The $1,000 Standard Tax Deduction for Australian Workers
Status at 5 September 2026: The standard work deduction is legislated and applies from the 2026–27 income year, beginning 1 July 2026. It was a 2025 election commitment, was included in the 2025–26 MYEFO and the 2026–27 Budget, and became law as Schedule 4 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Royal Assent 26 June 2026).
Keeping receipts for small work expenses is nobody’s favourite weekend activity. The new $1,000 standard tax deduction (the Government calls it the “instant tax deduction”) is designed to make that part of tax time simpler for millions of Australian workers.
The change allows eligible resident workers to receive total specified work-related deductions of up to $1,000 without having to substantiate every dollar in the usual way. The Treasurer expects around 6.2 million people to benefit, with an average extra tax saving of about $205.
There are, however, two important points. The $1,000 is a deduction from taxable income, not a $1,000 refund. It is also not an extra $1,000 added on top of all your existing work expenses.
How the standard work deduction works
The new rules apply to Australian resident individuals with employee-type income such as salary and wages, directors’ fees and similar payments. The available standard amount is generally capped at the lower of $1,000 and eligible labour income.
In practical terms:
If your covered work-related deductions are below $1,000, the standard deduction can bring your total covered claim up to $1,000.
If your actual covered work-related deductions exceed $1,000, you can claim the actual amount under the normal rules instead.
You cannot claim your full actual covered expenses and then add another $1,000 standard deduction.
A deduction reduces taxable income. The tax saved depends on your marginal tax rate and other circumstances.
The measure is aimed mainly at people with relatively modest employee expenses. Workers who regularly claim more than $1,000 may see little or no additional benefit, although they can continue claiming their actual allowable costs.
Which deductions sit outside the $1,000 cap?
Some deductions remain separate from the covered work-expense calculation. These include eligible gifts and donations, tax-agent fees and other costs of managing tax affairs, personal superannuation contributions and certain union, professional association or income-protection expenses.
That distinction matters. A worker may be entitled to the $1,000 standard work deduction and still claim separate eligible expenses. The ordinary rules and record-keeping requirements continue to apply to those separate claims.
Sole traders should take care: the standard deduction is built around employee-type income, so business income does not count towards it. Keep recording business expenses under the normal business rules. (The separate $250 Working Australians Tax Offset, which starts in 2027–28, does extend to sole-trader income — but that is an offset, not this deduction.)
A practical example
Mia is an Australian resident administration employee. During 2026–27 she incurs $350 of eligible working-from-home costs and $220 of other covered work expenses, giving her $570 of actual covered deductions.
Under the standard deduction rules, her total covered work deduction may be increased to $1,000. That is an additional deduction of $430, not an additional $1,000.
If Mia’s marginal tax rate is 30%, the extra $430 deduction may reduce her income tax by about $129, before considering Medicare levy or any other interactions. If she also pays an eligible $300 union membership fee, that may be claimed separately, subject to the normal rules.
Now suppose Mia actually incurs $1,450 of covered work expenses. She can claim the $1,450 actual amount with the required evidence; she does not claim $1,450 plus the $1,000 standard amount.
Do you still need to keep receipts?
The measure reduces substantiation for workers using the standard amount, but “no receipts” does not mean “no records”. Retain evidence for separate deductions and any actual work-expense claim above $1,000.
Keep records during the year until you know which method produces the better result, particularly if your costs may exceed $1,000.
Frequently asked questions
Does everyone receive a $1,000 tax refund?
No. The measure is a deduction from taxable income, not a payment. Your actual tax benefit depends on income, marginal rate, tax payable and eligibility.
Can I claim $1,000 plus my normal work expenses?
Not for expenses covered by the standard deduction. The rules effectively top covered deductions up to $1,000. If the actual covered amount is higher, claim that amount under the normal rules.
Can I still claim donations and tax-agent fees?
Yes, if they are otherwise deductible. Donations, tax-affairs costs and several other specified claims sit outside the standard work deduction and retain their own conditions and record requirements.
Talk to Regans Accountants
Not sure whether the standard amount or your actual deductions will give the better result? Regans Accountants can sort the covered and separate expenses, check the evidence and help you claim what you are properly entitled to claim.
General information only, current at 5 September 2026. Speak with us about your own circumstances.
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