Home Office Setup Deductions 2026: What You Can Claim for Desks, Chairs, and Monitors Under ATO Rules

New ATO guidance for 2025-26 clarifies exactly which home office furniture and equipment you can claim as an immediate deduction versus depreciating over time.

By ECTD Editorial · Published 2026-07-27 · Updated 2026-07-27

If you bought a new desk, ergonomic chair, or monitor in 2025-26 to work from home, the ATO has specific rules on whether you can claim the full cost this year or must spread it out. Here's what has changed and what you can actually claim, with dollar figures that matter.

The $300 Instant Asset Write-Off Threshold (Still in Place)

For the 2025-26 income year, the ATO continues to allow an immediate deduction for depreciating assets costing $300 or less (including GST) that are used for work purposes. This means if your desk chair cost $280, you can claim the full amount in this year's return, provided it's primarily used for work.

But if that chair cost $450, you cannot claim the whole amount at once. Instead, you must depreciate it over its effective life — typically 5 to 10 years for furniture. The same applies to desks, bookshelves, and monitors. The $300 threshold applies per asset, not per purchase, so a $600 desk is well over the limit.

Watch the $300 limit per item: If you buy a $290 chair and a $290 desk in the same year, each is under $300, so you can claim both in full. But a $320 chair means you must depreciate that one item, even if your total spend is under $300 for everything else.

What Counts as a Depreciating Asset in Your Home Office

Common home office items the ATO treats as depreciating assets include: desks, ergonomic chairs, monitor arms, filing cabinets, bookshelves, task lighting, and even standing desk converters. Each has an effective life set by the ATO — for desks and chairs it's usually 10 years, for monitors and electronics it's often 5 years.

You can use the ATO's diminishing value method to claim a higher deduction early in the asset's life. For a $600 desk with a 10-year life, the first year's deduction under diminishing value would be 20% (based on the 200% rate for assets under 25 years) — so $120 in year one. Under the prime cost method, it would be $60 per year. The choice is yours, but diminishing value usually gives a bigger upfront claim.

The Fixed Rate Method (67 Cents) Still Covers Furniture — But Only Partly

The ATO's fixed rate method (67 cents per hour for 2025-26) includes a 'decline in value' component for furniture and equipment. This means if you use this method, you cannot separately claim depreciation on your desk or chair — that 67 cents already covers it. However, you can still claim the full cost of items under $300 as an immediate deduction, because the fixed rate method only covers depreciation, not outright purchases of low-cost assets.

Confusing? Here's the practical rule: if you use the fixed rate method, you can still instantly claim a $250 monitor because it's under the $300 threshold. But a $500 monitor must be depreciated separately, and you cannot also claim the 67 cents per hour for that asset's decline in value — it's one or the other. The ATO's view is that the fixed rate method's decline in value component is a 'deemed' amount, so you don't get double-dip.

Items under $300: claim immediately under either method (fixed rate or actual cost).
Items $300 or more under fixed rate: must depreciate separately, but the 67 cents per hour already includes a decline in value component — you cannot claim extra depreciation on top.
Items $300 or more under actual cost method: depreciate normally over effective life.

What About Monitors, Keyboards, and Mice?

Monitors are depreciating assets with an effective life of 5 years under ATO rules. A $400 monitor bought in 2025-26 would give you a first-year deduction of $80 (diminishing value at 40% for 5-year life) if you use the actual cost method. Keyboards and mice are often under $300, so they can be claimed immediately. But if you buy a premium keyboard for $350, it must be depreciated over 5 years too.

Headsets and webcams follow the same logic — under $300, claim now; over $300, depreciate. Many people buy mid-range webcams for $150-$250, which is fine for an immediate claim.

Keep receipts and document work use: For any asset over $300, you need to show it's used primarily for work (at least 50% of the time). A desk used 80% for work means you claim 80% of the depreciation. A chair used 100% for work means full depreciation. The ATO expects a reasonable estimate — a diary note or a simple log is enough.

