Top Tax Deductions for Australians in 2025-26: The Complete Guide

Work-related expenses are the most commonly claimed deductions on Australian tax returns. To claim them, you must have spent the money yourself (not been reimbursed), it must relate directly to earning your income, and you need a record to prove it.

Clothing and uniforms: Compulsory uniforms with your employer's logo, protective clothing (steel-capped boots, hi-vis, hard hats), and occupation-specific clothing (chef's whites, nurse's scrubs) are all deductible. Conventional clothing worn to work — even if it's required dress code — is not claimable.

Self-education expenses: Courses, textbooks, and tuition fees that directly relate to your current job (not a career change) are deductible. Student union fees and HELP repayments are not deductible, but HECS itself is interest-free, so this is less of an issue.

Tools and equipment: Items costing $300 or less and used more than 50% for work are immediately deductible. Items over $300 are depreciated over their effective life.

Vehicle expenses: If you drive between job sites, carry bulky tools, or travel to clients, you can claim. The two methods are logbook (actual cost with 12-week logbook) and cents per kilometre (88 cents per km, up to 5,000 km per year for 2025-26).

If you earn investment income — dividends, rent, or interest — you can deduct expenses incurred in earning that income.

Investment property expenses: Interest on your investment loan, council rates, body corporate fees, property management fees, landlord insurance, repairs and maintenance, and depreciation on the building structure and fittings are all deductible. See our detailed Investment Property Tax Deductions guide for a full breakdown.

Share investment expenses: Interest on money borrowed to buy shares, the cost of investment advice directly related to your current investments, and the proportion of your internet and phone costs used for managing investments are deductible. Brokerage fees are a cost base item for CGT purposes, not an ongoing deduction.

Managed funds and ETFs: Management fees and expense ratios deducted from your distribution by the fund reduce your assessable income automatically — they don't require a separate claim on your return.

Beyond work and investment expenses, several personal deductions and tax offsets can reduce your tax bill.

Charitable donations: Donations of $2 or more to a registered Deductible Gift Recipient (DGR) are deductible. Buying charity merchandise (chocolates, cookies, raffle tickets) is not — the deduction only applies to gifts with no material benefit to you.

Income protection insurance: Premiums on an income protection policy held outside your superannuation fund are fully deductible. Premiums held inside super are deducted at the fund level, not in your personal return.

Tax agent fees: The cost of using a registered tax agent to prepare and lodge your return is deductible — but in the following year. So your 2024-25 agent fees are claimed on your 2025-26 return.

Low income tax offset (LITO): This is an automatic offset (not a deduction) applied by the ATO. For 2025-26, the maximum LITO is $700 for taxable incomes below $37,500. It phases out between $37,500 and $66,667. Use our Tax Calculator to see how it applies to your situation.

If you're self-employed or your employer doesn't make contributions on your behalf (unusual but it happens), you can claim a deduction for personal concessional contributions to your super fund — up to the annual concessional contributions cap of $30,000 for 2025-26.

Even if you're an employee, you can make additional personal contributions and claim a deduction — provided you lodge a Notice of Intent to Claim a Deduction with your super fund before you lodge your tax return. The fund will then tax your contribution at the 15% super fund rate rather than your marginal rate, which can be a significant saving for higher earners.

Carry-forward concessional contributions allow you to use unused cap space from prior years (up to five years back) if your total super balance is below $500,000. This can enable a large one-off contribution in a high-income year to be particularly tax-effective.

What's the most commonly missed deduction by Australian employees?
Union fees and professional memberships. If you pay fees to a union, industry association, or professional body that relates to your employment, those fees are fully deductible. Many employees forget to claim these.

Can I claim my home internet as a deduction?
Yes, but only the work-related proportion. If you estimate 30% of your home internet use is work-related, you can claim 30% of your annual plan cost. Keep a four-week usage log to substantiate the percentage.

Is there a limit on how much I can claim for work expenses?
There's no cap on most work expense deductions — the limit is your actual expenditure and its connection to your income. However, the ATO uses benchmarks and flags returns where deductions seem disproportionate to your occupation and income.

Can I claim the cost of lunches or coffee at work?
Generally no. Meals and drinks consumed at or near your workplace during working hours are a private expense, not a work-related deduction. The exception is when you're travelling overnight for work — meal costs while travelling are deductible.

Do I need receipts for claims under $300?
You don't need a receipt for total work-related expense claims under $300 (for items other than vehicles and travel), but the ATO still requires you to have incurred the expense and be able to explain it if asked. Best practice is to keep receipts regardless.

You can also use the Savings Mate Tax Calculator to estimate how your deductions will affect your total tax bill and refund for 2025-26.