A simple guide to tax deductions in Australia

Estimated reading time: 6 minutes

Last Updated:

23 Jul 2026

Key Takeaways

Tax deductions reduce your taxable income, which may increase your tax refund.
You can only claim expenses directly related to earning your income.
You must pay for the expense yourself and keep records to support your claim.
Different occupations can claim different work-related deductions.
Etax helps you identify deductions you may be entitled to claim and ensures they’re claimed correctly.

What is a tax deduction?

A tax deduction is an eligible expense you pay yourself that can be claimed on your tax return.

Deductions can help reduce your taxable income, which boosts your tax refund at tax time.

Tax deductions include work-related expenses such as uniforms, tools and travel costs – just to name a few.

To claim a tax deduction, you need to meet the following criteria:

have a record to prove it
have spent the money yourself
not have been reimbursed for the cost
the expense must be related to your job.

How do tax deductions work?

You don’t need to be a tax expert to claim deductions correctly. If you use Etax, we’ll help you identify the deductions you may be entitled to claim, plus you can chat with an accountant who’s on your side. That said, it’s useful to understand the basics. Knowing how deductions work makes it easier to keep receipts, logbooks and other records throughout the year.

If it all sounds confusing, you’re not alone. Australian taxes are very complicated. Here is a quick example to explain how it works:

If you earn $70,000 a year and you paid $14,000 tax, your tax refund would be $1,080.
However, if you spent $3,500 throughout the year on work-related expenses, your taxable income reduces to $66,500.
That means you only need to pay tax on $66,500 of your income, and any extra tax you already paid during the year is added to your refund.
At the time of writing, that’s an extra $1,123. Add this to your original refund of $1,080, and your total refund comes to $2,203.
In other words, for this example, your tax deductions earn you an extra $1,123 in your tax refund when you lodge your tax return.

Important Note: The extra money you receive in your tax refund from deductions is not a set amount. It changes as your income increases or decreases. For example, someone earning $35,000 with $3,500 of tax deductions increases their refund by $875.

On the other hand, for someone earning $110,000, their $3,500 of tax deductions increases their refund by $1,120.

It’s important to remember that you don’t get all the money back that you spend on tax-deductible items or services, but you do get a percentage. The percentage is usually the same as your tax bracket. The amount you spend reduces your taxable income. This means you pay tax on less of your overall income, and your refund goes up.

Budget Update: The government recently announced that eligible workers will be able to claim an automatic ‘$1,000 instant tax deduction‘, without needing to keep receipts for work-related expenses from their 2027 tax return.

Most people claim more than $1,000 in deductions, so read on to find out what to claim to get the best possible tax refund every year!

What can I claim on tax?

Do you travel to different worksites, buy your own tools, equipment or uniforms, or use your own car for deliveries? If you’re funding these costs yourself, it pays to know exactly what you can claim back at tax time.

Below are some of the most common tax deductions Australians claim.

Working from home tax deductions

Do you sometimes work from home? With many Australians now working at least part of their time at home, it’s important to get your work-from-home deductions right. Learn the difference between the Actual Cost Method and the Fixed Rate Method.

Work-related travel expenses

If you travel for work, excluding the commute to and from home, you could be claiming work-related travel expenses. This includes using your car, public transport, airfares, parking, and more!

Tools and equipment

You can claim a deduction for tools and equipment you require for work purposes. If the tools are used for both work and private purposes, our accountants can help you work out the percentage you can claim. The cost of the item will affect the type of deduction you can claim:

Purchases that cost $300 or less, can usually be claimed an immediate deduction
Items that cost over then $300, you can claim a deduction for their decline in value over time.

Investment property tax deductions

The cost of living has increased for everyone, including landlords. Knowing which rental property tax deductions you can claim is an important part of owning an investment property.

Tax-deductible donations

Have you donated to a charity this financial year? You might be able to claim it as a tax deduction on your next tax return. Find out if your donation is tax-deductible.

Super contribution tax deduction

You may be investing in your super for retirement, but did you know your personal super contributions can also benefit you now? Claim them as a tax deduction on your tax return and pay less tax!

Uniform and laundry tax deduction

If you must wear a uniform to work with a company logo, you can claim a portion of the laundry costs. For a list of uniform and laundry deductions you can and can’t claim, read our work uniform expenses blog.

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Job-specific tax deductions

Each career has different tax-deductible expenses. We’ve created detailed guides explaining the deductions commonly available for different occupations:

Frequently asked questions

What is a tax deduction?

A tax deduction is an eligible expense that reduces your taxable income. Lower taxable income generally means you pay less tax.

Can I claim tax deductions without receipts?

Sometimes. The ATO allows limited claims without receipts in certain situations, but you should always keep records wherever possible. Read our full guide on claiming deductions without receipts.

Do tax deductions give me all my money back?

No. Tax deductions reduce your taxable income rather than reimbursing the full amount you spent.

What expenses can employees claim?

Employees may be able to claim work-related travel, uniforms, tools, equipment, home office expenses, professional memberships and other costs directly related to earning their income.

Can I claim personal expenses?

No. Personal or private expenses generally aren’t deductible unless there’s a clear work-related component.

What happens if I claim the wrong deduction?

If you accidentally claim something you’re not entitled to, the ATO may ask you to provide evidence, adjust your tax return or, in some cases, apply penalties. Always ensure your claims meet ATO requirements.