Evidence-backed. Sourced from the ATO, Yahoo Finance, Treasury, H&R Block and ABC. General information only — not financial advice. WFH rules change — always verify with the ATO (ato.gov.au) or a registered tax agent before lodging. Last updated: June 2026.
⚡ Key Takeaways
- The ATO’s WFH fixed-rate method is 70 cents per hour from 1 July 2024 — up from 67c. A full-time WFH worker clocking 38 hours/week all year can claim around $1,383. [3]
- Roughly 4 million Australians claimed WFH deductions in 2023 — more than half using the fixed-rate method. [3]
- The fixed-rate covers electricity, gas, phone, internet and stationery — but you can claim depreciation separately on your laptop, monitor and chair. [1][2]
- You do not need a dedicated home office to use the fixed-rate method. [2]
- The ATO’s explicit “can’t claim” list includes coffee, tea, kids’ devices, streaming services and general groceries — even if your employer provides these at the office. [12]
- The $1,000 standard work-expense deduction proposed for 1 July 2026 does NOT apply to your 2025–26 return. You still need to itemise every expense. [6][7]
WFH Tax Deductions 2026: Stop Leaving Money on the Table (Complete Guide)
By The Fine Print editorial team | Last updated: June 2026 | 11 min read | ⚠️ Not financial advice
Working from home is now one of the easiest legal ways to boost your tax refund — but only if you play by the ATO’s updated rules. The old 80c “shortcut” method is gone. The new fixed-rate method runs at 70 cents per hour, the record-keeping requirements are stricter, and most Australians are either not claiming at all or submitting rough guesses that won’t survive an audit. Both errors cost money. This guide covers everything you need to claim your WFH deductions correctly for the 2025–26 return.📋 What’s in This Guide
Who Can Claim WFH Deductions
The ATO says you can claim WFH expenses if you meet three conditions: you are working from home to fulfil your employment duties (not just occasionally checking emails), you incur additional running expenses because you work from home, and you have records showing that you actually incur these expenses. [2]The ATO lists the following as deductible running expenses when incurred for work: electricity or gas (heating, cooling, lighting), home and mobile internet and data, home and mobile phone costs, stationery and office supplies, and decline in value (depreciation) of office furniture and equipment. [2] In limited cases where a room is used exclusively as a dedicated home office, you may also claim occupancy expenses like mortgage interest or rent — but the ATO is currently appealing a court case that expanded these rights, and most employees should not attempt to claim occupancy expenses.The Two Methods: Fixed-Rate vs Actual-Cost
Method 1: Fixed-Rate (70c/hour) — most people should use this
From 1 July 2024, the ATO raised the fixed rate to 70 cents per hour worked from home — up from 67c, and well above the old 52c rate. The 70c rate covers electricity and gas, phone and internet, and stationery and computer consumables in a single hourly rate. [1][3]Critically, you can still claim separately for the decline in value (depreciation) of significant equipment — your laptop, monitor, chair, desk — even while using the fixed-rate method. You do not need a dedicated home office to use this method. [1][2]💡 Fixed-rate method — what it covers vs what it doesn’t
- Covered by the 70c rate: electricity, gas, phone, internet, stationery, consumables.
- Claim separately on top: depreciation on laptop, monitor, chair, desk, headset, printer; repairs on work equipment.
- NOT covered by either: coffee, tea, general groceries, kids’ devices, streaming services, commuting. [1][2]
Method 2: Actual-Cost — for high-expense situations
Under the actual-cost method, you claim the genuine work-related portion of every bill — energy, phone, internet, cleaning, depreciation — based on your actual usage split between work and private. It can produce a higher deduction if your real costs are significant, but it requires detailed records: actual bills, clear apportionment between work and personal use, and evidence for every item. It’s more work, more admin, and best suited to those with very high actual running costs or a dedicated office. [5][2]What the 70c Rate Is Actually Worth
Yahoo Finance, using ATO numbers, calculated that someone working 38 hours per week from home for a full year could claim about $1,383 as a deduction under the 70c method — around $59 more than under the old 67c rate. [3] That’s $1,383 in reduced taxable income — worth roughly $345–$510 as actual tax saved, depending on your marginal rate.For someone working from home 2–3 days a week — common under hybrid arrangements — the deduction from the fixed-rate method alone is typically $400–$700, plus the depreciation on any equipment. Many employees either claim nothing at all or put in a round number from memory, which means they’re either leaving real money behind or inviting audit scrutiny. [9][10]💡 Quick estimate: what’s my WFH deduction worth?
