Income tax in Australia
Income tax in Australia is charged on taxable income at 0%, 15%, 30%, 37% and 45% for residents in 2026-27, with the first $18,200 tax-free. Your employer withholds it from each pay, and the Australian Taxation Office (ATO) settles the final bill after you lodge a return.
By Calculatax
Most people also pay the 2% Medicare levy, and some repay HECS-HELP through the same system. Each section below links to the Australian tax & pay calculators that handle one part of the bill. Pay by cycle sits with the salary and pay calculators, employer contributions with superannuation, business sales with GST in Australia and lodging with the tax return guide.
| Taxable income, 2026-27 | Rate on each dollar in the band | Tax at the top of the band |
|---|---|---|
| $0 to $18,200 | 0% | $0 |
| $18,201 to $45,000 | 15% | $4,020 |
| $45,001 to $135,000 | 30% | $31,020 |
| $135,001 to $190,000 | 37% | $51,370 |
| $190,001 and over | 45% | n/a |
Start here
Income tax calculator
Tax, Medicare levy and take-home pay.
How Australian income tax is worked out: taxable income, rates, offsets and levies
Your bill starts with taxable income. A $95,000 salary with no deductions shows each step.
- 1
Start with taxable income
That's assessable income such as wages and interest, minus allowable deductions.
- 2
Apply the rates band by band
Only the dollars above each threshold are taxed at the higher rate.
- 3
Subtract offsets
An offset comes off the tax itself. At $95,000 the low income tax offset has already cut out, at $66,667.
- 4
Add the Medicare levy
That's 2% of taxable income for most people.
| Step | Amount | Running total |
|---|---|---|
| First $18,2000% | $0 | $0 |
| $18,201 to $45,000$26,800 × 15% | +$4,020 | $4,020 |
| $45,001 to $95,000$50,000 × 30% | +$15,000 | $19,020 |
| Income tax before offsets | $19,020 | |
| Low income tax offsetCuts out at $66,667 | $0 | $19,020 |
| Medicare levy$95,000 × 2% | +$1,900 | $20,920 |
| Total tax | $20,920 | |
| Take-home pay | $74,080 | |
Worked example for a resident earning $95,000 in 2026-27, no HELP debt. Source: ATO rates; Calculatax calculation.
The average rate on $95,000 is 22.02%, yet the next dollar you earn costs 32 cents. A pay rise never pushes your whole income into a higher bracket.
2026-27 resident rates and what the 15% rate is worth to you
From 1 July 2026 the 16% rate became 15%, under the Treasury Laws Amendment (More Cost of Living Relief) Act 2025 (opens in a new tab). The other thresholds and rates didn't change, as the ATO tax rates for Australian residents (opens in a new tab) show. Your saving depends on how much of the $18,201 to $45,000 band you use, and the tax cuts calculator works it out for any income.
- Saving at $20,000LITO already wipes out the tax in both years
- $0
- Saving at $30,000The bill falls from $1,386.90 to $1,268.90
- $118
- Saving from $45,000 upwardsEveryone at this level saves the same amount
- $268
The rate drops again to 14% on 1 July 2027, which the ATO's page on new tax cuts for every Australian taxpayer (opens in a new tab) says is now law. Full tables for earlier years are with the tax brackets.
Calculators for working out your tax
- Income tax calculatorThe tax calculator gives a full-year figure for 2026-27 or 2025-26, with HELP and the Medicare levy surcharge as options.
- PAYG withholding calculatorApplies the ATO's Schedule 1 formulas to a weekly, fortnightly or monthly pay. The tax tables list the same amounts in rows.
- Marginal tax rate calculatorShows what a raise, bonus or deduction is worth, including the hidden rate created when LITO phases out.
- What changed on 1 JulyEach line of your tax and pay across three financial years.
- ABN tax calculatorTax, GST and what to set aside as a sole trader.
- Salary after taxTax on $20,000 to $300,000, with each page splitting one income into yearly, monthly, fortnightly and weekly take-home pay.
