From the 2026-27 income year, eligible employees get an automatic standard deduction of up to $1,000 for work-related expenses. Working from home claims and car expenses both reduce that $1,000, dollar for dollar, if you itemise them. The practical question is not only "what method can I use?" It is also "will itemising leave me with a larger total deduction than the automatic $1,000?"

The standard deduction itself, including the official Yui and Marco examples, is explained in the Never Lose Interest work-related deductions guide. The income tax and pay calculator explainers show how a deduction changes tax and take-home pay. This page covers the two methods for working from home, the two methods for a car you own or lease, and how those claims interact with the $1,000 from 2026-27. The 2025-26 year still uses the older substantiation exceptions, and does not get the standard deduction.

This is general information only. It is not personal advice or a tax assessment. Draft Law Companion Ruling LCR 2026/D5, which explains some standard-deduction detail, was still in draft as at November 2026.

What changes from 2026-27?

If you are an Australian resident individual with assessable labour income, the ATO applies a standard deduction of up to $1,000 automatically. You do not need receipts for that amount, and you do not need to have spent $1,000.

If you then claim working from home expenses, car expenses, uniforms, laundry, stationery or other covered work costs, the standard deduction shrinks by the same amount. If those claims reach $1,000, the standard deduction is nil and you keep the itemised total, with written evidence for all of those expenses. The older $300 work-expense and $150 laundry exceptions do not apply from 1 July 2026.

The comparison is straightforward:

  • if your genuine, deductible working from home and car claims, plus other covered work expenses, would be less than $1,000, you are usually better off not claiming them and taking the automatic amount
  • if they would be more than $1,000, claim them in full, with records, and the standard deduction drops away

You do not add $1,000 on top of a $2,000 car claim. Union fees, professional association memberships, donations and tax agent fees still sit outside this calculation, as the work-related deductions guide explains.

If you think your work travel or home-office costs might exceed $1,000, keep the records from 1 July 2026 so you can choose at year end. You cannot reconstruct a year's worth of working-from-home hours from an estimate later. The ATO does not accept estimates for the fixed-rate method.

How do I claim working from home expenses?

There are two methods: the fixed rate method and the actual cost method. You must have incurred additional running expenses from working at home, and the work must be genuine. Sitting at the kitchen table one evening to check email may not, on its own, support a large claim.

The fixed rate method

You multiply the hours you actually worked from home by a set rate for that year. For 2024-25 and 2025-26 the rate is 70 cents per hour. As at the ATO's 8 June 2026 update of that page, no 2026-27 hourly rate had been published. Use the official rate for the year you are claiming, when the ATO publishes it, rather than assuming 70 cents will continue.

The rate covers home and mobile internet or data, mobile and home phone use, electricity and gas for heating, cooling and lighting, and stationery and computer consumables. You cannot claim those items again on top of the rate. If you want to claim all of a work mobile phone bill, including days you were not working from home, the ATO's Keisha example says you need the actual cost method instead.

You can still claim, separately, the work-related decline in value of office furniture and technology, such as a desk, chair or computer, and repairs to those items. An item that cost $300 or less, used mainly to produce non-business income, can often be deducted in the year you buy it. Those decline-in-value claims also reduce the standard deduction if they relate to earning assessable labour income.

You must keep a record of the actual hours, made at the time, for the whole year: a timesheet, roster, diary or similar. An estimate based on "one day a week for 48 weeks" is not accepted. In the ATO's Wanda example, hours estimated for part of the year were excluded, and only the later diary hours could be claimed.

You also need at least one record for each type of running expense the rate covers, such as an electricity bill and a stationery receipt, and you must have incurred those expenses.

A 2025-26 illustration, using the published 70 cent rate: 800 recorded hours is $560. From 2026-27, claiming that $560 would reduce a $1,000 standard deduction to $440, leaving the same $1,000 total, plus any furniture claim. Unless furniture or other covered expenses push the total above $1,000, there is no advantage in itemising that $560.

The actual cost method

You claim the work-related portion of the actual running costs you incurred, with records of the expenses and of the work-related use. That can include energy, internet, phone, consumables and decline in value. It is more paperwork. It can be worth it if those costs, properly apportioned, plus car and other work expenses, exceed $1,000.

Occupancy expenses, such as rent, mortgage interest, council rates and home insurance, are a higher bar. The ATO generally does not allow employees to claim them unless a part of the home is a dedicated place of business and, in the usual case, the employer does not provide an alternative workplace. Occasional work from home does not meet that test. Claiming occupancy expenses can also affect the main residence CGT exemption, because the ATO uses an interest deductibility test when you later sell.

How do I claim car expenses?

For a car you own or lease, there are two methods. Home-to-work travel is generally not deductible. Work-related kilometres are kilometres the car travels in the course of earning your assessable employment income, such as travel between workplaces or to a client's site, not the daily commute.

