# Tax Deductions Explained for Your First Few Years of Work

> What a tax deduction actually saves, which work costs can count in a first job, the records to keep and how the 2026–27 standard deduction changes small claims.

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- Author: Marnix
- Published: 2026-10-21



Tax advice travels fast at work, usually as a confident “keep the receipt”. Some of it is right for your job and some of it was right for someone else's. Working through what a claim is worth, and what the tax office needs to see, lets you decide for yourself.

## What a deduction takes off your tax

The number your tax is worked out on is your **taxable income**: what you earned in the financial year, less your deductions.

Meet Zoe, a made-up 24-year-old electrician earning $75,000 in 2025–26. Zoe buys $200 of hand tools, uses them only for work and isn't paid back for them. That $200 comes off the top of Zoe's income, where each dollar is taxed at 30%.

A deduction lowers the tax, not the price (2025–26 resident tax rates, before the Medicare levy). Zoe earns $75,000 and claims $200 of tools, so taxable income is $74,800. At a 30% tax rate, that is $60 less income tax; $140 of the price is still Zoe's to pay.

The saving follows your tax rate on that top slice, so on a lower income it's smaller. If your taxable income is under the $18,200 tax-free threshold, there's no income tax for a deduction to reduce at all. Our [take-home pay guide](/blog/take-home-pay) explains how those rates step up.

## Budget for the full price

A deduction is a reason to keep a receipt, not a reason to buy something. Spending to get one still leaves you most of the price down, and the saving only shows up after you lodge. Work gear is easier to live with when it's planned at full price from the pay it comes out of. If you haven't set that up yet, [making a budget](/blog/how-to-make-a-budget) starts with the costs each pay has to cover.

Clova, our budgeting app, shows what's left until payday, so you can see whether new boots fit this pay or should wait for the next one.

Clova is an Australian budgeting app. Join the waitlist and we’ll be in touch. [Join the waitlist](https://getclova.com/)

## Three checks before you claim a work cost

For a work expense to count, all three of these need to be true:

- You paid for it yourself and weren't reimbursed.
- It's directly related to earning your income.
- You have a record that proves it, usually a receipt.

The second check is where most claims fall over. Getting to work and home again is private travel, and so is lunch, even on a long shift. Your boss asking you to buy something doesn't make it deductible on its own either; there has to be a close link to the work you actually do.

When something is used for work and private life, like a phone, you can only claim the work share. That share needs to come from a record of how you used it, not a guess at the end of the year.

## Costs that often count in a first job

The ATO has a [deductions guide for many occupations](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/guides-for-occupations-and-industries), and the one for your job is worth a read. These are the costs that come up most, with the catch on each.

| Cost                | Can count                                                                                            | Usually doesn't                                               |
| ------------------- | ---------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- |
| Clothes             | A compulsory uniform, or protective gear your job needs such as steel-capped boots, and washing them | Black pants or a white shirt, even when the job requires them |
| Phone and internet  | The work share, backed by your bills                                                                 | The whole plan                                                |
| Travel              | Trips between two workplaces or for a work task                                                      | Getting to work and home again                                |
| Study               | A course that builds skills for the job you have now                                                 | A degree for a different career                               |
| Tools and equipment | Tools and gear you use to do the job                                                                 | The share you use privately                                   |

Equipment has one more rule. An [eligible work item](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/tools-computers-and-items-you-use-for-work/depreciating-assets-you-use-for-work) costing $300 or less can usually be claimed straightaway, but sets and similar items totalling over $300 have different rules. A dearer one, like a laptop, is claimed bit by bit over the years you use it.

## Working from home has its own rate

If you work from home, the simplest way to claim the extra running costs is a fixed rate for every hour you work there. For 2025–26 it's 70 cents an hour. It covers electricity and gas, internet, phone use and stationery, including work calls on your phone away from home, so none of those can be claimed again on top. A desk, chair or computer is claimed separately as equipment.

The record that matters is your actual hours across the whole year, kept as you go in timesheets or a diary, plus one bill for each kind of cost the rate covers. Hours estimated in June won't hold up. The rate is set for each income year, so check the [fixed rate method](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/working-from-home-expenses/fixed-rate-method) for the year you're claiming.

## From 2026–27, the first $1,000 is automatic

Starting with the 2026–27 income year, which you lodge from July 2027, Australian residents who earn wages or a salary get a **standard deduction** of $1,000, or their total wages if that's less. The ATO applies it for you. You don't need receipts for it, or even to have spent anything.

Work costs you claim, working from home included, come out of that $1,000 rather than adding to it.

| Work costs claimed with receipts (AUD) | Standard deduction (AUD) | Total deduction (AUD) |
| ---: | ---: | ---: |
| $0 | $1,000 | $1,000 |
| $200 | $800 | $1,000 |
| $1,400 | $0 | $1,400 |

From the 2026–27 income year, for Australian residents earning wages or salary: claims come out of the $1,000 standard deduction, not on top of it.

