Tradies spend more of their own money on work than almost any other occupation — tools, steel caps, hi-vis, the ute, licences, union fees, sunscreen. The ATO publishes a dedicated guide for tradies.
Quick answer: In 2026-27, tradies can claim tools (up to $300 immediately, depreciation above that), car and ute costs at 91c per km or by logbook, protective clothing and laundry, licence renewals, union fees, self-education, the work portion of a phone, sun protection, and home-office hours. The new $1,000 standard deduction is automatic — but for a typical full-time tradie, itemising wins by $6,032 in deductions, worth about $1,930 in extra tax back.
The three tests every claim must pass
A work-related expense is deductible only if it meets all three tests:
- You spent the money yourself and were not reimbursed.
- It directly relates to earning your income in your current trade.
- You have a record to prove it. Receipts, invoices, a diary.
Keep records for five years from the date you lodge.
Employee or sole trader? It changes the rules
If you are an employee, you claim work-related expenses in your personal return: tools costing $300 or less are immediately deductible, dearer tools depreciated.
If you run your own business as a sole trader with an ABN, you are in the small business system instead. From 1 July 2026 the $20,000 instant asset write-off is permanent for eligible small businesses with turnover under $10 million, so a $4,000 concrete mixer can be deducted in full in the year you buy it. Read our instant asset write-off guide if you are a sole trader.
Key rates and thresholds for tradies in 2026-27
| Item | 2026-27 figure | What it means |
|---|---|---|
| Car — cents per kilometre | 91c per km, max 5,000 km | Maximum claim $4,550. Show how you worked out the kilometres. |
| Tools & equipment — immediate deduction | $300 or less | Items $300 or less, mainly for work, claimed in full. Sets over $300 in total are depreciated. |
| Tools over $300 | Depreciated over effective life | Electric hand tools: 5-year effective life in the ATO’s example, so 20% a year. |
| Standard deduction (new) | $1,000 | Automatic from 1 July 2026. Covered expenses shrink it $1-for-$1; union fees and tax agent fees sit on top. |
| Laundry | $1 per work-only load, 50c per mixed load | No written evidence needed if laundry is $150 or less. |
| Working from home — fixed rate | 70c per hour* | Covers energy, phone, internet and stationery for hours worked from home. |
| Instant asset write-off (small business only) | $20,000 | Permanent from 1 July 2026 for businesses with turnover under $10m. |
| Marginal tax rate (most tradies) | 30% + 2% Medicare levy | Applies from $45,001 to $135,000. Every deduction dollar saves 32c. |
*The ATO has not yet published a working-from-home rate for 2026-27. 70c per hour is the latest published rate (2025-26) and is used here as the working figure — keep recording your hours now and apply the rate in force when you lodge.
What tradies can claim in 2026-27
1. Tools and equipment
The $300 threshold is the whole game: a tool costing $300 or less that you use mainly for work can be claimed in full in the year you buy it — a $279 drill. Anything over $300 is depreciated: a $1,450 cordless combo kit gives you a $290 deduction a year over five years. Two traps: the set rule — a set costing more than $300 in total is depreciated as a set, so a $350 ratchet set cannot be claimed piece by piece — and timing: buy a tool part-way through the year and you can only claim the decline in value for the part of the year you owned it.
2. Car and ute expenses — where the real money is
Cents per kilometre is the simple path: 91c per work-related kilometre, up to 5,000 km per car — a maximum claim of $4,550 — no receipts needed, just a diary. The logbook method needs a 12-week logbook, valid for five years, and then you claim that percentage of every running cost.
Driving between job sites or to pick up materials is deductible; the ordinary trip from home to your regular workplace is private. The exception is the bulky-tools rule: home-to-work travel becomes deductible if you carry tools that are essential to the job, bulky enough to need a vehicle, and there is no secure storage for them at the site.
An employee cannot claim the cost of buying a ute at all, only its running costs.
3. Protective clothing, laundry and sun protection
Protective gear is deductible: steel-capped boots, hi-vis, hard hats, safety glasses and gloves. Not deductible: jeans and drill shirts are conventional clothing and can never be claimed.
Laundering deductible work clothing is claimable at $1 per work-only load, or 50c per mixed load — two loads a week across 48 working weeks is $96 a year, and if your laundry claim is $150 or less you don’t need written evidence. Outdoor tradies can also claim sun protection — sunscreen, a sunhat and sunglasses.
