Tax Planning

Work-Related Deductions and the Proposed $1,000 Standard Deduction: What Individuals Need to Know

With proposed changes like the $1,000 standard deduction arriving in 2026-27, here’s how employees can strategise their deductions and recordkeeping.

By NomadicTax Research Team • 6 min read • August 27, 2026

## Overview of the Proposed $1,000 Standard Deduction The 2026-27 Australian Budget proposal includes a **standard deduction of up to $1,000** for work-related expenses. This means individuals may claim up to $1,000 without needing itemised receipts or detailed allocation of each expense if certain criteria are met. This change is **not yet law** and will **apply from the 2026-27 income year** (i.e. for tax returns lodged in mid-2027). ([community.ato.gov.au](https://community.ato.gov.au/s/?nocache=https%3A%2F%2Fcommunity.ato.gov.au%2Fs%2F&utm_source=openai)) ## What Remains Under Current Law (2025-26 Return) For the 2025-26 year, existing rules apply: you must have incurred the expense, it must be directly related to earning your income, not reimbursed, and you need **written evidence** for most expenses if total work-related deductions exceed $300. ([ato.gov.au](https://www.ato.gov.au/myTax25Deductions?utm_source=openai)) The $1,000 standard deduction does **not apply** for 2025-26 lodgments. ATO has explicitly stated that these changes are **proposed** and have not yet passed into law. ([community.ato.gov.au](https://community.ato.gov.au/s/?nocache=https%3A%2F%2Fcommunity.ato.gov.au%2Fs%2F&utm_source=openai)) ## How the Standard Deduction Would Work * Apply automatically if your total work-related expenses are less than $1,000 and you opt for the standard deduction. * It simplifies lodging for clients who otherwise keep many small receipts. * Does **not** limit higher itemised deductions if you have more than $1,000 in eligible expenses—those can still be claimed with evidence. ## Tax Planning Strategies for Individuals **A. Recordkeeping now to preserve options** Although the standard deduction may reduce record burden for small expenses, maintaining **good documentation** (receipts, logs) remains wise in case itemised deductions yield more benefit. **B. Consider timing of expenses** If you expect to incur work-related expenses in early to mid-2027 (e.g. subscriptions, equipment), you can plan whether they fall into 2026-27 to maximise use of standard vs itemised deduction. **C. Review occupation-specific guides** ATO provides **occupation- and industry-specific guides** that detail what deductions are acceptable (travel, clothing, tools, home equipment). These stay relevant even with standard deduction in place. ([community.ato.gov.au](https://community.ato.gov.au/s/?nocache=https%3A%2F%2Fcommunity.ato.gov.au%2Fs%2F&utm_source=openai)) ## Examples 1. **Teacher buying school supplies**: If Jane spends $800 on classroom resources, under proposed standard deduction she’d claim the full $800 without needing to list individual items. If she spent $1,500, she could itemise with receipts for amounts exceeding $1,000, potentially giving a larger deduction. 2. **Remote worker paying for home internet, computer upkeep**: With many small monthly expenses, Jessie might use the $1,000 standard deduction instead of tracking dozens of invoices, unless her total exceeds $1,000—then, itemising likely better. ## Compliance and Practical Considerations * **Wait until the law is passed**: Don’t assume standard deduction can be claimed for 2025-26. Only apply it once legislation is in force. ([community.ato.gov.au](https://community.ato.gov.au/s/?nocache=https%3A%2F%2Fcommunity.ato.gov.au%2Fs%2F&utm_source=openai)) * **Keep supporting records**: Even if relying on standard deduction, keep evidence should you need to reconstruct expenses later (audit or change of mind). * **Seek advice**: Especially where you have large work-related expenses or mixed private/work use, a tax professional can help decide whether itemising now or later benefits you more. ## Conclusion The proposed standard deduction for work-related expenses could simplify life for many taxpayers with modest work-related costs. However, it’s not yet law, and itemised deductions with evidence may still offer greater benefit for those with higher expenses. Plan ahead, keep records now, and stay informed of when changes are legislated.