$1,000 Standard Deduction vs the WFH Fixed Rate: Which Is Higher?

What is the $1,000 standard deduction?

It’s a deduction of up to $1,000 for work-related expenses that eligible workers get without spending money or keeping receipts, starting with the 2026–27 income year. It was enacted by the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026 and inserted a new section 25-130 into the Income Tax Assessment Act 1997.

The ATO’s standard deduction page sets out the basics:

• It starts in 2026–27. The law applies to assessments for the 2026–27 income year and later years, so the first returns it affects are lodged from July 2027. It does not apply to your 2025–26 return.
• You don’t have to claim any expense to get it. The law doesn’t ask you to make an election or prove anything. If you’re eligible, the amount is yours.
• It’s a deduction, not a refund. It reduces your taxable income. What it’s worth in tax depends on your marginal rate.

The ATO’s draft ruling on how it works, LCR 2026/D5, was released for comment in August 2026. The final ruling hadn’t been issued when this guide was written.

Who gets the $1,000 standard deduction?

You get it if you’re an individual, an Australian resident at any time in the income year, and you earn assessable labour income. That’s the test in section 25-130(1).

“Labour income” has a specific meaning. It covers amounts that must have tax withheld under the PAYG rules for:

• salary and wages paid to employees
• payments to company directors and office holders
• payments to religious practitioners
• return to work payments, and termination and retirement payments
• Parental Leave Pay

Business income, such as what you earn as a sole trader with an ABN, isn’t on that list, so it doesn’t count towards eligibility or the cap.

It’s capped at your labour income. The amount is the lesser of $1,000 and your total assessable labour income. If you earned $600 in wages for the year, your standard deduction is at most $600.

How do itemised work expenses affect the standard deduction?

Every dollar of covered work-related expenses you itemise reduces the standard deduction by a dollar, down to zero. In effect, you get the higher of $1,000 or your itemised work expenses, never both added together.

Under section 25-130(2), the deductions that reduce it include general work-related deductions (which is where the WFH fixed rate sits), car expenses, travel between workplaces, and repairs to and decline in value of equipment you use to earn your labour income. So if you itemise $700 of WFH hours and depreciation, your standard deduction drops to $300. Your total is still $1,000.

If your itemised work expenses come to more than $1,000, the standard deduction is zero and you claim the itemised amount instead. The ATO says you then need records for all of your work-related expenses, not just the part above $1,000.

Which deductions sit outside the $1,000?

Some deductions don’t reduce the standard deduction, so you claim them on top as usual. Examples include:

• union fees and professional association memberships
• income protection insurance
• gifts and donations
• the cost of managing your tax affairs, such as tax agent fees

Check the ATO’s standard deduction page for the full list before you lodge. For the comparison in this guide, leave these out: they don’t change which side is higher.

How many WFH hours beat the $1,000 standard deduction?

With no other work expenses, you need about 1,429 work-from-home hours at 70 cents to pass $1,000. That’s $1,000 ÷ $0.70, or roughly 30 hours a week over 48 weeks.

The fixed rate method is 70 cents per work hour, and that rate applies for 2026–27 unless the ATO changes it (PCG 2023/1, para 26A). The table assumes a 7.6-hour day, 48 working weeks, and nothing else to itemise. Cents are dropped, as the ATO does.

For most hybrid workers, the fixed rate on its own won’t beat $1,000. At four days, it only just does, and $21 of extra deduction is worth a few dollars in tax.

What if I have other work expenses as well?

Other covered work expenses lower the WFH hours you need. The break-even is (1,000 − your other itemised work expenses) ÷ 0.70.

Equipment is the common one for people working from home. The fixed rate doesn’t cover the decline in value of a desk, chair, computer or monitor, so you claim that separately, and it counts towards the comparison. Here’s the same table with $300 of other itemised work expenses, such as depreciation on a laptop and a monitor:

With $300 of other expenses, the break-even drops to 1,000 WFH hours, about 2.7 days a week. Your own numbers will differ: leave, sick days, shorter days and office days all move the total. The WFH deduction calculator works it out from your days, hours and other expenses, and shows which side is higher.

Should I still keep a WFH diary if the $1,000 might be higher?

Yes, if there’s a chance your itemised total passes $1,000. You can’t itemise without records, and you won’t know your total until the year ends.

The fixed rate method needs a record of the actual hours you worked from home for the whole income year, kept at the time (PCG 2023/1, para 58). Estimates aren’t accepted, and you can’t rebuild the record in June. So the decision you can make in June depends on the records you kept from July.

A few things can push you over $1,000 that are hard to predict in July:

• Your pattern changes. A new role, a team that stops going in, or a long project at home can turn three days into four or five.
• You buy equipment. A new laptop or chair adds decline in value to your itemised total.
• Other work costs come up. Work car trips, training or protective gear all count towards the comparison.

If you’re clearly under, say one day a week at home and nothing else to claim, the $1,000 is likely higher and you may decide the diary isn’t worth it. If you’re anywhere near the line, keeping the record costs little and keeps both options open. WFH Diary records your hours from your Mac’s menu bar as you work, and shows a running 70c estimate you can compare against $1,000 at any point in the year.

Does the standard deduction apply to my 2025–26 return?

No. The standard deduction starts with the 2026–27 income year. For 2025–26, you claim your work-related expenses as before, including the 70c fixed rate if you’re eligible and have the records (ATO).

That means for the return most people lodge between July and October 2026, nothing changes. The choice between $1,000 and itemising first comes up with the 2026–27 return, lodged from July 2027.

Which is higher for me?

Add up the work expenses you’d itemise, including WFH hours at 70c and any equipment depreciation. If the total is more than $1,000 and you have the records, itemise. If not, the standard deduction is higher.

1. Count your WFH hours from your records, then multiply by 0.70.
2. Add other covered work expenses: depreciation and repairs of work equipment, car expenses, and other work costs you have records for.
3. Leave out union fees, income protection, donations and tax agent fees. You claim those either way.
4. Compare the total to $1,000, or to your labour income if that’s less.

If you’re close, ask a registered tax agent. They can check what counts towards the comparison in your situation.