The ATO’s fixed-rate method lets an employee claim a set amount for every hour worked from home, instead of tracking every individual bill. This guide explains that rate, what it covers and what it does not, the alternative actual-cost method, and the new standard deduction for 2026-27. It explains the rules; it does not tell you what you personally can claim, and it is not a substitute for a registered tax agent.
What is the fixed-rate method?
The fixed-rate method sets a single cents-per-hour figure that stands in for several running costs at once. An employee working from home multiplies the hours actually worked from home in the year by that rate, instead of separately calculating and apportioning electricity, internet, phone and stationery costs one by one. The rate has moved only twice in recent years, shown below.
| Income year | Fixed rate |
|---|---|
| 2026-27 (current) | Not yet published by the ATO |
| 2025-26 | 70 cents |
| 2022-23 to 2024-25 | 70 cents |
| 2019-20 to 2021-22 | 68 cents |
| 2018-19 and earlier | 52 cents |
Source: ATO, Fixed rate method. The 70-cent rate has applied to every income year from 2022-23 to 2025-26 without a change.
What the Fixed Rate Covers, and What It Does Not
The rate is bundled. Claiming an item on this list again, on top of the rate, is a double claim.
Covered by the 70c rate
Energy expenses: electricity and gas used while working.
Internet and data expenses for the period worked.
Mobile and home phone expenses for work use.
Stationery and computer consumables.
Decline in value (depreciation) of home-office furniture and fittings, such as a desk or filing cabinet.
Not covered, ever
Occupancy costs: rent, mortgage interest, house insurance, council rates, water rates and land tax.
General household items: coffee, tea, milk and other groceries.
Costs for a child’s education or study equipment.
Any expense already reimbursed by an employer.
Internet or phone costs claimed again under the actual-cost method for the same period.
What Records Does the Fixed-Rate Method Need?
The fixed rate needs a record of hours, not receipts. That record can be a calendar entry, a spreadsheet, or a written note in a diary or phone, and it has to show the dates and hours actually worked from home across the year. No invoice or bill for electricity, internet or phone is required to support the fixed-rate claim itself, because the rate already stands in for those costs.
A separate, more general rule sits alongside this. If an employee’s total work-related claims for the year come to $300 or less, records showing how the claim was calculated are enough; written evidence is not required. Once total work-related claims pass $300, the ATO requires written evidence for the claim as a whole. Either way, the hours record for the fixed-rate method itself does not change.
Source: ATO, Fixed rate method, and Records you need to keep.
The Actual-Cost Method
More paperwork, and only worthwhile where real running costs are genuinely higher than the fixed rate.
Rather than a flat rate, the actual-cost method claims the real running costs of working from home, apportioned between work and private use. It requires working out the percentage of the home used mainly or exclusively for work, applying that percentage to every relevant running cost, and keeping full written evidence, receipts, invoices and utility bills, for each one. Records need to be kept for five years from the date the tax return is lodged.
The fixed rate and the actual-cost method are alternatives for the same running costs, not a combination. A period claimed under the fixed rate cannot also carry an actual-cost claim for electricity, internet or phone in that same period.
Source: ATO, Actual cost method.
The $1,000 Standard Deduction
From the 2026-27 income year, an eligible employee can claim a standard deduction of up to $1,000 for work-related expenses generally, working-from-home running costs included, without receipts and without itemising each expense.
Example: an employee whose total work-related expenses for the year come to $900 can claim the full $900 as the standard deduction, with no evidence required.
Example: an employee whose total work-related expenses come to $1,500 can claim $1,000 under the standard deduction, and needs full written evidence for the remaining $500.
The standard deduction is not available to a self-employed person, a company or a partnership, or to an employee claiming working-from-home costs under the actual-cost method for that same year. For the wider tax-cut context it sits alongside, see the 2026-27 tax brackets guide.
Source: ATO, Standard deduction for work-related expenses.
What the Fixed Rate Produces at Different Hours
General arithmetic on the published rate, not a personal estimate. Assumes 48 working weeks a year, after 4 weeks’ annual leave.
| Hours worked from home, per week | Hours across 48 weeks | Fixed-rate deduction at 70c/hour |
|---|---|---|
| 15 | 720 | $504 |
| 38 (full-time, entirely from home) | 1824 | $1,277 |
Illustrative arithmetic only, at the published 2025-26 rate. It shows what the rate produces for a stated number of hours; it is not an estimate of what any individual reader can claim, which depends on actual hours worked and records kept.
Common Mistakes With Working-From-Home Deductions
Claiming rent or mortgage interest
Occupancy costs are not deductible for an employee working from home, under either method. Only running costs and office-furniture depreciation are in scope.
Stacking the fixed rate with actual bills
The fixed rate already bundles energy, internet, phone and stationery. Claiming an actual phone or internet bill on top, for the same period, is a double claim.
Treating groceries as a running cost
Coffee, tea, milk and other general household items stay private expenses under both methods, however often they are consumed at a home desk.
Assuming home-to-work travel becomes deductible
A Federal Court ruling in June 2026 confirmed ordinary commuting stays non-deductible, whether an employee works from home some days a week or every day.
Skipping the hours record
No receipts are needed for the fixed rate, but a contemporaneous record of hours, a calendar, spreadsheet or diary entry, still is. No record, no claim.
Assuming the standard deduction stacks with actual costs
The new $1,000 standard deduction is not available to an employee claiming working-from-home costs under the actual-cost method in that year.
Working-From-Home Deductions FAQ
This page explains the rules, not a personal refund figure
The rate, the coverage and the substantiation thresholds above are general information. What a specific reader can claim depends on their own hours, records and circumstances.
Open the ATO’s working-from-home expenses pageTo see how a deduction changes an estimated tax outcome, use the tax refund calculator. For the general rules on what is and is not deductible across other work expenses, see the ATO’s own work-related deductions hub, linked in Sources below. Full guidance on what this site’s figures do and do not cover and how every rate here is verified sits on their own pages.
Sources for This Page
- ATO, Working from home expenses (hub): fixed-rate and actual-cost methods overview.
- ATO, Fixed rate method: the 70-cent 2025-26 rate, what it covers, and the 2026-27 publication gap noted on this page.
- ATO, Actual cost method: apportionment, written evidence and the 5-year record-retention rule.
- ATO, Records you need to keep: the $300 substantiation threshold.
- ATO, myTax 2026, Claiming deductions.
- ATO, Standard deduction for work-related expenses: the new $1,000 cap from 1 July 2026 and its eligibility exclusions.
- Commissioner of Taxation v Hall [2026] FCAFC 43 (17 June 2026): home-to-work travel and working from home.
All sources accessed 30 July 2026.
Written by Marcus Kelleher, editor, pay and tax contentat pay-calculator.au. He works from ATO source documents and is not a registered tax agent. This page explains published rates and general rules. It is not personal tax advice, and it does not estimate any reader’s own deduction or refund.
