If you work on the tools in Australia, much of what you spend to do your job may be tax deductible. Tools, protective gear, work travel and training can reduce your taxable income — but only when they meet the Australian Taxation Office (ATO) rules.
This guide explains tax deductions for tradies in Australia for 2025–26: the three golden rules, tools, vehicles, clothing and working from home, what you cannot claim, and what a deduction is actually worth. Use the income tax calculator to see how a lower taxable income changes your tax outcome.
The ATO’s Three Golden Rules
Before you claim anything, it must pass all three ATO tests.
- You paid for it yourself. You must have spent your own money, and you must not have been reimbursed by your employer or anyone else. If your employer paid you back, there is nothing left for you to claim.
- It is directly related to earning your income. The expense must have a clear connection to your current job. An item you use only at home for personal projects, for example, does not qualify, even if it happens to be a tool.
- You have a record to prove it. You need evidence of the expense. For most claims this means a receipt, invoice or bank statement, plus a way to show the work-related portion if an item is used for both work and private purposes.
If your total work-related expense claims exceed $300, you need written evidence for the total amount. Keep your records for five years from the date you lodge your tax return.
Tools and Equipment
Tools are usually the biggest deduction category, and the rules depend on cost.
Tools costing $300 or less can generally be claimed in full in the year you buy them, provided they meet the three golden rules. That covers many hand tools, drill bits, safety glasses, gloves and smaller power-tool accessories.
Tools costing more than $300 must generally be depreciated over their effective life, rather than claimed all at once. The same applies to a tool that is part of a set costing more than $300 in total, even if each individual item cost less than $300. For example, a full socket set, a kit of spanners or a set of chisels is treated as one set for this test. Depreciation spreads the deduction across several years, so you claim a portion each year until the item’s value is written down.
One common misunderstanding is worth clearing up. Employees cannot use the instant asset write-off. That concession is for eligible businesses, not for employees claiming work-related expenses. If you are an employee, the $300 rule and depreciation rules above are the ones that apply to you. If you run your own trade business, different rules may apply, and you should get advice on your business structure.
Tool allowances need care too. If your employer pays you a tool allowance, that allowance is taxable income and must be included in your tax return. You can still claim a deduction for what you actually spent on tools, but you claim the actual spend — not the allowance amount, and not an estimate. Keep receipts so the amount you claim matches what you genuinely paid.
Vehicle and Travel Expenses
Vehicle claims turn on the type of travel.
The cents-per-kilometre method
For 2025–26, the cents-per-kilometre rate is 88 cents per kilometre. You can claim up to 5,000 work-related kilometres per year using this method. You do not need to keep a logbook for this method, but you do need to be able to show how you worked out your work kilometres — for example, a diary of trips, job records or a reasonable estimate based on your work pattern. You cannot claim more than 5,000 kilometres with this method, even if you genuinely drove further for work.
The logbook method
The logbook method lets you claim the work-related portion of your actual vehicle running costs. You keep a logbook for a continuous 12-week period that is representative of your travel, and that gives you a work-use percentage. You then apply that percentage to your actual costs, such as fuel, registration, insurance, servicing and depreciation. This method involves more record-keeping, but it can give a larger deduction if your work use is high and your running costs are substantial.
Home to work, and travel between jobs
Travel from home to your regular worksite is private travel and is generally not deductible. That surprises many tradies, but it is the standard rule for employees travelling to their normal place of work.
There is an important exception: the bulky-tools test. Travel between home and work may be deductible if you need to carry bulky tools or equipment that are essential to your job, there is no secure storage for them at the worksite, and it is not practical to carry them by other means. All parts of the test need to be met — simply preferring to take your ute, or carrying a small toolbox, is not enough.
Travel between job sites during the working day is different. If you travel from one worksite to another, or from a worksite to a supplier to pick up materials for a job, that travel is generally deductible because it is part of earning your income. Keep a record of these trips, including dates, destinations and kilometres, so you can substantiate the claim.
Protective Clothing and Laundry
Protective clothing that protects you, or protects your conventional clothes, at work is generally deductible. For tradies this commonly includes steel-capped boots, hi-vis vests and shirts, hard hats, safety glasses, protective gloves and overalls worn to protect your ordinary clothes from damage or dirt on site.
Conventional clothing is not deductible, even if you only wear it to work. Jeans, ordinary T-shirts, general work shirts and everyday footwear do not qualify, because they lack a protective function and could be worn outside work. The test is function, not habit: the question is whether the item protects you or your clothes, not whether you happen to wear it only on site.
Working From Home, Phone, Union Fees and Training
Many tradies do some work from home — quoting jobs, ordering materials, doing paperwork or completing safety documentation. For 2025–26, the fixed-rate method for working-from-home expenses is 70 cents per hour. You claim for the hours you actually worked from home, and you need a record of those hours, such as a timesheet, diary or roster. You cannot claim the fixed rate for hours you were not working.
