You’ve worked hard all year—and chances are, you’ve also shelled out for a bunch of work-related expenses. Now that it’s tax time, it’s your chance to claw some of that money back. But let’s be honest: plenty of Aussies still toss their tax return into the ‘too-hard basket’… or worse, the ‘I can’t be bothered’ pile. And that kind of thinking could leave hundreds—maybe even thousands—of dollars on the table.
Tax time doesn’t have to be a headache. With a little knowledge (and the right support), it’s a real opportunity to put some money back in your pocket. In this guide to tax deductions for employees in Australia in 2025, we’ll walk you through what you can claim, what’s changed, and how to make sure you don’t miss out. After all—it’s your money. Let’s help you get it back.
What Is a Tax Deduction?
Let’s start with the basics. A tax deduction is a work-related expense you can claim that reduces your taxable income—which is the amount the ATO uses to figure out how much tax you owe.
The more eligible deductions you claim, the lower your taxable income. And the lower your taxable income? The less tax you have to pay. It’s that simple.
Say you earned $80,000 and claimed $2,000 in deductions. You’ll only be taxed on $78,000. That could mean a bigger tax refund—or a smaller tax bill. Win-win.
Heads up: You can only claim deductions for expenses that directly relate to earning your income. No, your dog walker or gym membership doesn’t count—unless your job involves sprinting after golden retrievers for a living (and even then, ask your accountant).
What Is a Tax Credit (or Offset)?
A tax credit—also called a tax offset—is even more powerful than a deduction. Why? Because instead of reducing your taxable income, it slashes your actual tax bill, dollar for dollar.
For example, if your tax payable is $2,000 and you’re eligible for a $500 tax offset, you’ll only pay $1,500. That’s real money staying in your bank account.
There are lots of offsets available depending on your situation, including:
- The Low Income Tax Offset (LITO)—up to $700 for those earning under $66,667
- Spouse or carer offsets
- Zone tax offsets for those living in remote areas
Pro Tax Tip: Offsets aren’t always something you need to “apply for.” The ATO usually calculates them automatically based on your income and return—so long as your info is accurate.
How to Claim Tax Deductions (It’s Not as Confusing as it Sounds)
Here’s the good news: claiming tax deductions for employees in Australia in 2025 is easier than you think—especially if you keep decent records.
Here’s how it works:
- Track your expenses: Keep receipts, logbooks, or bank statements showing your work-related spending.
- Work out what’s claimable: The ATO has pretty strict rules. If it wasn’t essential to your job, it probably doesn’t count.
- Lodge your tax return: You can do this yourself via myTax or get help from a tax agent (who’s also tax-deductible—how good is that?).
- Claim deductions and offsets: Include everything you’re entitled to, backed up with evidence.
- Calculate your refund (or bill): Your deductions reduce your taxable income. Any offsets then reduce your tax payable.
A final word: Don’t guess your claims. Overclaiming can trigger an audit. Underclaiming means you’re leaving money on the table. Neither is ideal—so when in doubt, ask an ITP pro.
Common Tax Deductions for Employees
There’s a surprising number of everyday expenses you might be able to claim, if you know what to look for. Let’s break down the most common tax deductions for individual employees in Australia in 2025, starting with one that’s often underestimated: travel.
Vehicle and Travel Expenses
Use your own car for work this year? You may be able to claim a juicy deduction—just not for your commute (sorry, your daily drive to work is still on your own dime).
But if your boss had you running between job sites, delivering goods, or hauling heavy equipment that wouldn’t fit in your handbag, you’re in luck.
Claimable travel expenses include:
- Trips between two separate jobs (like your 9–5 and your side hustle).
- Travel from your usual workplace to an alternate location (like a meeting or training off-site).
- Carrying bulky equipment your employer needs you to bring (think ladders, toolboxes—not your reusable coffee cup).
Two ways to claim:
- Cents per kilometre method: Claim 88 cents per kilometre (2024–25 rate) for up to 5,000 work kilometres per year—no receipts needed, but keep a record of how you worked it out.
- Logbook method: Track everything—fuel, servicing, rego—and apportion your actual costs using a 12-week logbook showing your work vs personal travel.
Need more info? You can visit the ATO’s website here to learn more about making deductions when using your own car.
Pro Tax Tip: If you’re bad with receipts but good at remembering to fill up on Fridays, the cents-per-kilometre method might be your best friend. Otherwise, the logbook method can offer a bigger return if you’re on the road a lot.
Clothing, Laundry, and Dry-Cleaning Expenses
If your workwear isn’t something you’d wear to brunch, it might be deductible.
You can claim clothing expenses if:
- You wear a compulsory uniform with a logo.
