Highlights

  • From the 2026–27 income year, it sits alongside a new $1,000 standard deduction that eligible workers get automatically, with no receipts.
  • That raises a practical question for hybrid workers: how many hours at home does it take for an itemised claim to beat the standard amount?
  • On the current rate, the answer is roughly 1,429 hours, and the record-keeping for that year has already begun.
  • The standard deduction is part of Schedule 4 of the Treasury Laws Amendment (Tax Reform No.

On the current 70 cent fixed rate, a worker needs about 1,429 logged hours at home before an itemised claim beats the new $1,000 standard deduction. For many hybrid workers, the standard amount may be the better option. Working-from-home costs are a routine claim for many hybrid workers.

How the two deductions interact

1) Act 2026, which is enacted law. The ATO says it is not available for Tax Time 2025–26 and first applies to 2026–27 returns, lodged from July 2027. The maximum is the lower of $1,000 or a worker's total assessable labour income. The ATO says claimed labour-related work expenses, including working-from-home costs, reduce it dollar for dollar until it reaches nil. Put simply, the total work deduction becomes the greater of $1,000 or itemised work expenses, capped by labour income. Itemising below $1,000 gains nothing extra, and an itemised claim only adds value once it passes $1,000.

The fixed rate and its history

The ATO's fixed-rate method is 70 cents per work hour for 2024–25 and 2025–26. It was 67 cents for 2022–23 and 2023–24, and 52 cents for 2020–21 and 2021–22. The ATO has not yet published a rate for 2026–27. Every calculation below assumes the 70 cent rate continues, which is not confirmed. The fixed rate covers internet and data, phone usage, electricity and gas, and stationery and consumables. Work technology and furniture are claimed separately as decline in value. The ATO says that from 2026–27, decline-in-value claims for assets used mainly to earn labour income also reduce the standard deduction. The rate matters a great deal to the break-even point. Had the 67 cent rate applied, a worker would need about 1,493 hours to reach $1,000. At 52 cents, it would take about 1,923 hours.

Hypothetical example: the break-even point

Hypothetical example: These figures assume a 70 cent rate for 2026–27, a standard 7.6-hour working day, 46 working weeks a year, eligibility for the full $1,000, and no other work expenses. The break-even point is $1,000 ÷ $0.70 = about 1,428.6 hours. At 7.6 hours a day, that is roughly 188 full days at home. A worker at home two days a week logs 2 × 7.6 × 46 = 699.2 hours. The standard deduction falls to $1,000 − $489.44 = $510.56, and the total is still $1,000. A worker at home three days a week logs 3 × 7.6 × 46 = 1,048.8 hours, worth $734.16. The standard deduction falls to $265.84, and the total is again $1,000. A worker at home four days a week logs 4 × 7.6 × 46 = 1,398.4 hours, worth $978.88. That is still below $1,000, so the total deduction remains $1,000. A worker at home five days a week logs 5 × 7.6 × 46 = 1,748 hours, worth $1,223.60. The standard deduction falls to nil and the total deduction is $1,223.60.