Work from home (WFH) tax deductions in Australia changed significantly in 2023, with the ATO replacing the previous 80 cents flat rate and requiring taxpayers to use either the revised fixed rate method (67 cents per hour) or the actual cost method. In 2026, these rules remain in place — and the ATO has signalled it will scrutinise WFH claims carefully. Here is what you can and cannot claim for working from home in 2025-26.

The Two Methods for 2025-26 WFH Deductions

Method 1: Revised Fixed Rate Method (67 cents per hour)

The revised fixed rate of 67 cents per hour covers: electricity and gas (usage while working from home), phone (work-related calls and data), internet, stationery, and computer consumables. You claim 67 cents for every hour you work from home — provided you kept records of hours worked throughout the year (a diary or timesheet, not an estimate).

  • You can additionally claim depreciation of equipment (laptops, phones, monitors, office furniture) separately
  • You cannot separately claim electricity, gas, internet, or phone costs — these are included in the 67 cents rate
  • Record-keeping: a continuous diary or time tracking records for the entire year are required (from 1 March 2023, no more estimates)

Method 2: Actual Cost Method

Claim the actual work-related portion of each expense based on evidence. This requires more record-keeping but may produce a larger deduction for people with high home running costs or dedicated home offices:

  • Electricity/gas: Based on the floor area of your work area as a percentage of your total home floor area, multiplied by actual usage costs
  • Phone and internet: Based on the work-related percentage of your total bill, evidenced by a 4-week log of usage
  • Depreciation of equipment: Based on the work-use percentage of the cost of each asset
  • Occupancy expenses (rent, mortgage interest, council rates): Only deductible if your home is your principal place of business (rare for PAYG employees)

What You Cannot Claim

  • Coffee, tea, and food consumed while working from home
  • Occupancy costs (mortgage interest, rent) unless the home is your registered business address and you have a dedicated area exclusively used for business
  • Furniture in spaces used for personal purposes as well as work
  • Costs for a workspace that was not actually used to work from home

Frequently Asked Questions

Can I claim internet if I use the 67 cents per hour rate?

No. The revised fixed rate of 67 cents per hour already includes internet costs. If you use the fixed rate method, you cannot make a separate deduction for your home internet plan. You can still separately claim depreciation of your laptop, printer, and office chair under the fixed rate method.

Can PAYG employees claim a home office deduction?

Yes. PAYG (wage and salary) employees who were required to work from home — or who chose to work from home with their employer's agreement — can claim WFH deductions using the fixed rate or actual cost method. The key requirement is that you must have actually worked from home and kept records of the hours. Employees who simply did some work emails from home occasionally cannot claim the full deduction.

Worked from home in 2025-26 and want to maximise your deduction? Contact AWTS — we ensure your WFH claims are correctly calculated and properly supported with the ATO-compliant record-keeping.