methods — the Fixed Rate Method at 70 cents per hour worked from home, which bundles electricity, gas, phone, internet, stationery, and computer consumables into one rate; or the Actual Cost Method, which lets you claim the real work-related portion of each bill.

You can choose whichever method gives you the larger legitimate deduction, but you must apply the same method for the full income year. The 70c fixed rate covers the core running costs, meaning you cannot separately claim electricity, internet, or phone expenses on top — but you can still claim depreciation on computers, desks, and office chairs, and the work-related portion of consumables like printer ink and stationery.

Fixed Rate Method vs Actual Cost Method — Which Is Better?

The Fixed Rate Method is simpler and suits most employees who work from home part-time. If you work 20 hours a week from home for 48 weeks, that's 960 hours × 70c = $672 deduction with only a diary required. The Actual Cost Method usually wins for people with high running costs — for example, a dedicated home office running air-conditioning all day, a premium internet plan, or expensive work-issued equipment drawing significant power.

To decide, calculate both using real numbers. If your actual bills exceed the fixed rate result by more than the extra record-keeping effort is worth, choose Actual Cost. Otherwise stick with Fixed Rate — the ATO accepts it with just a diary of hours, no receipts for utilities required. This calculator does both comparisons instantly so you can pick the winner before you lodge.

Record-Keeping Before EOFY 30 June

Since 1 March 2023 the ATO no longer accepts estimated hours for the Fixed Rate Method — you need a real-time record such as a diary, timesheet, roster, or time-tracking app. Start or back-fill your records before EOFY to avoid having your claim denied. For the Actual Cost Method, retain every electricity, gas, internet, and phone bill plus a 4-week representative diary showing work-use percentage across the year.

Also keep receipts for any depreciating assets like monitors, standing desks, and office chairs — items under $300 can be claimed immediately, while items above $300 must be depreciated over their effective life. The ATO's myDeductions app is the easiest way to log hours and upload receipts as you go, and the data auto-syncs into myTax when you lodge your 2025-26 return from 1 July 2026.

Tax Refund Value at Your Marginal Rate

Your WFH deduction reduces your taxable income, which means your refund equals deduction × marginal tax rate. A $1,000 deduction is worth $300 to someone on the 30% bracket but $450 to someone on the 45% bracket. High-income earners benefit proportionally more, which is why it's worth maxing out every legitimate claim. Last updated: April 2026 (2025-26 rates confirmed by ATO).