2025–26 ATO Rates: Motor Vehicles, Home Office and Interest Charges

Each financial year, the ATO updates key rates and thresholds.

They rarely make headlines. But they can make a real difference to your tax position if you know about them.

Motor vehicle deductions

The cents-per-kilometre rate increases to 88 cents per kilometre for 2025–26.
For employees and business owners using personal vehicles for work-related travel, this method provides a simpler way to claim — without the need to maintain a detailed logbook.

Electric vehicle owners should also be aware that the ATO’s home charging flat rate has been updated:

• 4.2 cents per km — applies to claims dated 1 April 2024 to 31 March 2026
• 5.47 cents per km — applies to all claims dated from 1 April 2026 onwards

If you charge your EV at home for work purposes, make sure you’re using the right rate for the period being claimed.

Working from home

The fixed-rate method remains available at 70 cents per hour for those working from home.

What’s important to understand is that the ATO continues to require records demonstrating actual hours worked from home — not estimates.

A contemporaneous record (a diary, a timesheet, even a recurring calendar entry) provides the strongest foundation if your claims are ever reviewed.

The most significant change: interest charges

From 1 July 2025, the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) become non-deductible.

This is a meaningful change.

Previously, taxpayers could often claim deductions for interest charges on ATO debts. That concession has now been removed.

For businesses carrying ATO liabilities, the cost of delay has increased substantially. Early engagement and proactive cash-flow planning are more important than ever.

If you’re managing ATO debt, please reach out. We can help you navigate a path forward.

Want to talk through what this means for your situation? We’re always only one call away.

Book a conversation with the Lighthouse team → hello@lha.au · 02 9055 1330