The $1,000 standard deduction for work expenses
From 2026–27, Australian residents who earn salary or wages get up to $1,000 off their taxable income for work expenses, automatically, with no receipts. Here is how it works and when it still pays to claim your actual expenses.
How it works
- It is the lower of $1,000 and your total labour income, such as salary, wages and director’s fees.
- You don’t need to have spent anything or kept records to get it.
- If you claim your actual work-related expenses, the standard deduction goes down by the same amount. So you get whichever is bigger: $1,000, or your actual expenses.
- It is a deduction, not a refund of $1,000: it lowers your taxable income, so it saves tax at your marginal rate.
On a salary of $60,000, the standard deduction saves $335 in tax and Medicare levy in 2026–27.
Who gets it
Australian residents for tax with assessable labour income. It does not apply to foreign residents, to people whose only income is from a business or investments, or to 2025–26 or earlier returns. If your labour income is less than $1,000, the deduction is limited to it: with $800 of wages, it is $800.
What reduces it, and what doesn’t
Expenses that reduce the standard deduction when you claim them include working from home costs, work car trips, tolls and parking, uniforms and laundry, stationery, tools and work travel. See working from home and car expenses.
Some deductions sit on top and don’t reduce it: union fees and professional association memberships, as well as donations, tax agent fees and income protection insurance. With $500 of union fees, your total deductions on $60,000 are $1,500.
Should you claim your actual expenses?
Only if they add up to more than $1,000 and you have the records to prove them. Two examples on $60,000:
- $600 of expenses. Claiming them leaves a $400 standard deduction, so the total is still $1,000. You save no extra tax, and you need receipts for the $600. Not worth it.
- $1,600 of expenses. These replace the standard deduction, so you deduct $1,600 instead of $1,000. That saves another $201, but you need written evidence for the full $1,600, not just the part over $1,000.
Once you claim more than the standard deduction, the old rule letting you claim up to $300 without receipts no longer helps: the records must cover the whole claim.
Source: ATO, Standard deduction for work-related expenses. The ATO’s guidance on some details is still a draft ruling and may change.
Frequently asked questions
Can I use the standard deduction in my 2025–26 return?
No. It first applies to 2026–27 returns, which you lodge from July 2027. For 2025–26, claim work expenses the usual way, with records.
Do I need to do anything to get it?
No. It is applied in your tax return automatically if you are an Australian resident with salary, wages or other labour income. You only need to act if you want to claim more than $1,000 of actual expenses.
Does it change the tax taken out of my pay?
The deduction is claimed when you lodge, so it shows up as a bigger refund rather than a bigger pay. On $80,000 paid fortnightly, our figures give a refund of about $372 for 2026–27, against $44 for 2025–26.
General information based on ATO rules and rates, not tax advice. Figures are worked out by our calculators; see how we calculate.