The Australian Government has just released draft legislation for a new $1,000 Instant Tax Deduction, designed to simplify tax time for over 6.2 million workers. Here is what our clients need to know:

The Key Change

Starting from the 2026–27 income year, you will be able to reduce your taxable income by $1,000 automatically—without needing to keep or provide receipts—when you lodge your return.

Who Benefits?

• Simplified Claims: If your work-related expenses are typically under $1,000, you save time on paperwork and still get the full deduction.
• Low-to-Middle Income Earners: Roughly 75% of those benefiting earn less than $100,000, with an average tax saving of $195–$205.
• Young Professionals: Over 1.7 million workers under age 30 will see an immediate benefit.

What if my expenses are higher?

Don't worry—if you spend more than $1,000 on work-related items, you can still claim the higher amount using the traditional receipt-based method. Additionally, charitable donations and union/professional fees can still be claimed on top of this $1,000 deduction.

Expert Tip: This change doesn't kick in until you lodge in 2027, but it's part of a broader strategy to lower your tax bill alongside the upcoming 2026 tax cuts.

Sources & References:

• The Treasury (Australian Government): $1,000 instant tax deduction to deliver lower, simpler taxes