If you have seen headlines about a new $1,000 instant tax deduction for workers, do not go looking for it in myTax this year. The deduction is now law, but it only starts in the 2026–27 income year, so it cannot be claimed in the 2025–26 returns Australians are lodging right now.

The ATO has warned people off claiming it early. With the 31 October deadline approaching, understanding the timing could prevent an incorrect claim and help with planning for next year.

Law passed, but for a different income year

The measure is legally called the standard deduction for work-related expenses. It was enacted in Schedule 4 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Act No. 49 of 2026, which received Royal Assent on 26 June 2026.

Its start date is the key. The ATO's guidance page, updated on 14 September 2026, says the deduction "first applies in your 2026–27 tax return" and is "not available" for 2025–26.

Tax Time 2026 covers income earned between 1 July 2025 and 30 June 2026. The 2026–27 income year runs from 1 July 2026 to 30 June 2027, so the first claims will be in returns lodged from July 2027.

In its 27 July 2026 tax time messaging, the ATO told taxpayers not to claim the $1,000 deduction this year, because it applies from Tax Time 2027.

Why the confusion has spread

Part of the mix-up comes from the way the measure was announced. The government released an exposure draft in April 2026 and the Budget followed on 12 May. The law then passed in late June, just as the 2025–26 financial year was ending.

Much of the coverage focused on the "instant" nature of the deduction and on a round $1,000 figure. When the start date was mentioned at all, it came lower down.

The ATO has also flagged a broader problem with misinformation this year. In April, Assistant Commissioner Anita Challen warned about tax "hacks" and half-truths circulating online, saying: "If a tax claim sounds too good to be true, it's worth checking."

What you can claim in your 2025–26 return

This year's return is prepared under the existing rules for work-related deductions.

Workers can claim eligible costs they actually incurred in earning their income, provided they were not reimbursed and they meet the ATO's record-keeping rules. Anyone with total work-related expense claims of $300 or less can generally do so without written evidence, although they still need to be able to show how they worked out the claim. That exception still applies to 2025–26 returns. However, the ATO's draft ruling on the new deduction notes it will no longer apply from 1 July 2026.

Working from home costs can be claimed using the fixed-rate method, which remains 70 cents per hour for 2025–26, or the actual cost method.

The ATO's stated focus areas this tax time include work-related deductions, so claims need to be accurate and supported. Anyone who claims an amount that is not supported by records, or that does not meet the rules, risks having it adjusted.

The same applies to the new deduction. A $1,000 claim in a 2025–26 return would have no basis in the law for that year. If the ATO adjusted it, the result could be a smaller refund than expected, or a bill.

A hypothetical comparison: this year versus next

Consider a hypothetical retail worker with a taxable income of $60,000 and $400 of genuine, documented work expenses, such as compulsory uniforms and laundry.

In the 2025–26 return, the worker claims the $400 in the usual way. At a marginal rate of 30%, that reduces their tax by about $120, before the Medicare levy.

Now assume the same income and expenses in 2026–27. The worker could choose not to claim the $400 separately and receive the $1,000 standard deduction instead. The ATO says it will apply the deduction automatically based on the information in the return, with no receipts needed for it. At the same 30% marginal rate, a $1,000 deduction reduces tax by about $300, or $180 more than itemising.

If that worker instead claimed the $400 of expenses in 2026–27, the $1,000 amount would be reduced dollar for dollar to $600. Total deductions would still come to $1,000, but the $400 would then need to be substantiated. That is why most people with small expense claims may find the standard deduction simpler.

This example is illustrative only, and outcomes depend on individual circumstances.

Planning ahead for the first claim

Because the new income year has already started, some workers may want to think about records now.

Under the ATO's guidance, anyone who ends up claiming work-related expenses above the standard amount must hold written evidence for all of them. Some expenses sit outside the scheme and can still be claimed on top, with records, including union fees, professional memberships, donations and tax agent costs.

The deduction is available only to Australian residents with assessable labour income, such as wages, director fees and parental leave pay. People who earn only investment or business income cannot claim it. From 2026–27, assets mainly used to earn labour income also cannot be added to low-value pools.

The government estimated in April that around 6.2 million workers, or 42% of taxpayers, would benefit, with an average saving of $205. It estimated that about 3.3 million women and 1.7 million people under 30 would benefit, and that 4.5 million of those benefiting earn under $100,000. These are government estimates from the exposure draft stage.

Key dates to watch

The immediate date is 31 October 2026, the deadline for self-lodged 2025–26 returns. Because it falls on a Saturday, the ATO's weekend rule allows lodgment on Monday 2 November without penalty.

Comments on the ATO's draft ruling on the deduction, LCR 2026/D5, close on 9 October 2026. The final ruling may clarify how particular expenses are treated, and its wording could differ from the draft. Until then, the draft reflects the ATO's preliminary view only.

From July 2027, the $1,000 standard deduction becomes available in 2026–27 returns, alongside the new 15% rate on income between $18,201 and $45,000. Anyone unsure which expenses to keep records for may find a registered tax agent helpful.