The rules around claiming a tax deduction just got a major shake-up. Here’s what actually changed, what hasn’t, and how to make sure you’re not leaving cash on the table.
It’s that time of year again. Tax season is here, and millions of Australians are about to lodge their returns — many without a clue what they can actually claim.
And with big changes hitting from 1 July 2026, the confusion this year is worse than ever.
Here’s what you need to know before you lodge.
The $300 rule is still in play — for now
Right now, for the 2025–26 return you’re about to lodge, the existing rules still apply. You can claim up to $300 in work-related expenses without a receipt. Anything above that and the ATO wants proof.
That changes next year. A long-promised overhaul of the tax rules is set to let workers claim $1,000 in deductions without any receipts needed — more than tripling the current $300 limit.
But that applies to the 2026–27 income year, meaning you won’t see it until your 2027 tax return.
So what can you claim right now?
The ATO has a clear framework for what qualifies as a legitimate tax deduction. The golden rule: the expense must be directly related to earning your income, not reimbursed by your employer, and you need a record to prove it.
Here’s a breakdown of the most commonly claimed deductions for Australian workers in 2025–26:
| Deduction Category | Examples | Receipt Required? |
|---|---|---|
| Work-related travel | Fuel, tolls, parking (not home to work) | Yes |
| Home office expenses | Internet, electricity (67c/hr fixed rate) | Yes |
| Tools & equipment | Laptops, uniforms, safety gear | Yes (if over $300) |
| Self-education | Courses directly related to current role | Yes |
| Union & professional fees | Membership dues, licences | Yes |
| Car use (cents per km) | Up to 5,000 km at 88c per km (91c from July 1) | No logbook needed |
| Donations | DGR-registered charities only | Yes |
| Up to $300 misc work expenses | Phone, stationery, small tools | No receipt needed |
The car deduction just got bigger
From 1 July 2026, the ATO has increased the cents per kilometre rate from 88 cents to 91 cents, meaning workers who use their car for work purposes can claim up to $4,550 without keeping a logbook.
That’s a straightforward win for tradies, nurses, salespeople, and anyone else regularly driving for work.
If you’re lodging your current return, you’ll still use the 88-cent rate. The 91-cent rate kicks in from next financial year.
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The $1,000 instant deduction: brilliant or a trap?
From 2027, workers will be able to choose between two options: claim the flat $1,000 standard tax deduction with no receipts, or itemise their actual expenses with supporting records.
For most Australian workers whose work-related expenses exceed $1,000, claiming actual expenses will produce a much larger refund. The $1,000 deduction translates to roughly $300 in real money back for someone on an average wage.
H&R Block’s Director of Tax Communications Mark Chapman put it plainly: keeping receipts throughout the year preserves your options and allows you to make an informed decision at tax time — because you won’t know whether your total work expenses exceed $1,000 until the year is done.
The smart move? Keep your receipts anyway. You can always choose the flat deduction later if it works out better.
What you can’t do
One thing the ATO is crystal clear about: you won’t be able to claim the $1,000 no-questions-asked deduction and then provide receipts for additional work deductions on top of that. It’s one or the other — no double dipping.
Also off the table: personal expenses dressed up as work costs, home-to-office commuting, and anything your employer has already paid for.
The bigger picture
Beyond the instant tax deduction, every Australian taxpayer will receive a tax cut of up to $268 from 1 July 2026, growing to up to $536 per year from 1 July 2027, compared to 2024–25 tax settings. Australian Government Budget
Combined with the new $1,000 instant tax deduction and the Working Australians Tax Offset, a worker on average earnings could be up to $2,816 better off from 2027–28.
That’s meaningful relief — but only if you’re claiming everything you’re entitled to.
What to do before you lodge
Pull together your records now. Check whether your work-related costs exceed $300 for this return, and start a dedicated folder for 2026–27 expenses so you’re ready to compare options next year.
If your financial situation is even slightly complex — investment income, rental property, side income, or significant work expenses — speaking to a qualified financial adviser before you lodge is worth it. The difference between a properly structured return and a rushed one can run into the hundreds, sometimes thousands, of dollars.
At True Wealth Management, we help everyday Australians cut through the confusion at tax time and build strategies that protect and grow their wealth year-round. [Book a conversation with our team today.
