Working from home and car expenses

Updated 13 October 2026

Two of the most common work deductions, and the two the ATO checks most. Here are the rates for 2025–26, the records you need, and how the new standard deduction changes things from 2026–27.

Working from home

If you work from home and pay extra running costs because of it, you can claim them. Most people use the fixed rate method: 70c for every hour worked from home in 2025–26. The rate covers electricity and gas, internet, phone, stationery and computer consumables, so you can’t claim those separately as well. You can still claim the decline in value of equipment such as a desk, chair or laptop on top.

Records you need:

• a record of the actual hours you worked from home for the whole year, kept as you go, such as a diary, timesheet or roster;
• one bill for each type of running cost you pay, such as an electricity bill and an internet bill.

Example. Working from home 2 days a week, 7.6 hours a day, for 46 weeks is 699.2 hours. At 70c an hour that is a $489.44 deduction, which saves about $156.62 on a salary of $80,000 (32% including the Medicare levy).

The alternative is the actual cost method, where you work out the real extra cost of each expense. It needs detailed records and is rarely worth it unless your costs are unusually high.

Source: ATO, Fixed rate method. The ATO has not yet published the 2026–27 rate.

Car expenses

You can claim a car you own or lease when you use it for work: driving between two jobs, to clients or other worksites, or carrying bulky equipment. The trip from home to your usual workplace and back doesn’t count. If your employer reimburses you, you can’t claim the same cost.

Cents per kilometre

A set rate for each work kilometre, up to 5,000 km per car a year: 88c per km in 2025–26 and 91c in 2026–27. The rate covers all running costs, including fuel, servicing, registration, insurance and depreciation, so nothing else can be added. You don’t need receipts, but you need a record of how you worked out your work kilometres, such as a diary of trips.

Example. 3,000 work kilometres at 88c is a $2,640 deduction in 2025–26, saving about $844.80 on a salary of $80,000. The most you can claim this way is $4,400.

Logbook method

If you drive a lot for work, keep a logbook for a continuous 12 weeks to work out the work-use share of the car, then claim that share of all your car costs, with receipts. There is no kilometre limit, and a logbook stays valid for 5 years if your driving pattern doesn’t change much.

Source: ATO, myTax 2026 Work-related car expenses; LI 2026/19 cents per kilometre rate for 2026–27.

From 2026–27: the standard deduction

From 2026–27, residents with salary or wages get a standard deduction of up to $1,000 for work expenses without records. Working from home and car expenses both reduce it dollar for dollar when you claim them, so they only help if your total work expenses come to more than $1,000.

• The $489.44 working from home claim above is less than $1,000 on its own, so with no other expenses you would be better off taking the standard deduction and keeping no records.
• 3,000 work kilometres at 91c is $2,730, more than the standard deduction, so claiming it adds $1,730 to your deductions. You then need records for every expense you claim.

The standard deduction guide explains it in full.

General information based on ATO rules and rates, not tax advice. Figures are worked out by our calculators; see how we calculate.