Other common deductible items for tradies include:
- Union fees. Fees paid to a trade union in connection with your current job are generally deductible.
- Licences and tickets. Licence renewals, tickets and cards required for your current job are generally deductible, provided they relate to your existing employment rather than qualifying you for a new job.
- Phone and internet. You can claim the work-related portion of your phone and internet costs. If you use your phone for both work and private calls, you need a reasonable basis for working out the work percentage, such as a representative sample of your usage over a period.
- Self-education. Training and courses connected to your current job may be deductible. The course must maintain or improve skills you need in your current role, or be likely to lead to an increase in income from your current job. A course that qualifies you for a completely different occupation is generally not deductible.
What You Cannot Claim
Common non-deductible items include your driver’s licence, fines and penalties, travel from home to your regular worksite (unless the bulky-tools test is met), and conventional clothing without a protective function.
Personal expenses, even if they make your working life easier, are not deductible unless they meet the three golden rules. Childcare, general grooming, meals on an ordinary workday and the private portion of a dual-purpose expense are all outside the deduction rules. For any expense that is partly work and partly private, you can only claim the work-related portion.
| Expense | Generally claimable? | Notes |
|---|---|---|
| Tools $300 or less | Yes | Claim in full in the year of purchase |
| Tools over $300 (or a set over $300) | Yes, depreciated | Claimed over the effective life |
| Vehicle, cents-per-km (88c/km) | Yes | Capped at 5,000 work km for 2025–26 |
| Vehicle, logbook method | Yes | 12-week logbook gives your work-use percentage |
| Travel between job sites | Yes | Part of earning your income |
| Home-to-work travel | No, with one exception | Deductible only if the bulky-tools test is met |
| Steel-capped boots, hi-vis, hard hats | Yes | Protective function required |
| Jeans, ordinary T-shirts | No | Conventional clothing, even if worn only to work |
| Working from home, fixed rate | Yes | 70c per hour for 2025–26, hours must be recorded |
| Union fees, licences, tickets | Yes | Must relate to your current job |
| Phone and internet, work portion | Yes | Only the work-related percentage |
| Driver’s licence, fines | No | Private or penalty costs, not deductible |
Worked Example: What Is a Deduction Actually Worth?
A deduction does not reduce your tax dollar for dollar. It reduces your taxable income, and the tax saved depends on your marginal tax rate.
Take a tradie on a 30% marginal tax rate, plus the 2% Medicare levy — a combined rate of 32% on that slice of income. If that tradie claims a legitimate $1,000 work-related deduction, taxable income falls by $1,000 and tax falls by 32% of $1,000, which is $320. The deduction is worth $320 in tax saved, not $1,000. The same logic applies at any level: a $2,500 set of deductions at a combined 32% rate saves $800, and a $5,000 set saves $1,600.
Frequently Asked Questions
What if my employer gives me a tool allowance?
The allowance is taxable income and must be declared. You can then claim a deduction for what you actually spent on tools, supported by receipts. You claim the real spend, not the allowance figure, so if you spent less than the allowance, you only claim what you spent.
Can I claim my ute if I also use it privately?
Yes, but only the work-related portion. Under the cents-per-kilometre method you claim only work kilometres, up to 5,000 per year at 88 cents per kilometre for 2025–26. Under the logbook method you apply your work-use percentage to actual costs. Private use is never deductible under either method.
Are steel-capped boots deductible if my employer requires them?
Yes, steel-capped boots are protective footwear and are generally deductible when required for your work. The same applies to hi-vis clothing, hard hats and safety glasses. Ordinary boots or shoes without a protective function are not deductible, even if your employer has a dress code.
Can I claim travel from home to a site if I carry bulky tools?
Possibly, if you meet the bulky-tools test in full: the tools must be essential to your job, there must be no secure storage at the worksite, and carrying them must not be practical by other means. If any part of the test fails, the travel remains private and is not deductible. Keep evidence of the tools you carry and the storage situation at the site.
Can I claim laundry costs for work clothes?
Yes, for deductible protective clothing you wash yourself. You need a reasonable record of your laundry pattern, and you cannot claim laundry for conventional clothing that is not itself deductible.
Conclusion
Tax deductions for tradies come down to a simple discipline: spend on what your job genuinely requires, keep the receipt, record the work connection, and claim only the work-related portion. Tools under $300 can be claimed in full, larger tools are depreciated, vehicle claims use the 88 cents-per-kilometre method up to 5,000 kilometres or a 12-week logbook, and protective gear qualifies where conventional clothing does not.
Before you lodge, run your figures through the income tax calculator, and consider speaking to a registered tax agent if your situation involves a business, a logbook claim or a large tool purchase.