From the 2026–27 income year, employees can claim a $1,000 standard deduction for work-related expenses without keeping a single receipt. The measure is law, enacted in the Treasury Laws Amendment (Tax Reform No. 1) Act 2026.
Two things to be clear on from the start. It does not apply to the 2025–26 tax return you are lodging now. And it is a deduction, not a refund: it is worth $1,000 multiplied by your marginal tax rate.
The $1,000 standard deduction at a glance
- Applies from the 2026–27 income year, so it first appears in returns lodged from July 2027
- Up to $1,000, or your labour income if that is lower
- Applied automatically, with nothing to elect
- Available to Australian resident individuals with labour income such as salary, wages and directors’ fees
- Not available against business income or investment income
- If your actual work expenses are more than $1,000, you can still claim them in full, with records
What the standard deduction is worth
| Taxable income in 2026–27 | Marginal rate | Tax saved on $1,000 |
|---|---|---|
| $18,201 to $45,000 | 15% | $150 |
| $45,001 to $135,000 | 30% | $300 |
| $135,001 to $190,000 | 37% | $370 |
| Over $190,000 | 45% | $450 |
Add the 2% Medicare levy where it applies. And the real benefit is only the difference from what you would have claimed anyway. If you normally claim $600 of work expenses, the standard deduction gives you an extra $400 of deductions, worth $120 at a 30% rate.
How it works with your actual expenses
The standard deduction is reduced dollar for dollar by the work-related expenses you claim. In effect you get the greater of $1,000 or your actual substantiated expenses, not both.
| Your actual work expenses | What you claim | Records needed |
|---|---|---|
| $300 | $1,000 standard deduction | None |
| $900 | $1,000 standard deduction | None |
| $2,400 | $2,400 of actual expenses | Written evidence for all of it |
The expenses that count against the standard deduction are the familiar work-related categories: car and travel, uniforms and laundry, working from home, self-education, tools and equipment, and phone and internet.
What you can still claim on top
Some deductions sit outside the standard deduction and can be claimed in addition to it:
- Union fees and professional association memberships
- Income protection insurance premiums
- Gifts and donations
- Tax agent fees and other costs of managing your tax affairs
- Investment and rental property deductions
Who should still itemise work-related expenses?
Anyone whose work expenses come to more than $1,000. In practice that is usually:
- People who work from home most of the week. At the 70 cents per hour fixed rate that applied for 2025–26, $1,000 is about 1,430 hours, or roughly 27 hours a week. Two days a week at home will generally not get there on its own.
- People who use their own car for work travel. At the 2025–26 rate of 88 cents per kilometre, $1,000 is about 1,140 work kilometres.
- Tradies and others who buy their own tools and equipment.
- Employees paying for their own work-related study.
- Anyone with significant uniform, protective clothing or laundry costs.
If you are in that group, record keeping matters more than it did. Once you claim more than the standard amount, you need written evidence for all of the work-related expenses you claim, not only the part above $1,000. The underlying tests have not changed either. Our article on the three rules every work-related claim has to pass sets them out.
Traps to avoid
- It is not in your 2025–26 return. Returns being lodged now run on the old rules, and claims still need to be supported.
- Sole traders and investors do not get it for that income. If you have a job and a side business, it applies to the job only.
- Do not stop keeping records part way through the year. If your expenses might exceed $1,000, you cannot reconstruct a logbook or a diary of working from home hours in July.
- You cannot add it to your other work claims. A $700 working from home claim and the standard deduction give you $1,000 in total, not $1,700.
- Some of the detail is still in draft. The ATO’s guidance, Draft Law Companion Ruling LCR 2026/D5, has not been finalised, so some edge cases may shift.
Common questions about the $1,000 standard deduction
Do I need to do anything to get the $1,000 deduction?
No. It applies automatically when your 2026–27 return is lodged, unless you claim more than that in actual expenses.
Can I claim the $1,000 as well as my working from home expenses?
No. Working from home expenses reduce the standard deduction dollar for dollar. You get whichever is higher.
Do both partners in a couple get it?
Yes. It applies to each individual who has labour income.
Is it the same as the $300 rule?
No. The $300 rule only ever relaxed the need for receipts. You still had to have spent the money. The standard deduction is available whether or not you spent anything.
Does it apply if I only worked part of the year?
Yes, but it is capped at your labour income for the year if that is less than $1,000.
Need a hand with this?
If your work expenses sit anywhere near $1,000, the decision to itemise is worth getting right, and the records need to exist before year end. We can review what you claim, tell you which side of the line you fall on and set up the record keeping for 2026–27. We are Chartered Accountants and registered tax agents in Cairnlea, in Melbourne’s west.
Related reading
- Work-related deductions: the three rules every claim has to pass
- Working from home deductions 2025–26: the 70 cent rate explained
- Car and travel claims: 88 cents a kilometre, and the trips you can’t claim
- Working from home: running expenses vs occupancy expenses (and the CGT sting)
- Our full range of services
Sources
This article is general information only and does not take your personal circumstances into account. It reflects the law and announced measures as at October 2026. Measures described as draft or proposed may change before they are enacted. Speak to us before acting on anything you read here.
