Working From Home Tax Deductions: ATO Rules and Rates for 2025-26
Quick answer: Working from home tax deductions let you claim a share of your running costs, using either the ATO's fixed rate method (70 cents per work hour for 2024-25 and 2025-26) or the actual cost method, provided you keep a genuine record of the hours you worked from home all year, not just an estimate.
What Can You Claim With Working From Home Tax Deductions?
You can only claim a deduction for the extra running costs you actually incur because you work from home, not for costs you would have paid anyway. The ATO gives you a choice of two methods: the fixed rate method, which bundles several common running costs into one rate per hour, and the actual cost method, which claims the real work-related portion of each expense you can substantiate. You can only claim the work-related portion of any cost you also use privately, and if your employer pays you an allowance for these costs, you need to include that allowance as income.
How Does the Fixed Rate Method Work for Working From Home Tax Deductions?
The fixed rate method pays a flat 70 cents for every hour you worked from home in both the 2024-25 and 2025-26 income years, and it does not require a dedicated home office. The rate has changed over time as the ATO has adjusted it for running costs, as the table below shows.
Income year | Fixed rate (cents per work hour) |
2020-21 and 2021-22 | 52 cents |
2022-23 and 2023-24 | 67 cents |
2024-25 and 2025-26 | 70 cents |
What Does the 70 Cents an Hour Actually Cover?
The 70 cents an hour already covers home and mobile internet or data, mobile and home phone usage, electricity and gas for heating, cooling and lighting, and stationery and computer consumables such as printer ink and paper, all in one combined figure. If you use the fixed rate method you cannot also claim these same items separately. You can still claim, on top of the rate, the work-related decline in value of equipment such as laptops, desks, chairs and bookshelves, plus their repairs and maintenance. Items costing $300 or less that are used mainly for work can usually be claimed in full immediately, while items over $300 are depreciated over their effective life.
What About the Actual Cost Method?
The actual cost method lets you claim the real work-related portion of each running expense you can substantiate, rather than one combined rate. This can suit people with unusually high running costs, but it demands more detailed, itemised records for every expense claimed, and you still need to separate work use from private use for each one. In limited circumstances, such as when you have a dedicated home office, occupancy expenses like mortgage interest or rent and cleaning costs for that area may also be claimable.
What Records Do You Need to Claim Working From Home Tax Deductions?
The ATO requires an actual record of the hours you worked from home for the whole income year, such as a timesheet, roster, diary or similar document kept at the time the hours were worked; an estimate will not be accepted. You also need at least one supporting record for each running expense type your claim covers, such as one electricity bill or one internet invoice, plus records for any depreciating assets showing what you spent and the work-use percentage. Generally you should keep these records for five years from when you lodge the return they relate to, or five years from your last decline-in-value claim for depreciating assets.
Source: ATO - working from home expenses.
How Does Tax Falcon Help You Claim These Deductions Correctly?
Tax Falcon's online return process is built so a claim like this does not get skipped just because it feels fiddly to work out. After you link your details and the service pre-fills your income from the ATO, the add deductions step asks specific questions about the hours you worked from home and the running costs you paid, so the fixed rate or actual cost method gets applied rather than left on the table. A standard tax return through Tax Falcon is listed from $88, and the process is designed to take under 10 minutes from sign-up to lodgement, though you still need your own hours and expense records on hand before you start, since no service can supply those for you.
Start your return with Tax Falcon and get the add deductions questions that cover working from home costs.
Frequently Asked Questions
What is the ATO's fixed rate for working from home in 2025-26?
For both the 2024-25 and 2025-26 income years, the ATO's fixed rate method pays 70 cents for every hour you worked from home, covering electricity, phone, internet and stationery costs in one combined rate.
Do I need receipts to claim working from home tax deductions?
Yes. Even under the fixed rate method you need an actual record of the hours you worked from home for the whole year, plus at least one supporting record for each running expense type, such as one phone bill or one internet invoice; estimates are not accepted.
Can I claim both the fixed rate and depreciation on my laptop?
Yes. The fixed rate method lets you separately claim the work-related decline in value of equipment such as laptops, desks and chairs, on top of the 70 cents per hour rate, provided you keep records of the cost and work-use percentage.
What is the difference between the fixed rate and actual cost method?
The fixed rate method applies one rate per hour to cover several common running costs together, while the actual cost method claims the real work-related portion of each expense separately and needs more detailed records for every item claimed.
Can Tax Falcon help me claim working from home tax deductions?
Yes. Tax Falcon's return process asks specific questions about your working from home hours and running costs so this deduction is not missed, though you still need to keep your own hour and expense records to support the claim.