4. Licences, tickets, training and self-education
Renewing a licence you need to keep working is deductible — the ATO’s own example is a plumber claiming the $241 renewal of his plumber’s licence. The same logic covers an electrician’s licence or a white card renewal. But the initial licence is not deductible: getting your builder’s licence so you can get a job is a cost of entering the profession. Courses that maintain or improve the skills for your current trade are deductible as self-education — a certificate upgrade, a safety induction, first aid recertification. HECS-HELP fees and study loan repayments are never deductible. Read the detail in our self-education expenses guide.
5. Phone, home office and the small stuff
Most tradies run their working life off a phone — quoting, scheduling, ordering materials. Claim the work-related percentage with a representative four-week record: 60% of a $1,080 annual plan is a $648 deduction. But if you use the working-from-home fixed rate for hours spent quoting and doing admin at home, that rate already covers your phone and internet for those hours — don’t claim them twice. Quoting, invoicing and ordering from the kitchen table after hours counts as working from home, at 70c per hour under the fixed rate (the ATO has not yet published the 2026-27 rate — track your hours now). Our working-from-home guide works through both methods.
Then the smaller items: union fees (CFMEU, CEPU or your trade union — fully deductible, and they sit on top of the $1,000 standard deduction), association memberships, last year’s tax agent fee, and parking fees and tolls on work trips.
6. What you cannot claim
The ATO’s tradie guide is unusually blunt here: gym fees and fines; music streaming for the drive; the initial cost of a licence or qualification. Tool allowance warning: it appears on your income statement and must be declared as income in full.
How to claim: five steps
- Separate the year into covered and on-top expenses. Most work expenses are “covered” — they shrink the $1,000 standard deduction dollar-for-dollar; union fees, tax agent fees and donations sit on top.
- Photograph every receipt as you spend. The ATO app’s myDeductions tool stores the photo, the amount and the category.
- Keep a diary for the estimates. Kilometres, home-office hours, laundry loads.
- Run the 12-week logbook if you drive a lot — it is usually worth far more than cents per kilometre and stays valid for five years.
- Compare the totals, then lodge. Under $1,000 of covered expenses, take the standard deduction; over $1,000, itemise.
Worked example 1: a full year for a typical tradie
Jake is a plumber earning $92,000 in 2026-27. Here is his year:
| Expense | Amount | How it is worked out |
|---|---|---|
| Car — cents per kilometre | $3,822 | 4,200 work km × 91c |
| Tools $300 or less (immediate) | $1,150 | Drill $279, hand tools, bits, tapes |
| Tool depreciation | $290 | $1,450 combo kit ÷ 5-year life |
| Protective clothing | $414 | Boots $189, hi-vis $120, glasses $45, gloves $60 |
| Laundry | $96 | 2 loads/week × 48 weeks × $1 |
| Licence renewal | $241 | Plumber’s licence (ATO example figure) |
| Phone — work portion | $648 | 60% of $1,080 annual plan |
| Training — working at heights refresher | $185 | Course fee |
| Sun protection | $85 | Sunscreen, sunhat, sunglasses |
| Working from home — quoting & admin | $101 | 144 hours × 70c* |
| Covered expenses subtotal | $7,032 | |
| Union fees | $520 | Annual membership — sits on top |
| Tax agent fee (last year’s return) | $180 | Sits on top |
| Total itemised deductions | $7,732 |
Itemising saves him $7,732 × 32% = $2,474 in tax — versus only $544 from the $1,000 standard deduction plus the $700 on top. Itemising puts $1,930 more back in his pocket.
Worked example 2: the $1,000 standard deduction vs itemising
The ATO applies the $1,000 automatically, but it does not stack with your other work expenses — every dollar of covered expenses shrinks it by a dollar. Claim $400 and your standard deduction becomes $600; claim more than $1,000 and it disappears entirely.
For Jake: $7,032 of covered expenses means itemising wins by $6,032 in deductions, or $1,930 in tax. The standard deduction only wins when covered expenses are genuinely small — a first-year apprentice with $620 of covered expenses gains $380, worth about $122 in tax at a 32% combined rate. Rule of thumb: if your covered expenses pass $1,000, itemise. Our full standard deduction guide works through the mechanic.
Worked example 3: the $300 tool rule in practice
Three purchases:
- Drill/driver, $279 — under $300 and mainly for work: claim the full $279.
- Ratchet set, $350 — the set costs more than $300, so you depreciate the whole set: roughly $70 a year over five years.
- Cordless combo kit, $1,450 — over $300: $290 a year over its five-year effective life. Bought on 1 July, Jake claims the full $290; bought on 1 January, about $145.