Cents per kilometre

For 2026-27 the rate is 91 cents per work-related kilometre. For 2024-25 and 2025-26 it was 88 cents. You can claim a maximum of 5,000 work-related kilometres per car. The rate covers decline in value, registration, insurance, maintenance, repairs and fuel. You cannot add those costs on top.

You do not need fuel receipts, but you do need to own the car and to have a record that shows how you worked out the kilometres, such as a diary or the myDeductions tool. A reasonable estimate of trips can be used for this method, unlike the working-from-home fixed rate, which requires contemporaneous hour records.

A 2026-27 example: 2,000 genuine work kilometres times 91 cents is $1,820. That already exceeds the $1,000 standard deduction, so you would claim the $1,820, with your kilometre record, and receive no standard deduction. If you only had 800 work kilometres, the claim would be $728, which is less than $1,000, so you would usually take the automatic standard deduction instead.

If you and another joint owner use the car for separate income-producing purposes, you can each claim up to 5,000 work-related kilometres.

The logbook method

You claim the work-related portion of your actual car expenses, including fuel or electricity, servicing, registration, insurance and decline in value. You need:

  • a logbook for a continuous period of at least 12 weeks, broadly representative of your travel, with the purpose, destination, start and end odometer readings and kilometres for each work journey, recorded at the end of the trip or as soon as possible afterwards
  • odometer readings for the start and end of the logbook period, and of each later year you rely on that logbook
  • receipts or other records of the expenses

The logbook is valid for five years, unless your circumstances change, for example you change jobs or move house, and it no longer represents your work use. If you do not have a valid logbook, you cannot use this method.

Decline in value is limited by the official car limit in the year you bought the car. For 2025-26 that limit was $69,674. Check the ATO's car limit for the year you purchased. The Commissioner's determined effective life for a car is generally eight years.

The ATO also publishes a home-charging rate for certain electric vehicles, of 4.2 cents per kilometre for the 2022-23 to 2025-26 years, under Practical Compliance Guideline PCG 2024/2. As at November 2026, check whether that rate has been extended or replaced for 2026-27 before you use it.

A logbook claim can be much larger than 5,000 kilometres at 91 cents if your work use is high. It can also be smaller. Work out both methods, then compare the better one with the $1,000 standard deduction.

Frequently asked questions

Can I claim 5,000 kilometres automatically?

No. You must have travelled the work-related kilometres, and you must be able to show how you worked them out. There is no automatic 5,000 kilometre deduction.

Can I claim the standard deduction and 91 cents a kilometre?

You can take the standard deduction, or you can claim the car expense, but the car claim reduces the standard deduction dollar for dollar. If the car claim is $1,820, the standard deduction is nil. If it is $728, claiming it would leave you worse off than taking the $1,000.

Do I need a dedicated home office?

Not for the fixed rate method. You do need additional running expenses and a record of hours. A dedicated office is more relevant if you want to consider occupancy expenses, which most employees cannot claim, or if you are thinking about CGT on a later sale.

What if my employer pays a car allowance?

An allowance is usually assessable income. You can only deduct the work-related car expenses you actually incurred, using one of the methods above, if you are entitled to the deduction. The allowance does not automatically equal the deduction.

Which year do these rules start?

The standard deduction and the end of the $300 and $150 exceptions apply from 2026-27. The 91 cent car rate is a 2026-27 rate. For 2025-26, use 88 cents, the 70 cent working-from-home rate, and the older substantiation rules, with no standard deduction.

General information warning

This article is general information only. It is not personal advice or a tax assessment, and it is not a recommendation to itemise or to use a particular method. It does not take into account your objectives, financial situation or needs. The 2026-27 working-from-home fixed rate had not been published on the ATO's fixed-rate page as at 8 June 2026, and LCR 2026/D5 was still in draft as at November 2026. Consider speaking with a registered tax agent if your travel or home-office claims are material.

Sources

  • Australian Taxation Office, Standard deduction for work-related expenses, last updated 2 November 2026.
  • Australian Taxation Office, Fixed rate method, last updated 8 June 2026, including the 70 cent rate for 2024-25 and 2025-26 and the official Keisha, Yang and Wanda examples.
  • Australian Taxation Office, Actual cost method.
  • Australian Taxation Office, Occupancy expenses.
  • Australian Taxation Office, Cents per kilometre method, including the 91 cent rate for 2026-27.
  • Australian Taxation Office, Logbook method, last updated 12 June 2026.
  • Australian Taxation Office, Practical Compliance Guideline PCG 2024/2, for the electric vehicle home-charging rate of 4.2 cents per kilometre in the 2022-23 to 2025-26 years.

Last reviewed: November 2026.