Individual Tax Return Tips 2025-26

Individual Tax Return Tips 2025–26: Your Complete Guide for Australian Taxpayers

With 30 June fast approaching, now is the perfect time for Australian individuals to start thinking about their tax return. Whether you’re a salaried employee, a freelancer, an investor, or a side-hustle entrepreneur, understanding what you can claim — and what the ATO is watching — can make a significant difference to your refund this year.

This guide covers everything you need to know about lodging your 2025–26 individual tax return, from the new tax rates and top deductions through to key deadlines and the ATO’s compliance priorities.

What’s New for Individuals in 2025–26?

The 2025–26 financial year brings some of the most significant changes to individual income tax in years, thanks to the legislated Stage 3 tax cuts that took effect from 1 July 2025.

Updated Tax Rates for 2025–26

Australian resident taxpayers (excluding the Medicare levy) are now taxed at the following rates:

$0 – $18,200: Nil (tax-free threshold)
$18,201 – $45,000: 16 cents for each $1 over $18,200
$45,001 – $135,000: $4,288 plus 30 cents for each $1 over $45,000
$135,001 – $190,000: $31,288 plus 37 cents for each $1 over $135,000
$190,001 and over: $51,638 plus 45 cents for each $1 over $190,000

The Medicare levy of 2% applies on top of these rates for most taxpayers. Importantly, the Low and Middle Income Tax Offset (LMITO) expired after the 2022–23 financial year and does not apply to your 2025–26 return. The Low Income Tax Offset (LITO) continues to apply for eligible lower-income earners.

The $1,000 Instant Deduction — Not Yet

You may have heard about the proposed $1,000 instant work-related expense deduction. While this is a welcome change, it applies from the 2026–27 financial year only — not the current year. For your 2025–26 return, you still need to keep receipts and substantiate all claims in the usual way.

Key Lodgement Deadlines

Getting your dates right is essential to avoid penalties:

Financial year ends: 30 June 2026
Lodgement opens: 1 July 2026
Self-lodgers (via myTax): 31 October 2026
Tax agent clients: Extended to 15 May 2027 — provided you are on your agent’s client list by 31 October 2026

Pro tip: Don’t rush to lodge on 1 July. Wait until late July so the ATO can pre-fill your income data from employers, banks, and other third parties. Pre-filled data is more accurate and reduces the risk of errors.

Top Deductions to Maximise Your Refund

To claim any deduction, you must meet three basic rules: you paid the expense yourself (and weren’t reimbursed), it was directly related to earning your income, and you have records to prove it.

Work-From-Home Expenses

If you worked from home during 2025–26, you can choose between two methods:

Fixed Rate Method (70 cents per hour): Covers electricity, gas, internet, phone, and stationery. You cannot claim these items separately under this method. You must keep a record of your actual hours worked from home for the entire year — estimates are not accepted by the ATO.
Actual Cost Method: Claim the actual cost of each expense, including depreciation on office equipment. This method requires more detailed records but may result in a higher deduction.

Vehicle and Car Expenses

If you use your car for work purposes (not your regular home-to-work commute), you can claim:

Cents per kilometre method: A set rate per business kilometre (88 cents per km for 2024–25; check the ATO for the updated 2025–26 rate). You can claim up to 5,000 km without a logbook.
Logbook method: Claim the business-use percentage of all car expenses. Requires a valid 12-week logbook.

Remember: travel between home and your regular workplace is generally not deductible.

Tools, Equipment, and Technology

Items costing $300 or less used for work can be claimed as an immediate deduction.
Items over $300 must be depreciated over their effective life.
The work-related portion of your mobile phone and internet costs is deductible — keep records of your usage split.

Self-Education Expenses

You can claim the cost of courses, textbooks, and professional seminars if the study relates to your current job and improves your skills or income. Education for a new career path is not deductible.

