From the 2026–27 financial year, eligible Australian workers will be able to claim a standard deduction of up to $1,000 for work-related expenses, without needing to keep receipts for those expenses.
The new measure is designed to simplify tax returns for millions of Australian workers.
But there is one important point to understand:
It is a deduction – not a $1,000 tax refund
The $1,000 instant tax deduction reduces your taxable income by up to $1,000. It does not mean that you automatically receive an extra $1,000 in your tax refund.
For example, if you are entitled to the full $1,000 deduction, your taxable income may be reduced by $1,000. The actual tax saving will depend on your individual tax position and applicable tax rate.
The Government estimates that around 6.2 million workers will benefit, with an estimated average tax saving of approximately $205.
Who can use the $1,000 standard deduction?
The standard deduction is available to eligible Australian tax residents who earn employment or other qualifying labour income.
It applies to eligible work-related expenses that would otherwise need to be individually claimed.
This means many employees with relatively small work-related expenses may be able to simplify their tax return by choosing the standard deduction instead of calculating and substantiating each individual work-related expense.
What if my work-related expenses are more than $1,000?
You are not limited to $1,000.
If your eligible work-related deductions exceed $1,000, you can choose to claim your actual work-related expenses instead, subject to the normal deduction and substantiation requirements.
For example:
Option 1 – Work-related expenses of $650
An eligible taxpayer may choose the standard deduction of up to $1,000 rather than claiming the $650 of actual work-related expenses.
Option 2 – Work-related expenses of $2,500
It may be more beneficial to claim the actual $2,500 of eligible work-related expenses rather than using the $1,000 standard deduction. The normal substantiation and record-keeping requirements would apply.
Can I claim other deductions as well?
Yes.
The $1,000 standard deduction relates specifically to eligible work-related expenses. i.e. travel expenses, self-education expenses, car expenses, decline in value, balancing adjustment deductions, deduction for repair, etc.
Certain other deductions can still be claimed separately where the relevant requirements are satisfied. These may include:
- Charitable donations
- Investment-related expenses
- Union membership fees
- Professional association membership fees
- Income protection
When does it start?
The new standard deduction applies from the 2026–27 income year, beginning 1 July 2026.
This means eligible taxpayers will generally first use it when lodging their 2026–27 individual tax return after 30 June 2027.
Should I stop keeping receipts?
Where the standard deduciton is available, substantiation for the claims will not be required.
If there is a possibility that your actual work-related deductions will exceed $1,000, keeping appropriate records may still be important.
At tax time, your actual expenses can then be compared with the standard deduction to determine which approach is appropriate for your circumstances.
The Bottom Line
The new $1,000 instant tax deduction should make tax time simpler for many Australian workers.
However, $1,000 does not mean a $1,000 refund, and the standard deduction may not be the best option for everyone.
If you regularly incur significant work-related expenses, keeping good records remains important.