- 1 day/week WFH (approx. 48 weeks × 7.6 hrs): ~365 hrs × $0.70 = ~$255
- 2 days/week WFH: ~730 hrs × $0.70 = ~$511
- 3 days/week WFH: ~1,094 hrs × $0.70 = ~$766
- Full-time WFH (38 hrs/week): ~1,976 hrs × $0.70 = ~$1,383
Claiming Equipment and Depreciation Separately
Even while using the fixed-rate method, you can claim the decline in value of work equipment on top of your hourly rate. This is one of the most commonly missed add-ons. [11][1]Items that cost $300 or less and are predominantly used for work can generally be deducted in full in the year of purchase. Items costing more than $300 are depreciated over their effective life — a laptop over 3 years, a monitor over 5 years, an office chair over 10 years. You need the purchase receipt and a reasonable estimate of the work-use percentage. [2][1]Examples of claimable equipment: laptops and computers, external monitors, printers and scanners, office chairs (ergonomic or otherwise), standing desks, headsets and webcams, and mobile phones used for work. The work-use percentage must be honest — if you use the monitor 90% for work and 10% for Netflix, claim 90%. [2]What You Cannot Claim Under WFH
ABC’s 2026 tax-time coverage shows the ATO explicitly warning taxpayers not to claim coffee, tea, milk or other household items as WFH expenses — even if your employer would provide them at the office. The ATO’s published list of non-deductible WFH expenses includes general groceries, children’s education devices and subscriptions, non-work streaming services, items your employer already provides or reimburses, and general household items used by the whole family. [12][2]⚠️ The “employer would provide it” logic doesn’t work. The ATO explicitly rejects the argument that something is deductible because your employer would supply it at the office. Coffee at home is not a WFH deduction. Your kids’ iPad for school is not a WFH deduction. Netflix is not a WFH deduction — even if you occasionally use it as background noise while working. [12]
What Records the ATO Actually Requires
To use the fixed-rate method correctly, the ATO requires three types of records: a record of total hours worked from home during the year (timesheets, rosters, a consistent diary, or calendar entries — a sample period is no longer sufficient), bills for phone, internet and energy to show you actually incur these costs, and receipts for any equipment you’re claiming depreciation on. [5][1][2]The most common record-keeping failure is hours. Many people only have a rough idea of their hours, reconstruct them from memory months later, or enter a round number that looks approximate. In an ATO audit, a vague estimate is almost as bad as no record at all — the ATO can reduce or deny the deduction even if the work was genuinely done. The fix is simple and free: add a recurring calendar event for every WFH day, or mark it in a notes app as you go.The occupancy controversy: renters and the ATO
A controversial court case involved a radio presenter who successfully claimed occupancy expenses — rent and mortgage interest — for a second bedroom used as a recording studio. The ATO is appealing the ruling, worried about the precedent it sets for renters claiming large occupancy deductions. The ATO’s general position remains that most employees cannot claim mortgage interest or rent — only running costs — unless the home is genuinely a principal place of business with very limited private use. [13] Until this appeal is resolved, most employees should not attempt to claim occupancy expenses.✅ Three Actions to Make the ATO’s WFH Rules Work For You
Action 1: Choose the right method and commit today
For most employees, the 70c fixed-rate method is the right choice — simpler records, no complex apportionment. Decide now which method you’ll use for 2025–26 and start tracking accordingly. If you have very high actual running costs or a dedicated, exclusive home office and are willing to maintain detailed records, get advice on whether the actual-cost method yields more. You can’t switch methods mid-year. [5][1][2]Action 2: Start a simple WFH log and receipts system today
Set up two things right now: a recurring calendar entry where you mark each day you work from home (this becomes your hours log), and a digital folder called “WFH 2025–26” where you save power bills, internet bills, phone bills, and purchase receipts for any office equipment. By 30 June you’ll have everything the ATO could ask for — a total hours figure and evidence of actual bills — without scrambling. [1][5][2]Action 3: Cross-check the “can’t claim” list before lodging
Before entering any amount as a WFH deduction in myTax, check it against the ATO’s explicit exclusion list: no coffee, tea, snacks or general groceries; no kids’ devices or education subscriptions; no items your employer already provides or reimburses. This lets you claim everything you’re genuinely entitled to — hours, equipment, bills — without falling into the traps the ATO is publicly targeting in 2026. [12][2]❓ Frequently Asked Questions
What is the ATO’s WFH rate for 2025-26?
