Working from home a few days a week? You are probably paying more for power, internet and printer ink than you would in an office. The ATO lets employees claim those extra running costs, but only if you pick a method and keep the right records.
This guide explains how to claim work from home expenses in your 2025-26 tax return, due by 31 October 2026 if you lodge yourself, and what to set up for 2026-27. It covers the 70c fixed rate, the actual cost method, records of hours and the limits on rent and mortgage interest. Every figure was checked against the ATO working from home pages.
This article is for employees who work from home. If you run a business from home and want to know about occupancy costs, home office set-ups and capital gains tax, read our separate guide to home office deductions in Australia.
Key takeaways
- Fixed rate: 70c per work hour for 2024-25 and 2025-26.
- You need a record of your actual hours for the whole year to use the fixed rate.
- The fixed rate covers energy, internet, phone, stationery and consumables, but not furniture or equipment.
- Items costing $300 or less and used mainly for work can be claimed in full.
- Employees generally cannot claim occupancy costs such as rent or mortgage interest.
- Keep records for 5 years after you lodge.
Work from home deductions at a glance
| Item | Fixed rate method | Actual cost method |
|---|---|---|
| Rate | 70c per hour (2024-25 and 2025-26) | Actual work-related cost |
| Covers | Energy, internet, phone, stationery, consumables | Each running expense worked out separately |
| Hours record | Actual hours for the full year | Full-year record or a representative 4-week diary |
| Expense records | At least one bill for each expense in the rate | Receipts and bills for every expense claimed |
| Furniture and equipment | Claim separately | Claim separately |
| Dedicated room needed? | No | No, but it affects how you apportion energy |
Source: ATO – fixed rate method, ATO – actual cost method, ATO – occupancy expenses, checked 7 October 2026.
Who can claim work from home expenses?
The ATO says you can claim if you work from home to fulfil your employment duties, not just for minimal tasks such as occasionally checking emails or taking calls. You must also incur extra running expenses because you work from home, and keep records.
You cannot claim:
- Household items such as coffee, tea and milk.
- Equipment your employer provides, such as a work laptop or phone.
- Costs your employer reimburses.
- Running costs you did not pay extra for, such as heating a room where others in the household are not working.
If your employer pays you a working from home allowance, it goes in your return as income. For a wider list of claims, see our guide to work-related tax deductions.
How does the fixed rate method work?
Under the fixed rate method you multiply the hours you worked from home by 70 cents. The rate covers:
- Home and mobile internet or data.
- Mobile and home phone use.
- Electricity and gas for heating, cooling and lighting.
- Stationery and computer consumables, such as printer ink and paper.
Because those costs are built into the rate, you cannot claim them again separately. You can still claim the decline in value of furniture and technology, such as a desk, chair or monitor.
Records for the fixed rate method
- A record of actual hours worked from home for the whole income year, such as timesheets, rosters or a diary. Estimates are not accepted.
- One record for each running expense covered by the rate, for example one electricity bill and one phone bill.
- Receipts for any furniture or equipment you claim separately.
How does the actual cost method work?
The actual cost method lets you claim the real work-related share of each expense. It takes more effort but can give a larger deduction if your costs are high.
- Energy – work out the cost of running items such as a heater or air conditioner for your work hours. If others use the space too, apportion on a fair and reasonable basis.
- Phone and internet – keep a diary of work use over a continuous 4-week period that represents your usual pattern, then apply that percentage to the year.
- Equipment – claim the work share of depreciation.
- Cleaning – only for a dedicated home office.
You need a record of hours worked from home, either for the full year or a representative 4-week period, plus the bills and receipts for every expense.
Can you claim furniture and equipment?
Yes, under either method. Under the ATO $300 rule, an item costing $300 or less that you use mainly for work, and that is not part of a set costing more than $300, can be claimed in full in the year you buy it. Dearer items are depreciated over their effective life. Claim only the work-use share. The instant asset write-off is a business concession and does not apply to employees.
Can employees claim occupancy expenses?
Rent, mortgage interest, council rates and home insurance are occupancy expenses. The ATO says employees generally cannot claim them. The exception is narrow: your work must require a place of business, your employer must provide no alternative workplace, and the area must be used exclusively or almost exclusively for work. If you choose to work from home when an office is available, you cannot claim occupancy.
