Don't claim the $1,000 standard deduction on your 2025–26 return

You've probably heard you can skip the receipts this year and take a flat $1,000. The ATO's own Tax Time list says don't.

On 27 July 2026, as lodgments got underway, the ATO published dos and don'ts. One don't is explicit: do not claim the newly announced $1,000 standard work-related deduction. It doesn't apply until Tax Time 2027.

Tax Time 2027 is when you lodge the 2026–27 year. The return you are lodging now is 2025–26. The myTax 2026 deduction instructions, and the ATO's "what's new for individuals" page, both list the standard deduction (also called the instant tax deduction) under changes that do not apply this tax time.

Not this return

For 1 July 2025 to 30 June 2026, keep claiming work expenses the usual way. myTax still uses the three rules: you spent the money and weren't reimbursed, it relates to earning your income, and you have a record (usually a receipt). Lodge yourself by 31 October, or be registered with a tax agent by then if you want the usual agent extension.

There is no $1,000 default in myTax for this return. Putting one in is how people under-claim, or lodge with nothing behind the numbers.

The $300 work-expense written-evidence exception still applies to 2025–26. It ends from 1 July 2026 — not for the return you are lodging this spring.

What it is from 2026–27

From the 2026–27 income year — the return you lodge at Tax Time 2027 — eligible people get a default work-related deduction of up to $1,000 without needing to have spent the money or kept records for it. The ATO's standard deduction page (updated 14 September 2026) is the detailed how-it-works guide.

You are eligible if you are an individual, an Australian resident for tax purposes, and you earn assessable labour income — salary and wages, and a short list of related payments such as director fees, parental leave pay, and some termination amounts. It does not apply if you only earn other income, such as dividends or business income.

It is a deduction. It reduces taxable income. It is not a tax offset or a rebate, and it is not $1,000 back in your pocket.

If you are eligible, you do not opt in. The ATO applies it automatically from the information in your return. The maximum is the lower of $1,000 or your total assessable labour income. A resident with $400 of casual wages and a lot of investment income gets a $400 maximum, not $1,000.

Dollar for dollar, then nil

The standard amount is reduced by work-related claims that sit inside it. Claim those, and the default shrinks by the same dollars. Claim more than $1,000 of them and the standard becomes nil.

Covered claims include expenses of earning labour income such as stationery, tolls, travel allowance expenses, uniforms, laundry, and working from home; car expenses for that income; transport between two workplaces (when neither is your home); balancing adjustment deductions on labour-income assets; and COVID-19 test expenses.

Covered work claims in the return	Standard deduction left
None	Up to $1,000
$550	$450
$1,000 or more	Nil

The ATO's Yui example is the $550 row: $200 working from home, $200 training, $150 travel to clients. Claiming them means written evidence for $550 and a $450 standard. Not claiming them means the full $1,000 and no records for those items. For anyone in that position, skipping the itemised $550 is the simpler result.

Marco spends $3,500 on covered work expenses. He claims the $3,500 with written evidence and gets no standard deduction. That is the point of itemising: you only do it when the real total is bigger than the default.

What you still claim on top

Some deductions do not reduce the standard. Claim them as usual, with records:

• union fees
• memberships of a trade, business, or professional association

The same is true of gifts and donations, investment and rental deductions, tax-agent fees (the cost of managing your tax affairs), personal super contributions, and income protection or similar insurance premiums. Business income and digital-platform expenses sit outside it too.

The record-keeping sting from 1 July 2026

If you expect to stay under the standard, you do not need records for the expenses it covers — though unexpected costs still happen, so keeping them is not wasted.

If you itemise above the standard, the old shortcuts go away. From 1 July 2026, for everyone, including people who are not eligible for the standard:

• the $300 work-expense substantiation exception ends
• the $150 laundry exception ends
• the award transport expense exemption ends

Claim more than your maximum standard and you need written evidence (a receipt, typically) for all work-related expenses in that return — not only the amount over $1,000.

Laundry, if you do claim it, is still worked out at $1 per load when the load is only work clothes, or 50c when it is mixed. That is a calculation shortcut, not a substitute for the new evidence rule.

Low-value pooling also changes. From 2026–27 you cannot add a depreciating asset to a low-value pool if, when you bought it, you expected to use it mainly to earn labour income. You can still claim decline in value; that claim reduces the standard in that year. Existing pool assets, and assets that are not for labour income, are unaffected.

How to decide

flowchart TD
  start[What are you doing?] --> year{Which income year?}
  year -->|"Lodging 2025-26 now"| ignore["Don't claim it this return"]
  year -->|"Planning 2026-27"| expect{"Covered expenses over $1,000?"}
  expect -->|"No - expect $1,000 or less"| standard[Take the automatic standard]
  expect -->|"Yes - expect more"| records[Keep written evidence all year]

Lodging now: substantiate 2025–26 as usual. Do not claim the $1,000. Tax Time 2027 is next year's return.

Planning 2026–27: if your covered work expenses usually sit under $1,000, the default is the easier outcome. If you regularly work from home, drive for work, and buy gear, keep the full-year records anyway — WFH hours, trips, and receipts — so you can compare before you lodge. You can still choose the standard if the itemised total does not beat it.

Keep the habit anyway

The people who benefit from dropping receipts next year are the ones whose covered claims never get near $1,000. Hybrid work plus a car plus a laptop is often already over the line. For them, the new rule is a floor, not a reason to stop writing things down.

This is general information, not tax advice. Check the ATO standard deduction page or your agent for your own return.