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Complete Tradie Tax Guide 2025-26

Updated for the 2025-26 financial year (Stage 3 tax cuts applied)

The 3 Golden Rules (ATO)

Before claiming anything, all three must apply:

1. You spent the money and were not reimbursed
2. The expense directly relates to earning your income as a tradesperson
3. You have a record (receipt, diary entry, bank statement)

2025-26 Tax Rates (After Stage 3 Cuts)

Income Range	Marginal Rate	Tax on This Bracket
$0 – $18,200	0%	$0
$18,201 – $45,000	16%	16¢ per $1 over $18,200
$45,001 – $135,000	30%	$4,288 + 30¢ per $1 over $45,000
$135,001 – $190,000	37%	$31,288 + 37¢ per $1 over $135,000
$190,001+	45%	$51,638 + 45¢ per $1 over $190,000

Plus 2% Medicare Levy (for most taxpayers). Tradies earning between $45,000 and $135,000 — the majority of the industry — pay 30¢ per dollar in the 30% bracket.

What Tradies Can Claim

Tools & Equipment

You can claim the cost of tools you need for your trade — power tools, hand tools, tool belts, and tool bags. Items under $300 can be claimed as an immediate deduction without a receipt (though keeping one is recommended). Items $300 and over must be depreciated over their effective life, unless you are an ABN contractor using the instant asset write-off (up to $20,000 for small business).

PPE — Safety Gear & Protective Clothing

Personal protective equipment is fully deductible if you purchased it yourself. Common tradie PPE claims include:

• Safety boots — Steel-cap or composite-cap work boots ($150–$400 per pair)
• Hi-vis clothing — Vests, shirts, jackets, pants meeting AS/NZS 4602 standards
• Hard hats — Safety helmets meeting AS/NZS 1801
• Safety glasses & face shields — Essential for site compliance
• Gloves — Riggers, cut-resistant, rubber, or welding gloves
• Sunscreen & sun protection — SPF 50+ sunscreen, wide-brim hats, sunglasses for outdoor tradies
• Knee pads — For flooring, tiling, and carpentry work
• Hearing protection — Earplugs or earmuffs for noisy sites

Vehicle Expenses (Your Ute or Work Vehicle)

Vehicle expenses are one of the biggest deductions for tradies. You have two methods to choose from:

Method	How It Works	Best For
Cents-per-km	88¢ per km for business km, max 5,000 km	Tradies with moderate site-to-site travel
Logbook	Claim actual expenses based on work-use percentage	Tradies with high km or a dedicated work ute

You cannot claim home-to-work travel. Only travel between different job sites during your work day qualifies. If you carry tools in your ute, that does NOT automatically make home-to-work travel deductible — the ATO is strict on this.

Licences & Tickets

Mandatory licences and tickets required for your trade are fully deductible. This includes:

• White card (General Construction Induction Card) — mandatory for all construction workers
• EWP licence — Elevated Work Platform high-risk licence
• Forklift licence — High-risk work licence for operating forklifts
• Dogging, rigging & scaffolding tickets — High-risk work licences
• First aid certificates — If required by your employer or union
• Confined space & working at heights tickets — Site-specific safety tickets
• Union fees — ETU, CFMEU, AMWU, or other trade union memberships

If the licence has a validity period (e.g. white card is valid for life, High Risk Work licences need renewal), you can claim the cost of renewal each time.

Travel Between Work Sites

Deductions for travel between different job sites during your work day are a common and perfectly valid claim. This includes:

• Driving from Site A to Site B during the same shift
• Parking fees at work sites (if not reimbursed)
• Tolls on routes between work sites
• Overnight accommodation and meals when working away from home

Union & Professional Fees

Union membership fees are fully deductible. Common trade unions include:

• ETU — Electrical Trades Union (approx $500–$700/year)
• CFMEU — Construction, Forestry and Maritime Employees Union (approx $600–$900/year)
• AMWU — Australian Manufacturing Workers' Union (approx $500–$700/year)
• AWU — Australian Workers' Union (approx $400–$600/year)
• Plumbers' Union — approx $500–$700/year

Other Common Deductions

Beyond the big categories, tradies frequently claim:

• Tool insurance — Premiums for insuring your tools against theft or damage
• Phone & internet — Work-use portion (keep a 4-week diary to establish the percentage)
• Income protection insurance — Personal policy premiums (not super-held)
• Home office — If you do quote prep, paperwork, or invoicing from home
• Sunscreen & sun protection — SPF 50+ sunscreen, lip balm with SPF, outdoor hats, sunglasses
• Apprentice tools — Apprentices can claim tools purchased under the Trade Support Loans program

Instant Asset Write-Off (Small Business)

If you operate as an ABN contractor or small business, the instant asset write-off lets you immediately deduct eligible assets costing less than $20,000 per item. This applies to:

• Power tools and machinery
• Vehicles (if used for business)
• Office equipment
• Any other business asset under $20,000

For PAYG employees, the threshold is $300 per item. Anything over $300 must be depreciated over the asset's effective life.

What Tradies CANNOT Claim

Expense	Why Not?
Regular home-to-work commute	Private expense, even with tools in the car
Everyday clothes worn on site	Private expense unless compulsory branded PPE
Meals during a normal shift	Private expense
Alcohol or entertainment	Explicitly excluded by the ATO
Fines (parking, speeding, traffic)	ATO considers these private in nature
Childcare while working	Private expense
Items reimbursed by employer	You did not bear the cost
Personal phone plans (no diary)	No basis to determine work percentage

Record Keeping

Keep all tax records for 5 years from the date you lodge your return. Use the ATO's myDeductions app to snap receipts and log kilometres as you go — it builds an audit trail automatically and can be handed straight to your tax agent.