Medicare levy and the surcharge sit on top of the tax bill
The Medicare levy adds 2% of taxable income, so $95,000 attracts $1,900. Low earners pay less or nothing. The Medicare levy surcharge is a separate charge of 1% to 1.5% if you don't have private hospital cover.
Thresholds
The latest announced levy thresholds are for 2025-26: no levy up to $28,011 for a single person, phasing in fully by $35,013. Families start at $47,238, plus $4,338 per dependent child.
For 2026-27 the surcharge starts above $105,000 for singles and $210,000 for families. Our $95,000 earner is under the line.
Offsets that cut your bill: LITO and SAPTO
An offset comes off the tax bill itself. The low income tax offset is worth up to $700 and falls to nothing at $66,667. With the tax-free threshold, it means a resident pays no income tax on taxable income up to $22,866.
Seniors and other offsets
Older Australians may also get the Seniors and Pensioners Tax Offset. Under the latest published table (2025-26) a single person gets up to $2,230, and the SAPTO calculator works out the shaded amount.
Other offsets, from the spouse super offset to the foreign income tax offset, are grouped under tax offsets.
HECS-HELP repayments collected through your tax
A HELP debt is repaid through your tax return once repayment income passes $69,528 in 2026-27. On $95,000 the compulsory repayment is $3,820.80, which cuts take-home pay to $70,259.20.
How the rate works
Since 1 July 2025 the rate applies only to income above the threshold: 15 cents per dollar up to $129,717, then higher.
The HECS repayment calculator does the sum, and the HECS repayment threshold table lists every band for 2026-27 and 2025-26.
Three rate scales: residents, foreign residents and working holiday makers
Your residency for tax purposes decides which scale applies, and the gap is large.
$95,000 taxable income
Australian resident
- Income tax
- $19,020
- Medicare levy
- $1,900
- Total
- $20,920
Working holiday maker
- Income tax
- $21,750
- Medicare levy
- Usually nil
- Total
- $21,750
Foreign resident
- Income tax
- $28,500
- Medicare levy
- n/a
- Total
- $28,500
Working holiday makers pay 15% from the first dollar to $45,000. Foreign residents pay 30% from $1 to $135,000. The foreign resident tax rates and working holiday maker tax rates calculators handle each scale.
What is income tax?
It's a federal tax on taxable income, collected by the ATO. For 2026-27 residents pay nothing on the first $18,200, then 15%, 30%, 37% and 45% on higher bands. Wages, interest, rent and business income all count as assessable income.
How much income tax is paid on the average full-time wage?
About $25,193 a year, including the Medicare levy. Average full-time adult ordinary earnings were $2,083.70 a week in May 2026 (ABS), or $108,352 a year. On that income, 2026-27 income tax is $23,025.60 and the levy is $2,167.04. That leaves take-home pay of about $83,159 and an average rate of 23.25%.
Is a second job taxed at a higher rate?
No. Both jobs are added together and taxed as one income at the end of the year. A $25,000 second job on top of a $60,000 salary adds $8,100 of tax: 30% plus the 2% Medicare levy on $25,000, and the last $100 of LITO. Your second employer often withholds less than that, which can leave you with a bill at tax time.
When does the income tax year start and end?
The Australian income year runs from 1 July to 30 June, so 2026-27 covers 1 July 2026 to 30 June 2027. If you lodge your own return, it's normally due by 31 October. For 2025-26 returns that date fell on a Saturday, so the deadline moved to Monday 2 November 2026.
Tax on weekly pay
Each page shows the tax withheld, with and without the tax-free threshold and HELP. For any other wage, use the weekly tax calculator.
Keep going
Sources
- ATO: Tax rates, Australian residents (opens in a new tab)
- ATO: Personal income tax, new tax cuts for every Australian taxpayer (opens in a new tab)
- Federal Register of Legislation: Treasury Laws Amendment (More Cost of Living Relief) Act 2025 (opens in a new tab)
- ATO: Low income tax offset (opens in a new tab)
- ATO: Tax rates, foreign residents (opens in a new tab)