If you worked from home at any point during the 2025–26 financial year, you can claim a deduction for the extra running costs it caused you. Most people use the ATO’s fixed rate method, and the rate for 2025–26 is 70 cents per hour.
The rate itself is the easy part. Where people come unstuck is the record keeping — and that is exactly where the ATO is looking.
What the 70 cent rate covers
The fixed rate is 70 cents for every hour you worked from home during 2024–25 and 2025–26. It bundles together:
- Electricity and gas for heating, cooling and lighting
- Home and mobile internet or data
- Mobile and home phone usage
- Stationery and computer consumables, such as printer ink and paper
The important consequence: you cannot claim any of those items separately on top of the rate. If you claim 70c per hour, your phone and internet are already in that number — even the work calls you made on days you were in the office.
What you can still claim on top
The fixed rate does not cover assets. You can separately claim the work-related decline in value of things like your desk, chair, monitor, laptop and bookshelves, plus repairs and maintenance on them.
- Items costing $300 or less — claim the full cost immediately in the year you buy it (keyboards, a mouse, a desk lamp, a power board)
- Items costing more than $300 — claim the decline in value over the asset’s effective life
- Mixed work and private use — you must apportion and claim only the work-related share
A worked example
The ATO’s own example: Keisha is an employee engineer who tracked her hours on timesheets. She worked 843 hours from home during 2025–26.
843 hours × 70c = a deduction of $590.
If Keisha had also bought a $299 office chair and a $250 desk used only for work, she could add both in full — because each cost $300 or less — taking her total to $1,139.
The record keeping that actually matters
This is the part that gets claims denied. To use the fixed rate method you must keep:
- A record of your actual hours worked from home for the entire income year. A timesheet, roster, diary or spreadsheet kept at the time. An estimate is not acceptable — and neither is a “representative four-week period”, which was allowed under the old rules and no longer is.
- At least one record for each running expense the rate covers — for example one quarterly electricity bill and one internet bill.
The ATO is blunt about the hours requirement. In its published example, a taxpayer who estimated her hours from July to February and only kept proper records from March onward could claim only the recorded months. The estimated eight months were disallowed entirely.
Keep your records for five years from the date you lodge.
When the actual cost method beats 70 cents
The alternative is the actual cost method: work out the real work-related portion of each expense. It is more work and needs more evidence, but it can produce a much bigger deduction if you have high energy costs, a dedicated home office, or significant work phone and internet use that the flat rate under-compensates.
As a rough guide, if you work from home three or more days a week and your household energy bills are substantial, it is worth having both methods calculated before you decide.
Need a hand with this?
We calculate both methods for every client who works from home and lodge whichever is higher. If you are not sure your records stack up, bring what you have and we will tell you honestly what is claimable.
Related reading
- Rental property tax mistakes: why the ATO says 9 in 10 landlords get it wrong
- Car and travel claims: 88 cents a kilometre, and the trips you can’t claim
- Crypto and the ATO: what data matching means for your tax return
- Our full range of services, including individual tax returns and work-related deductions
Sources
This article is general information only and does not take your personal circumstances into account. Rates and thresholds are current for the 2025–26 income year unless stated otherwise. Speak to us before acting on anything you read here.
Samrat Sharma & Associates 