Professional Memberships and Union Fees

Annual fees for professional associations, unions, and industry bodies are fully deductible. Don’t overlook these — they’re easy to miss but add up quickly.

Gifts and Donations

Donations of $2 or more to a registered Deductible Gift Recipient (DGR) are deductible. You must have a receipt, and you must not have received anything in return (so raffle tickets don’t count).

Income Protection Insurance

Premiums for income protection insurance held outside superannuation are generally deductible. Life insurance and trauma insurance premiums are not.

Personal Super Contributions

If you made personal (after-tax) contributions to your super fund and lodged a valid Notice of Intent to Claim a Deduction, those contributions may be deductible — subject to the concessional contributions cap ($30,000 for 2025–26).

What the ATO Is Watching in 2025–26

The ATO uses sophisticated data-matching technology, cross-referencing over 600 million transactions annually from banks, employers, share registries, property agencies, and online platforms. Here’s where they’re focusing their attention this year:

Cryptocurrency and Digital Assets

All cryptocurrency trades, NFT sales, and DeFi earnings are treated as capital gains events. The ATO’s crypto data-matching program extends through 2025–26, collecting data directly from Australian crypto exchanges. If you’ve traded crypto and haven’t declared it, the ATO likely already knows.

Gig Economy and Side Income

Income from ride-sharing, Airbnb, food delivery, and online selling platforms is reported directly to the ATO. If you earn income from any platform, it must be declared — even if it’s just a few hundred dollars.

Work-From-Home Claims

The ATO has flagged WFH deductions as a key compliance area. Common errors include using estimates instead of actual hours, claiming expenses already covered by the fixed rate, and claiming the full cost of items that are only partly used for work.

Rental Property Income

Property management agencies report rental income to the ATO. Ensure your rental income is correctly declared and that deductions are properly apportioned — especially for properties that are also used privately.

Overseas Income

Through the Common Reporting Standard (CRS), the ATO receives financial account data from over 120 countries. If you have overseas bank accounts, investments, or income, it must be declared on your Australian tax return.

Common Mistakes to Avoid

Overclaiming deductions without receipts or proper records
Claiming personal expenses as work-related
Not declaring side income from gig work, freelancing, or cash jobs
Forgetting investment income such as bank interest and dividends
Using estimates for WFH hours instead of actual records
Ignoring cryptocurrency gains — every trade is a taxable event
Confusing deductions and offsets — deductions reduce your taxable income; offsets reduce your tax payable directly

Record Keeping: What You Need to Keep

Keep all records for 5 years from the date you lodge your return
If your total work-related expenses exceed $300, you need written evidence (receipts or invoices) for all claims — not just the amount over $300
For claims of $300 or less, you need records showing how you calculated the amount (receipts not strictly required, but recommended)
Electronic records are acceptable — apps like the ATO’s myDeductions tool can help you track expenses throughout the year

With new tax rates delivering real savings for most Australians, 2025–26 is a great year to ensure you’re claiming everything you’re entitled to. The key is preparation: keep your records organised, understand what you can and can’t claim, and don’t leave it until the last minute.

At TaxServe Australia, our experienced tax professionals help individuals across Australia maximise their refunds while staying fully compliant with ATO requirements. Whether you need help understanding the new tax rates, claiming work-from-home deductions, or navigating cryptocurrency tax obligations, we’re here to make tax time stress-free.

Contact TaxServe Australia today to book a consultation with one of our tax experts — and get your 2025–26 return right the first time.

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Written & reviewed by Nick Moon, CPA & Registered Tax Agent

Nick Moon is a Certified Practising Accountant (CPA) and Registered Tax Agent with a Master of Professional Accounting, and the founder of Tax Serve — a CPA-led accounting firm at 11 Palmerston St, North Lakes QLD 4509, serving individuals and small businesses across Australia. This article reflects Australian tax law and ATO guidance current at the time of writing and is general information only, not personal advice. Book a consultation or call 0407 579 448.