For Zoe, claiming the $200 of tools in 2026–27 would change nothing. Below $1,000 the standard deduction does the work. Keep receipts through the year, because one bigger purchase in May can push your costs past it. From 1 July 2026, every work cost you claim needs a record, however small.

Union fees, professional memberships, donations to registered charities and the cost of a tax agent sit outside the $1,000. You claim those on top, with a record of each.

## Keep records as you go

A receipt or invoice for a work cost needs to show the seller, the amount, what you bought and the date. A bank or card statement isn't enough on its own, because it comes from your bank rather than the seller and rarely says what the purchase was. For anything used partly for work, add a note of how you worked out the work share.

Keep ordinary expense records for five years after lodging. For equipment claimed over time, keep its records for five years after the last decline-in-value claim. Digital copies are fine, and the myDeductions tool in the ATO app can hold receipts alongside a running list of your claims.

Going back through a whole year at once is slower, and [reviewing your spending across every account](/blog/review-your-spending) can turn up purchases you'd forgotten. Work costs tend to be scattered across a couple of cards and sometimes a second bank. Clova brings every account into one view, so they're quicker to find, though each one still needs its receipt.

Your claims go in the work-related expenses part of your tax return, and our guide to [your first tax return](/blog/first-tax-return) walks through the rest of lodging. Most first jobs come with a few costs that count, if any. Knowing which ones means you can keep those receipts and stop wondering about everything else.

## A note from us

The money you spend to do your job deserves the same attention as the money the job pays you. Clova shows upcoming bills beside the pay, so a union fee or a course instalment due next week is already part of the plan when the pay lands.

## Common questions

### Do I need receipts for my 2025–26 return if my claims are small?

Not if your work-related expenses total $300 or less, though you still need to show you spent the money and how you worked out each claim. Laundry claims of $150 or less can use a reasonable calculation, such as $1 a load of work clothes only or 50 cents a mixed load. Both exceptions end from 1 July 2026.

### Is a tax deduction the same as a tax refund?

No. A deduction lowers the income your tax is worked out on. A refund is tax withheld from your pays during the year that turns out to be more than you owe once your return is assessed. A deduction can make a refund bigger or a tax bill smaller.

### Can I claim my HECS-HELP repayments or uni fees?

HELP repayments can't be claimed, and neither can fees paid through a HECS-HELP loan. Other course costs count only when the study keeps up or improves skills for the job you have now, or is likely to increase your income from it. A degree for a different career generally doesn't, even with a casual job alongside it.

### Who can check my claims for free?

The ATO's Tax Help program has trained volunteers who help with simple returns for people earning about $70,000 or less, usually from July to October. A registered tax agent charges a fee, which you can claim as a deduction in the year you pay it.

## Sources

1. [How to claim deductions](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/how-to-claim-deductions) · Australian Taxation Office
2. [Income Tax Rates Act 1986, Schedule 7: resident rates](https://www.legislation.gov.au/C2004A03348/2026-07-01/2026-07-01/text/original/epub/OEBPS/document_1/document_1.html) · Federal Register of Legislation
3. [Standard deduction for work-related expenses](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/standard-deduction-for-work-related-expenses) · Australian Taxation Office
4. [Records you need to keep](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/records-you-need-to-keep) · Australian Taxation Office
5. [Working from home expenses: fixed rate method](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/working-from-home-expenses/fixed-rate-method) · Australian Taxation Office
6. [Clothing, laundry and dry-cleaning expenses](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/clothes-and-items-you-wear-at-work/clothing-laundry-and-dry-cleaning-expenses) · Australian Taxation Office
7. [Mobile phone, mobile internet and other devices](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/tools-computers-and-items-you-use-for-work/mobile-phone-mobile-internet-and-other-devices) · Australian Taxation Office
8. [Expenses for a car you own or lease](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/cars-transport-and-travel/motor-vehicle-and-car-expenses/expenses-for-a-car-you-own-or-lease) · Australian Taxation Office
9. [Self-education expenses](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/education-training-and-seminars/self-education-expenses) · Australian Taxation Office
10. [Guides for occupations and industries](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/guides-for-occupations-and-industries) · Australian Taxation Office
11. [Depreciating assets you use for work](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/tools-computers-and-items-you-use-for-work/depreciating-assets-you-use-for-work) · Australian Taxation Office
12. [Keeping records for depreciating assets](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/tools-computers-and-items-you-use-for-work/depreciating-assets-you-use-for-work/keeping-records-for-depreciating-assets) · Australian Taxation Office
13. [Tax Help program](https://www.ato.gov.au/individuals-and-families/your-tax-return/help-and-support-to-lodge-your-tax-return/tax-help-program) · Australian Taxation Office

## Related reading

- [Take-Home Pay: What Lands in Your Account and Why](https://getclova.com/blog/take-home-pay)
- [Your first payslip, explained line by line](https://getclova.com/blog/payslip-explained)
- [How to review your spending across every account](https://getclova.com/blog/review-your-spending)

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