70 cents per hour from 1 July 2024, covering electricity, gas, phone, internet and stationery. Depreciation on work equipment (laptop, monitor, chair) is claimed separately on top. No dedicated home office required. [1][2][3]How much can I actually claim for WFH?
Full-time WFH all year: ~$1,383 from the fixed rate alone. 3 days/week: ~$766. 2 days/week: ~$511. Add depreciation on work equipment on top. These are deductions — actual tax saved depends on your marginal rate. [3]What records do I need?
A diary or calendar showing actual WFH hours for the full year (not a sample period), bills for phone, internet and energy, and receipts for any equipment you’re depreciating. No records = no deduction in an audit. [5][1]Can I claim coffee and groceries?
No. The ATO explicitly excludes coffee, tea, snacks, general groceries, kids’ devices and streaming services — even if your employer provides these at the office. Claiming them increases audit risk. [12][2]⚖️ The Fine Print Verdict
Through COVID, the ATO made WFH claims easy. In 2026, that generosity is gone — but the deductions aren’t. The only people still losing are those who either claim nothing out of laziness or claim everything out of wishful thinking. The 70-cent rule is legitimate, meaningful, and available to almost every Australian who works from home. Twenty minutes setting up a WFH log and a digital receipts folder today can be worth hundreds of dollars this July — and every July after that.
👉 Start your WFH hours log today. Save your bills. Claim every cent the ATO says you’re entitled to — and not one cent more.
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- ATO, “Fixed-rate method — working from home expenses,” 2026. ato.gov.au
- ATO, “Working from home expenses,” 2026. ato.gov.au
- Yahoo Finance, “ATO confirms $1,380 tax change for millions of Aussies who work from home,” April 2025. finance.yahoo.com
- H&R Block, “Work from home update,” 2023–24. hrblock.com.au
- COSCA, “Home office expenses — what you can claim and ATO requirements in 2025.” cosca.com.au
- H&R Block, “Standard $1,000 tax deduction explained,” 2026. hrblock.com.au
- Treasury, “Standard deduction exposure draft,” April 2026. consult.treasury.gov.au
- ATO, “Overview of key changes — Tax Time 2025–26.” ato.gov.au
- Instagram / tax educator reel, 2026.
- CleanSlate, “Work from home tax deductions Australia,” 2025. cleanslate.net.au
- Future Accounting Tax, “Top tax deductions individuals can claim in Australia — 2026 guide.” futureaccountingtax.com.au
- ABC News, “Tax time 2026: ATO warns millions of Aussies claiming tax deductions,” 2 June 2026. abc.net.au
- YouTube / ATO occupancy appeal commentary, 2026.
This article is general information only and does not constitute tax or financial advice. WFH rules change each year — always verify with the ATO (ato.gov.au) or a registered tax agent before lodging. The Fine Print 🇦🇺 is not affiliated with the ATO.