FY2025-26 guide
Working from home tax deductions: 70c fixed rate vs actual cost (FY2025-26)
How the ATO's 70c per hour fixed rate method compares to the actual cost method for FY2025-26, what each one covers, the records you need, and the double-dipping mistake to avoid.
If you work from home, there are two ways to claim your running costs — and most people pick one without ever checking whether the other would have given a bigger deduction. Here's how the two compare under the published ATO rules for FY2025-26.
Method 1: the fixed rate — 70c per hour
The fixed rate method lets you claim 70 cents for each hour you work from home. It's simple, but the critical thing to understand is what that rate already covers.
- •Electricity and gas
- •Home and mobile internet
- •Home and mobile phone usage
- •Stationery and computer consumables
Because phone and internet are already inside the 70c rate, you cannot claim them again separately on top. Doing so is double-dipping, and it's one of the most common working-from-home errors.
Method 2: actual cost
Under the actual cost method you work out the real work-related portion of each running expense — electricity, internet, phone, consumables and so on — usually by apportioning based on work use. It takes more record-keeping, but for people who work from home heavily, or who have high energy or internet costs, it can produce a materially larger deduction.
Which one wins?
There's no universal answer — it depends on your hours and your actual bills. As a rough guide, the fixed rate tends to suit lighter or occasional home-based work, while the actual cost method more often suits people working from home most of the week with real, documented costs. The only way to know is to calculate both.
The work-from-home calculator runs both methods side by side from your real hours and bills, and tells you which one is bigger — it takes about two minutes.
IT & Office Professional Tax Deduction Calculator — $19 →Records you need either way
For the fixed rate you need a record of the actual hours you worked from home across the year. An estimate written up at tax time is not sufficient — the record needs to be kept as you go, such as a timesheet, roster or diary. Under the actual cost method you also need the bills and a reasonable basis for your apportionment.
It also includes an hours timesheet that satisfies the record-keeping rule, and warns you if you're about to claim phone or internet on top of the fixed rate.
IT & Office Professional Tax Deduction Calculator — $19 →Equipment is separate
Desks, chairs, monitors and computers aren't covered by either running-cost method — they're claimed separately as depreciating assets. Items costing $300 or less can generally be claimed immediately, while more expensive items are claimed over their effective life.
What employees generally can't claim
- •Rent, mortgage interest, rates and home insurance (occupancy costs) — generally not available to employees
- •Coffee, tea, snacks and other household items
- •The cost of travelling between home and your regular office
Compare both in a couple of minutes
Our work-from-home calculator runs both methods side by side from your real numbers, tells you which one comes out ahead, and warns you if you're about to double-dip on phone and internet.
This article is general information only, based on published ATO rates and rules for FY2025-26. It isn't tax advice and doesn't consider your circumstances. OzTaxReturn is not a registered tax agent. Check your own position at ato.gov.au or with a registered tax agent (tpb.gov.au).