Updated June 2025

The new financial year is almost upon us, and you may have already started thinking about your impending 2025 income tax return (ITR). In this article, we explain what you can claim as deductions this tax season.

What are the Australian income tax brackets for 2024-25?

For the 2024-25 financial year, the Australian resident tax rates are:

Taxable income	Tax paid on this income	Effective tax percentage
0 – $18,200	Nil	0%
$18,201 – $45,000	16 cents for each $1 over $18,200	16%
$45,001 – $135,000	$4,288 plus 30c for each $1 over $45,000	30%
$135,001 – $190,000	$31,288 plus 37c for each $1 over $135,000	37%
$190,001 and over	$51,638 plus 45c for each $1 over $190,000	45%

Which tax offsets am I eligible for?

The main tax offsets still available to eligible taxpayers for the 2024-25 financial year are:

Low income tax offset (LITO)
Seniors and pensioners tax offset (SAPTO)
Private health insurance offset.

1. Low income tax offset (LITO) 2025

For 2025, there’s an offset of $700 for taxpayers with a taxable income under $37,500, with a pro-rata payment up to $66,667. For example:

If your taxable income is $37,000, you’ll get the full $700 LITO.
If your taxable income is $65,000, you’ll get $25 LITO.

It’s important to note that the LITO is a non-refundable offset. It can reduce your tax payable to $0 but won’t create a refund.

2. Seniors and pensioners tax offset (SAPTO) 2025

To be eligible for SAPTO, you must:

Be eligible for an Australian Government pension or allowance
Meet rebate income limits of $52,759 or less if you’re single or a combined rebate income of $87,620 if you have a spouse.

Rebate income is your taxable income plus any reportable super contributions, total net investment loss, or adjusted fringe benefits total.

If you’re eligible for SAPTO, you could receive:

Single: Maximum tax offset of $2,230 if your rebate is less than $34,919, with a pro-rata amount for rebate income between $34,919 and $52,759.
Couple (each partner): Maximum tax offset of $1,602 if your rebate is less than $30,994, with a pro-rata amount for rebate income between $30,994 and $43,810.

The SAPTO is also a non-refundable tax offset, which can help reduce your tax payable to $0 but won’t create a refund.

3. Private health insurance offset 2025

If you have private health insurance (PHI), you might be eligible for this offset. It’s a Government contribution towards your PHI, which you can take as a reduced premium or a refundable offset when you lodge your tax return.

Your entitlement depends on:

The age of the oldest person on the policy
Your single or family income threshold
Rates for the Medicare levy surcharge (MLS) based on your family status.

Higher income earners receive a reduced amount; the offset is only available if your income is within the threshold.

The PHI offset is a refundable tax offset, meaning it can be refunded even if you don’t have a tax liability.

Can I claim work from home expenses in my tax return?

For the 2025 financial year, you can claim work from home expenses using either:

Revised fixed rate method: $0.70 per hour worked from home (increased from $0.67 in 2023-24), which includes electricity, gas, phone, internet, computer consumables and stationery. You can also claim separate deductions for depreciating assets like office furniture and technology.
Actual cost method: Calculate your actual work from home expenses and claim based on the percentage of your office area.

Regardless of your WFH deduction method, you must log the hours you worked at home. We’ve created a downloadable WFH deduction diary to help you track your hours.

For more information on claiming WFH deductions, check out our detailed article on work from home tax deductions.

Can I use last year’s WFH deductions in this year’s tax return?

The ATO continues to crack down on taxpayers who recycle the same deductions each year. If you use the same figures you used in previous returns, you’re more likely to appear on the ATO’s radar. When claiming WFH deductions, ask yourself:

Do my claims reflect my current working arrangements?
Have I incurred the cost?
Have I not been reimbursed for the cost?
Do the expenses relate directly to my income?
Do I have records to support my claims (e.g. receipts, invoices, bank statements, diary entries or a logbook)?

You can include the deduction in your tax return if you answered ‘yes’ to these questions. Remember to keep your supporting records for at least five years.

Can I claim motor vehicle expenses in my tax return?

Yes, you may be able to claim car expenses if you use your vehicle for work-related purposes (beyond commuting between home and work).

The ATO allows two methods for calculating these deductions:

the cents-per-kilometre method (88 cents per kilometre for 2024-25, limited to 5,000 km)
or the logbook method, which allows you to claim the business-use percentage of your actual car expenses.

Keep appropriate records, such as a logbook, expense receipts, and evidence of your work-related travel. Our free, downloadable vehicle logbook and 5,000-kilometre diary can help you keep track.

What other expenses can I claim in my tax return?

You may be able to claim deductions for various other expenses if they’re directly related to earning your income. Always check with your accountant about your specific circumstances, but commonly claimed deductions include:

Self-education expenses: Courses, textbooks and equipment directly related to your current occupation
Uniforms and protective clothing: Occupation-specific clothing, protective wear, or branded uniforms
Union and professional membership fees: Annual subscriptions related to your work
Tools and equipment: Work-specific tools costing less than $300 can be claimed immediately, while more expensive items may be depreciated
Charitable donations: Contributions to registered deductible gift recipients
Income protection insurance: Premiums paid for policies outside of superannuation
Investment-related expenses: Costs of managing your investment portfolio, including advisor fees
Books, journals and subscriptions: Professional or trade publications related to your work
Tax agent fees: The cost of preparing your previous year’s tax return.

Do I declare cryptocurrency in my tax return?

Yes, you should review your crypto activity and disclose it in your tax return. The ATO has sophisticated data collection processes to identify taxpayers with crypto activity, including information from share registries and crypto asset exchanges.

We can help calculate what needs to be declared to show any capital gains or losses from your cryptocurrency dealings.

For more information, check out our articles, ‘How is crypto taxed in Australia?’, and ‘What happens to my crypto losses at tax time?‘.

Do I declare income from selling goods online in my tax return?

The ATO has been running an online selling data matching program since 2008. They obtain data from platforms like eBay and Amazon to ensure businesses and individuals selling online are:

Correctly registered with the ATO
Holding an ABN, if applicable
Registered for GST, if applicable
Lodging their income tax returns
Reporting the payments they receive
Paying the right amount of tax.

What’s the ATO focusing on this tax time?

Every year, the ATO chooses some focus areas to pay special attention to when scrutinising tax returns. Check out our blog that details the ATO focuses for the 2025 financial year.

How Davidsons can support you at tax time

Our personal income tax return specialists and small business advisors are available to support you, either virtually or at our Geelong or Torquay offices.

You can reach out to us by:

completing an enquiry form
calling us on 03 5221 6399
emailing via info@davidsons.com.au.

Download our free income tax return resources

Check out our free resources:

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This article was written by Tax and Business Services Director Kylie McEwan.

Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.

What can I claim in my 2024-25 tax return?