Working from home is now a standard part of Australian professional life. The ATO has adapted its rules to reflect this — replacing the old $0.52 rate with a revised 67 cents per hour fixed rate method from 2022-23 onwards. For the 2025-26 income year, this rate remains 67 cents, but the record-keeping requirements changed and many Australians are still claiming incorrectly or leaving money on the table by choosing the wrong method.
Quick Answer
Claim 67 cents per hour for every hour worked from home in 2025-26. You must keep an actual record of hours — not an estimate. The rate covers electricity, gas, internet, phone, and stationery. Depreciation on equipment, and occupancy costs, are claimed separately.
The ATO offers two methods for calculating work from home deductions. You must choose one per income year and apply it consistently — you cannot mix and match across different expenses.
Fixed Rate Method
67¢/hour
Covers electricity, gas, internet, phone, stationery, computer consumables
Best for: people with lower actual costs, or those who want simplicity
Actual Cost Method
Actual $
Calculate real costs with a work-use percentage for each expense category
Best for: people with high home running costs, dedicated home offices
The 67 cents per hour rate covers all of the following expenses. You cannot claim these separately if you use the fixed rate method:
The formula is straightforward:
Total WFH hours × $0.67 = deduction
Example: 1,200 hours × $0.67 = $804 deduction
For context: if you work 40 hours per week and spend 2 days at home, that is 16 WFH hours per week. Over a full year of 48 working weeks, that is 768 hours at $0.67 = $514 deduction. If you work entirely from home, 40 hours per week for 48 weeks = 1,920 hours = $1,286 deduction — just from the fixed rate alone, before any equipment depreciation.
The biggest change from the old WFH rules is that from 2022-23 onwards, the ATO requires a contemporaneous record of your actual WFH hours for the full income year. A four-week representative diary is no longer acceptable for the fixed rate method.
What counts as a compliant record:
You also need at least one document evidencing that you actually incurred each expense type — a single electricity bill, a phone bill, and an internet bill for the year is sufficient. You do not need every bill for every month, but you need to be able to show you paid for these things.
The ATO recommends starting your record now if you have not already. Records must be kept for five years after you lodge the tax return they relate to.
Even if you use the 67 cents fixed rate method, you can still claim the decline in value (depreciation) of your work equipment. This is one of the most underutilised deductions for remote workers.
Eligible items include: laptop, external monitor, keyboard, mouse, webcam, headset, office chair, desk, desk lamp, and any other equipment used primarily for work. The deduction is based on the work-use percentage of the item.
Depreciation example: laptop used 80% for work
Illustrative only. Verify effective life in the ATO's Tax Ruling TR 2024/1.
The actual cost method requires more record keeping but can produce a larger deduction if your home running costs are high. You will generally get a better result from the actual cost method if:
The actual cost method requires you to calculate the work-use percentage of each expense, keep receipts for all expenses, and apply an area-based formula for shared expenses like electricity. For example: if your home office occupies 10% of the floor area of your house, you can claim 10% of your total electricity costs as the home office's share, then apply a further percentage for the proportion of the day the room is used for work versus personal use.
Sole traders running their business from home face a more complex calculation than employees. You can claim home office running costs using either method above, but there is also the question of occupancy costs.
If you have a dedicated area of your home that is set aside exclusively for business use — not a desk in the lounge room, but a room or defined space used solely for business — you may be able to claim a proportion of rent, mortgage interest, council rates, and home insurance. This is calculated based on the floor area of the dedicated space relative to the total home.
The important warning: claiming occupancy costs may mean the portion of your home used for business is no longer fully exempt from capital gains tax when you sell. The main residence CGT exemption may be partially reduced. For most sole traders, the CGT risk outweighs the occupancy deduction benefit — particularly if you own your home and it has increased significantly in value. Get specific advice before claiming occupancy costs.
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Start free trialThe ATO's revised fixed rate method allows you to claim 67 cents per hour for every hour worked from home during the 2025-26 financial year. This covers electricity, gas, internet, phone, and stationery costs.
For the 67 cents method, you need a continuous record of the actual hours worked from home for the entire income year — a timesheet, roster, diary, or similar. You also need at least one bill for each expense the rate covers (electricity, internet, etc.) to show you actually incurred those costs.
Yes. The 67 cents method does not cover the decline in value (depreciation) of assets like laptops, monitors, or office chairs. You can claim these separately using the ATO's depreciation methods — either the prime cost or diminishing value method.
Yes, but with extra care. Sole traders who use part of their home as a dedicated business space may claim home office running costs and potentially occupancy costs (rent or mortgage interest). However, using your home for business can affect your main residence CGT exemption — consult an accountant before claiming occupancy expenses.
No. You must choose one method for the income year. You cannot combine them — for example, using the fixed rate for electricity but actual cost for internet. You should calculate your deduction under both methods to see which gives the larger result.