The 'Effective Life' Tables You Need to Know

The ATO publishes effective life schedules for common assets. For home office furniture, the standard effective life is 10 years. For computers and monitors, it's 5 years. For printers, it's 5 years. For office furniture like desks and chairs, 10 years. You can use these standard rates or self-assess a shorter life if the item is likely to wear out sooner — but you need evidence (e.g., a manufacturer's warranty of 3 years). Most people stick with the ATO's standard rates.

For example, a $1,200 standing desk with a 10-year effective life: under diminishing value (200% rate), year one deduction = $1,200 × 20% = $240. Year two = ($1,200 - $240) × 20% = $192, and so on. Over 10 years you claim the full $1,200, but the bulk comes in the first few years.

What You Cannot Claim as a Home Office Setup Deduction

The ATO is clear: you cannot claim the cost of general home improvements that also serve as an office — like repainting a room or installing new flooring — even if you use that room as an office. These are capital improvements to the home itself, not depreciating assets. You also cannot claim the cost of a room's construction or renovation if it's part of your home (unless you have a dedicated home office that meets the 'place of business' test, which is rare for most employees).

Additionally, if you buy furniture that's also used personally — like a sofa that doubles as a waiting area for clients — you can only claim the portion used for work. The ATO expects a reasonable basis for apportionment, and a 50/50 split is common for dual-use items.

Practical Example: Sarah's Home Office in 2025-26

Sarah works from home three days a week as a marketing manager. She buys a $250 ergonomic mouse, a $450 monitor, and a $600 desk. She uses the fixed rate method (67 cents per hour). Here's what she can claim:

Mouse: $250 — under $300, immediate deduction allowed even under fixed rate method.
Monitor: $450 — over $300, must be depreciated separately. She uses diminishing value over 5 years: year one = $450 × 40% = $180. She claims 60% work use (3 days out of 5) = $108.
Desk: $600 — over $300, depreciated separately over 10 years: year one = $600 × 20% = $120. 60% work use = $72.
Fixed rate hours: 8 hours × 3 days × 46 weeks = 1,104 hours × $0.67 = $739.68 for running costs (electricity, internet, phone, and the decline in value component already included).

Total home office deduction: $250 (mouse) + $108 (monitor depreciation) + $72 (desk depreciation) + $739.68 (fixed rate) = $1,169.68. Note that she cannot also claim depreciation on the monitor and desk under the fixed rate method — she's claiming them separately, which is allowed because the fixed rate method only covers the 'decline in value' component for assets you don't separately depreciate.

The ATO's actual cost method is still an option: If Sarah's actual running costs (electricity, internet, phone) are higher than the 67 cents per hour would cover, she could use the actual cost method instead. That means tracking her actual electricity bill (apportioned for work hours), internet costs, and phone usage, plus claiming depreciation on all assets over $300. For most people, the fixed rate method is simpler and often more generous, but it's worth comparing both.

Key Takeaways for 2025-26 Returns

Any single asset under $300 can be claimed immediately, regardless of which method you use.
Assets $300 or more must be depreciated over their effective life (10 years for furniture, 5 years for electronics).
The fixed rate method (67 cents/hour) includes a decline in value component, so you cannot claim extra depreciation on assets you already cover under that method — but you can still claim low-cost assets under $300 immediately.
Keep receipts, document work-use percentages, and choose between fixed rate and actual cost based on your actual expenses.
General home improvements (painting, flooring) are not deductible — only the depreciating assets themselves.

The ATO's rules haven't changed dramatically for 2025-26, but the $300 threshold and effective life tables remain critical to get right. If you're unsure, a registered tax agent can help you optimise your claims — the cost of their fee is also deductible.

General information only — not personal financial, tax, legal or medical advice. Consider your own situation and consult a licensed professional before acting. Figures are current as at the date shown above.