TL;DR
- •From 2026-27, claim $1,000 of work-related expenses without substantiation
- •Tax saving = $1,000 × your marginal rate ($150 to $450)
- •If your actual expenses exceed $1,000, itemise instead
- •Applies at tax time, not via PAYG withholding
What is it?
The 2026-27 Federal Budget introduced a flat $1,000 instant tax deduction for work-related expenses. From 1 July 2026, you can claim it on your tax return without any receipts, logbooks, or evidence — just tick a box.
The change is designed to simplify tax for the majority of Australian workers who claim small amounts of legitimate work expenses (uniforms, mobile phone usage, working-from-home costs) but spend disproportionate time substantiating them. Treasury estimates 6.2 million workers will benefit, with an average tax saving of $205 in 2026-27.
How much it saves you
Because it's a deduction (not an offset), the dollar saving depends on your marginal tax rate. Higher earners get more benefit per dollar of deduction.
| Marginal Rate | Tax Saving | Applies to |
|---|---|---|
| 16% | $160 | Income $18,201-$45,000 (under 2025-26 rates) |
| 15% | $150 | Income $18,201-$45,000 (from 1 July 2026) |
| 30% | $300 | Income $45,001-$135,000 |
| 37% | $370 | Income $135,001-$190,000 |
| 45% | $450 | Income above $190,000 |
Add ~2% Medicare levy for the full effective saving (e.g. 30% marginal rate → ~$320 inc. Medicare).
When to itemise instead
The instant deduction is a floor, not a cap. If your actual work-related expenses for the year exceed $1,000, you can still itemise and claim the actual amount. The instant deduction is simply the default option for everyone who can't (or doesn't want to) prove more than $1,000.
Take the $1,000 flat if:
- ✓Your actual expenses are under $1,000
- ✓You don't have receipts
- ✓You want a simpler return
- ✓You've never itemised before
Itemise if:
- ✓Your home office costs are significant
- ✓You travel for work or use your car
- ✓You buy tools, uniforms, or training above $1,000/year
- ✓You already track everything in software
Frequently Asked Questions
When can I claim the $1,000 instant deduction?
From the 2026-27 income year — on the tax return you lodge for the year ending 30 June 2027.
Do I need receipts?
No. The whole point of the instant deduction is that you can claim $1,000 of work-related expenses with no substantiation. If your actual expenses exceed $1,000, you can still itemise and claim the actual amount (with receipts).
How much tax does it actually save me?
It saves $1,000 × your marginal tax rate. So someone in the 30% bracket saves $300, someone in the 37% bracket saves $370, and someone in the 45% bracket saves $450. The Treasury estimates an average benefit of $205 across 6.2 million workers.
Can I claim this AND itemise?
No. You choose one or the other for the year. If your work-related expenses are more than $1,000, itemise. If they're less (or you don't want to deal with receipts), take the $1,000 flat.
Is this the same as the US standard deduction?
It's similar in spirit but narrower in scope. The $1,000 instant deduction only replaces work-related expense substantiation — other deductions (gifts, donations, investment expenses, etc.) still work the same way.
Will my employer adjust PAYG withholding?
No, this is claimed at tax time, not via PAYG. The benefit shows up as a higher refund (or lower bill) when you lodge your return.
Get Tax Bracket Updates
Be the first to know when tax brackets change. We'll email you about updates like the Stage 3 tax cuts and new HECS thresholds.
No spam, just tax updates. Unsubscribe anytime.
Related Resources
Information is general only and not tax advice. Final ATO administration details subject to legislation.
Last updated: 25 May 2026