Where occupancy can be claimed on a home bought after 20 September 1985, there are capital gains tax implications. Claiming only running expenses has no CGT effect.
Worked example: Jordan uses the fixed rate for 2025-26
Jordan is a software developer employed by a Melbourne company. He works from home 25 hours a week for 46 weeks and keeps his timesheets. He also bought a $249 office chair used only for work.
Hours: 25 x 46 = 1,150 hours.
Fixed rate claim: 1,150 x $0.70 = $805.
Chair: $249 is under $300, so he claims it in full.
Total deduction: $805 + $249 = $1,054. He keeps his timesheets, one electricity bill, one internet bill, one phone bill and the chair receipt.
Which method should you choose?
Choose the fixed rate if your bills are ordinary and you want simple records. Consider the actual cost method if you have a dedicated room, high energy use or heavy work use of your phone and internet, and you are prepared to keep detailed records. You can choose each year. Our tax return checklist lists the documents to gather.
This table shows how common costs are treated under each method:
| Expense | Fixed rate method | Actual cost method |
|---|---|---|
| Electricity and gas | Included in 70c | Work-related share of actual cost |
| Internet and data | Included in 70c | Work-use % from a 4-week diary |
| Mobile and home phone | Included in 70c | Work-use % from a 4-week diary |
| Stationery and printer ink | Included in 70c | Actual work-related cost |
| Desk, chair, computer | Claim separately ($300 rule or depreciation) | Claim separately ($300 rule or depreciation) |
| Cleaning | Only for a dedicated home office | Only for a dedicated home office |
| Rent or mortgage interest | Generally not for employees | Generally not for employees |
Rule of thumb: Record your work from home hours as you go, each week, in a calendar or spreadsheet. Without a full-year hours record, the 70c fixed rate is not available.
Common mistakes with work from home claims
- Using the old 67c rate – that rate applied to 2022-23 and 2023-24 only.
- Estimating hours – the fixed rate needs an actual record.
- Double dipping – claiming internet or phone separately on top of the fixed rate.
- Claiming rent as an employee – occupancy is generally not deductible for employees.
- Relying on no receipts – read our guide on what you can claim without receipts before assuming small claims need no records.
FAQ about work from home expenses
What is the work from home rate for 2025-26?
The fixed rate is 70 cents for each hour you work from home in 2025-26, the same rate as 2024-25. It covers energy, internet and data, phone use, stationery and computer consumables. You need a record of your actual hours for the whole year and at least one bill for each running expense included in the rate.
Can I estimate my hours if I use the fixed rate method?
No. The fixed rate method requires a record of the actual hours you worked from home across the whole income year. Timesheets, rosters, logbooks or a diary all work. An estimate or a four-week sample is not enough for this method, although a representative four-week diary can support the actual cost method instead.
Can I claim a desk or laptop as well as the 70 cents?
Yes. The fixed rate does not cover the decline in value of furniture and equipment, so you can claim those separately. An item costing $300 or less, used mainly for work and not part of a set, can be claimed in full that year. A dearer item is depreciated over its effective life.
Can employees claim rent or mortgage interest?
Generally no. Employees can only claim occupancy expenses if their work requires a place of business, their employer provides no alternative workplace, and the area is used exclusively or almost exclusively for work. Choosing to work from home when an office is available does not qualify. Claiming occupancy can also have capital gains tax consequences.
Which method gives the bigger deduction?
It depends on your costs and records. The fixed rate is simpler and suits most people with ordinary bills. The actual cost method can give more if you have a dedicated room or high energy and internet costs, but it needs detailed records and fair apportionment. Many people calculate both and use whichever they can support.
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Talk to a registered tax agent
Nanak Accountants can check your hours records, compare both methods and claim the right amount in your 2025-26 return. Call 1300 626 258 or book a free 15 minute consultation.
This article is general information only and is not personal tax or legal advice. Figures and rules were checked against the ATO working from home, fixed rate method, actual cost method, occupancy expenses, $300 assets and record keeping pages on 7 October 2026. Rates and thresholds change, so confirm the current position before acting.