The category tradies under-claim most is cheap tools — a $40 pair of pliers feels too small to bother with, but over a year they add up.
Worked example 4: logbook vs cents per kilometre
Jake drove 4,200 work kilometres: under cents per kilometre that is 4,200 × 91c = $3,822. Now suppose he kept a 12-week logbook showing 78% work use, and his ute’s running costs for the year were $14,800 — fuel $5,600, registration $980, insurance $1,450, servicing $1,900, tyres $1,200, loan interest $1,870, depreciation $1,800. The logbook claim is 78% × $14,800 = $11,544 — ahead by $7,722, worth about $2,471 in extra tax back at 32%.
Cents per kilometre suits low work kilometres; the logbook wins when the ute does serious kilometres. If Jake used the logbook instead, his full-year total in worked example 1 would rise from $7,732 to $15,454 — and his tax saving to about $4,945. Full detail in our car expenses guide.
Common mistakes tradies make
- Claiming the drive from home to the regular site — private, unless you meet all three bulky-tools conditions.
- Claiming jeans and drill shirts — conventional clothing is never deductible.
- Treating a tool allowance as a deduction — it is income; only the actual tools you bought are deductible.
- Claiming the initial licence — renewal yes, first licence no.
- Depreciating a set piece by piece — a set costing over $300 is depreciated as a set.
- Claiming the ute’s purchase price as an employee — you claim running costs, not the vehicle.
Tips to claim every dollar you are owed
- Photograph receipts on the day. The ATO app’s myDeductions tool takes thirty seconds on site.
- Start the logbook in July, not June — it is valid for five years.
- Keep a running tally against $1,000 — once your covered expenses pass it, usually by February, you know itemising wins.
- Check your income statement for allowances. Tool, travel and overtime meal allowances are income; declare them, then claim only what you actually spent.
- Don’t forget the award transport allowance — a fares allowance under an award in force on 29 October 1986 lets you claim work transport up to the 1986 award amount without written evidence.
Our complete tax deductions checklist covers every category in one place — and the occupation guide for nurses follows the same format.
Frequently asked questions
Can I claim tools I bought before I started work?
Generally no. A deduction has to relate to income you are already earning, so tools bought before your apprenticeship or job started are usually not deductible. If you bought tools in the weeks before starting and are unsure, check with the ATO or your tax agent before claiming them.
Can I claim my ute?
As an employee, you claim the running costs of your ute — fuel, rego, insurance, servicing, tyres, interest and depreciation — by the cents-per-kilometre or logbook method, for the work-related share only. You cannot claim the purchase price. If you run a business, the $20,000 instant asset write-off may let you deduct the business portion of the vehicle’s cost in the year you buy it.
Can I claim home office expenses as a tradie?
Yes, for the hours you genuinely work from home — quoting, invoicing, ordering materials, doing admin. The fixed rate is 70c per hour under the latest published ATO rate, but note the ATO has not yet published a 2026-27 rate, so keep recording your hours and apply the rate in force when you lodge. You cannot claim rent or mortgage interest as an employee.
Can apprentices claim tools?
Yes, if you bought them yourself and they weren’t supplied or reimbursed by your employer — including tools given to you through a government-funded program via your employer. Items $300 or less are immediately deductible; dearer items are depreciated. Travel from your employer’s workshop to TAFE on the same day is deductible; the trip from home to TAFE is not.
Can I claim laundering my hi-vis?
Yes — hi-vis is protective clothing, so washing it is deductible at $1 per work-only load or 50c per mixed load. Two loads a week over 48 weeks is $96. You don’t need written evidence if your laundry claim is $150 or less, but you still need to be able to show how you calculated it.
What if my employer reimburses me for tools?
Then you can’t claim them. The first test is that you spent the money yourself and weren’t reimbursed. Keep the receipt anyway — if the reimbursement only covers part of the cost, the unreimbursed part may still be claimable.
The 2026-27 rules are more generous than they look once you separate the $1,000 standard deduction from the expenses that sit on top of it and the ones that shrink it. Run the numbers on your own year the way Jake’s are run above: if your covered expenses pass $1,000, itemise, keep the logbook, and photograph the receipts — that is where the $1,930 is hiding. And if the numbers still don’t add up, check what you would owe with our income tax calculator before you lodge.
This article is general information, not personal tax advice — speak to a registered tax agent if you are unsure. Rates and thresholds are as published by the ATO for the 2026-27 income year unless noted.
