Around 6.2 million workers around Australia will be able to receive a $1,000 instant tax deduction, without needing to provide a receipt, in draft legislation announced by the federal government today. This change would simplify the tax system and deliver a cost-of-living relief to 42 per cent of taxpayers, with an average tax saving of $205. This change would come into effect from July 1, 2026, and be applicable for the 2026-2027 tax return.
$1,000 instant tax deduction for Australian workers
This long-awaited change was first proposed as an election commitment in April last year. The new deduction would benefit those who currently claim less than $1,000 in work-related expenses each year.
To be clear, this is a $1,000 tax deduction, not a tax refund, which means you won’t be given a thousand dollars at tax time. Instead, it would help you pay less tax.
According to Treasurer Jim Chalmers, around 3.3 million of benefiting taxpayers are women, who would have an average saving of $200. Meanwhile, 4.5 million taxpayers with less than $100,000 of taxable income would have an average benefit of $195.
This change will be an increase from the current system, which allows you to claim up to $300 of work-related expenses without a receipt.
The $1,000 deduction would apply to work-related expenses, such as travel expenses, work-from-home office expenses and work-related subscriptions.
Other types of expenses, such as charitable donations and union fees, will be claimed separately.
If you have over $1,000 in work-related expenses, you should continue to provide a receipt as usual.
Throughout the year, you should continue to document and collect receipts for all of your work-related expenses, just in case it becomes higher than $1,000.
Once it passes legislation, the instant tax deduction would apply from 2026-2027 income year onwards, with workers to see benefits from the second half of 2027.
The government is now seeking feedback on this legislation, and consultation closes on May 1. You can find more information, and submit your response, here.