Work From Home Tax Deductions (2025-26)

If you worked from home during the 2024–25 income year, you may be entitled to claim deductions for the extra running costs you incurred. The ATO allows employees and some business owners to claim only the work-related portion of expenses, so the key question is not whether you worked at home, but whether you can show you incurred additional costs because you were working. For most people, the main method available for 2024–25 is the fixed rate method at 70 cents per hour. This rate is designed to cover a bundle of common home office running costs, but it does not cover everything, and you can still claim some expenses separately where allowed.

Under the 70 cents per hour fixed rate method, you can claim a set amount for each hour you worked from home during the year. The rate covers electricity and gas for heating, cooling and lighting, internet, mobile and home phone usage, and stationery and computer consumables such as printer ink and paper. You need to calculate your total hours worked from home and multiply by 70 cents. For example, if you worked from home for 600 hours during the year, your deduction under this method would be $420. If your work-from-home pattern changed through the year, you can use a reasonable estimate based on a diary, timesheets, rosters or other records, but you must be able to support the hours you claim.

Record keeping is critical. For the 2024–25 return, the ATO requires a record of all the hours you worked from home for the entire period you are claiming, or a representative four-week period if your pattern was regular and you can reasonably extrapolate from it. In practice, keeping a diary, calendar entries, timesheets, roster records or a log of login and logout times is the safest approach. You also need evidence of the expenses covered by the fixed rate method, such as electricity, internet and phone bills, even though you are not claiming those bills separately under the fixed rate. If the ATO asks, you need to show both that you worked from home and how you worked out the number of hours claimed.

The fixed rate method is convenient, but it is not always the best option. You can sometimes claim actual expenses instead if you have the records and your claim works out higher. The actual cost method can include the work-related portion of electricity, internet, phone, stationery and consumables, and potentially decline in value for items such as computers, desks, chairs and office equipment. However, this method is more complex because you must apportion expenses based on work use and keep stronger evidence. For many taxpayers, the fixed rate method is simpler and produces a reasonable deduction, especially where work-from-home hours were consistent across the year.

One important point is that the fixed rate method does not cover depreciation of assets or repairs to equipment. If you buy a laptop, monitor, keyboard, mouse, office chair or desk for work, you may be able to claim decline in value or an immediate deduction depending on the item’s cost and your circumstances. Small business owners and contractors who use a dedicated home office may also be able to claim a broader range of home office expenses, but the rules differ from employee claims and the occupancy expense rules can be much more complex. If part of your home is genuinely used as a place of business, get advice before claiming rent, mortgage interest, rates or insurance, because these claims can have capital gains tax and other consequences.

You also cannot double dip. If your employer reimburses you for any of your home office costs, you cannot claim that amount. Similarly, if you use the fixed rate method, you cannot also claim the same electricity, internet, phone or stationery costs separately. You need to choose the method that best fits your records and gives you the correct deduction. The ATO expects claims to be reasonable, based on work use only, and supported by documentation.

If you worked from home in 2024–25 and want to make sure your claim is accurate and maximised without crossing the line, SolAeon Tax can help with tailored advice on the right method, the records you need and any top-up deductions you may be entitled to claim.