- You need protective gear, like fire-resistant overalls, steel-capped boots, gloves, or hi-vis vests.
- Your job requires occupation-specific clothing, like a nurse’s scrubs or a chef’s jacket.
You can also claim the cost of cleaning these items—just keep receipts or a reasonable diary of laundry loads.
Pro Tax Tip: If it’s something you could reasonably wear outside work (hello, black pants and business shirts), the ATO doesn’t want to know about it. Even if your boss says it’s part of the ‘dress code,’ it doesn’t count.
Home Office Expenses
Working from home is now the norm for many Aussies, whether it’s one day a week or the whole shebang. The ATO lets you claim costs—but only if you do it the right way.
Here’s what’s on offer for the 2024–25 financial year.
The Fixed Rate Method (70c per hour)
Covers:
- Electricity and gas
- Phone and internet usage
- Computer consumables (like ink and paper)
- Stationery
What you’ll need:
- A record of your actual hours worked from home (estimates are out).
- At least one bill or receipt for each cost category you’re claiming.
The Actual Cost Method
This one’s more fiddly—but could mean a bigger deduction if your bills are sky-high or your home office setup is premium.
You’ll need to track:
- Work-related portions of power, phone, and internet
- Depreciation on furniture and equipment
- Repairs and cleaning
- Stationery and consumables
Pro Tax Tip: Choose the method that gives you the best result—but remember, both require detailed records. If you’re not sure which works in your favour, chat with an ITP tax agent who can run the numbers with you.
Self-Education Expenses
If you’ve enrolled in a course this year to upskill or boost your current job performance—good news, it might be tax-deductible. The ATO allows you to claim a range of self-education expenses, as long as the course relates to your current employment (sorry, no tax breaks for a mid-career pivot into underwater basket weaving—unless you’re already a professional diver).
Claimable expenses include:
- Course or tuition fees (excluding HECS-HELP, FEE-HELP and similar loan repayments)
- Textbooks, stationery, printing and photocopying
- Travel between your workplace and your place of study (but not from home)
- Internet usage, and depreciation on study tools like laptops and headsets
To claim, your course must:
- Maintain or improve the skills you need in your current role, or
- Be likely to lead to a salary boost in your current line of work
Pro Tax Tip: From 1 July 2022, the old $250 ‘self-education expense threshold’ was scrapped—so you can now claim the full amount (if it’s eligible). Just make sure you’ve kept your receipts and course documentation to prove it.
Tools, Equipment, and Other Assets
Bought something this year to help you do your job better or faster? You may be able to deduct the cost from your tax—whether it’s a laptop, a new drill, or even a fancy ergonomic chair to save your back during those long Zoom calls.
Eligible items include:
- Tools of trade (think drills, hammers, sewing machines)
- Laptops, tablets, mobile phones
- Office furniture like desks, lamps, and chairs
- Safety gear and technical equipment
- Briefcases, professional bags, and even toolboxes—if they’re for work
How to claim:
- $300 or less: Instant deduction (win!)
- Over $300: Depreciate the cost over the item’s effective life
Pro Tax Tip: If you also use the item for personal stuff (streaming Netflix on your work iPad, for instance), you’ll need to estimate your work-use percentage. Only the work-related portion is claimable.
Other Work-Related Deductions
These lesser-known deductions can pack a surprising punch. So don’t skip them—especially if you’re trying to maximise your refund.
You may be able to claim:
- Tax agent fees for managing your return (yes, even this one!)
- Union or professional association memberships
- Gifts or donations to registered charities (with a receipt)
- Income protection insurance (if it’s outside your super)
- Personal super contributions you’ve made voluntarily—just be sure to lodge a notice of intent to claim
Pro Tax Tip: Every claim needs documentation. Keep your receipts, statements, and letters so you’re ready if the ATO comes knocking.
Final Thoughts: Don’t Let the ATO Keep More Than It Should
Getting the most out of your tax return isn’t about gaming the system—it’s about knowing your rights, staying organised, and claiming what you’re genuinely entitled to. Whether it’s your work uniform, home office hours, or a shiny new laptop, every legitimate deduction adds up. And in a cost-of-living crisis, who wants to leave money on the table?
The key to maximising tax deductions for employees in Australia in 2025 is twofold: know the rules and keep the receipts. Even better? Get an expert in your corner.
At ITP, our friendly tax agents make sense of the fine print, flag extra savings you might’ve missed, and ensure you’re staying compliant while getting the biggest refund possible. Whether it’s your first time lodging or you’re just sick of guessing what’s deductible, we’ve got you.
Book an appointment today and take the stress out of tax time.