Marginal tax rates and calculator (2026-27)
Marginal tax rates for 2026-27 are 0%, 15%, 30%, 37% and 45% on each extra dollar of taxable income, plus the 2% Medicare levy (ATO tax rates for Australian residents (opens in a new tab)). This calculator shows your marginal and average rate. At $62,000 the real marginal rate is 33.5%, because the low income tax offset is phasing out.
The link carries the numbers you entered, so anyone who opens it sees the same result.
Effective marginal rate
33.5%
Breakdown
| Bracket rate | 30% |
|---|---|
| LITO phase-out | +1.5% |
| Medicare levy | +2% |
| Effective marginal rate | 33.5% |
- Bracket rate
- 30%
- Average rate
- 16.60%
- Kept from the next $1,000
- $665
- Total tax and levy
- $10,290
- Next rate change
- LITO runs out at $66,667 ($4,667 away)
Key insights
- Your marginal rate is 32% including the 2% Medicare levy.
- The LITO phase-out adds 1.5 cents per dollar, so your effective marginal rate is 33.5%.
- You're $73,000 below the next bracket, where the rate rises to 37%.
Marginal rate vs average rate on one salary
Your marginal rate is the tax on your next dollar, so it prices a change such as overtime or a deduction. Your average rate is total tax divided by total income, which tells you what share of the whole salary goes in tax. On a $62,000 salary they're 33.5% and 16.60%.
Earning $1,000 more lifts the bill by $335. That's why the marginal rate is 33.5%, even though no bracket has that rate.
How the $62,000 average works out
A resident with $62,000 taxable income has income tax of $9,120 before offsets. LITO takes off $70 and the Medicare levy adds $1,240, for a total of $10,290. Divided by $62,000, that's an average of 16.60%.
The marginal rate can fall as income rises. At $70,000 the offset has gone, so the marginal rate drops to 32% while the average rate climbs to 18.46%.
| Step | Amount | Running total |
|---|---|---|
| Bracket rate30% | +$300 | $300 |
| Medicare levy2% | +$20 | $320 |
| Smaller LITO1.5c per $1 | +$15 | $335 |
| Extra tax | $335 | |
Marginal rates for 2026-27 with the Medicare levy included
Bracket tables show five rates. Once the levy and offsets are added, a single resident passes through ten bands of effective marginal rate on the way up.
| Taxable income | Bracket rate | Effective marginal rate | What drives it |
|---|---|---|---|
| $0 to $18,200 | 0% | 0% | Tax-free threshold |
| $18,201 to $22,866 | 15% | 0% | LITO absorbs the tax |
| $22,867 to $28,011 | 15% | 15% | Bracket rate only |
| $28,012 to $35,013 | 15% | 25% | Medicare levy phasing in at 10c per $1 |
| $35,014 to $37,500 | 15% | 17% | Full 2% levy |
| $37,501 to $45,000 | 15% | 22% | LITO falls by 5c per $1 |
| $45,001 to $66,667 | 30% | 33.5% | LITO falls by 1.5c per $1 |
| $66,668 to $135,000 | 30% | 32% | Bracket rate plus levy |
| $135,001 to $190,000 | 37% | 39% | Bracket rate plus levy |
| $190,001 and over | 45% | 47% | Bracket rate plus levy |
At $30,000, an extra $1,000 costs $250: $150 of income tax and $100 of Medicare levy. The levy phases in at 10 cents per dollar above $28,011 until it reaches the full 2% of income.
The 33.5% band covers many middle incomes, and in it the marginal rate is higher than for someone on $100,000. The five headline rates are set out in the Australian tax brackets.
Foreign residents and working holiday makers
Other residency scales have simpler steps. A foreign resident's marginal rate is 30% from the first dollar to $135,000, with no Medicare levy. A working holiday maker pays 15% up to $45,000, then the resident bracket rates.
How much of your next $1,000 you keep
Multiply $1,000 by one minus your effective marginal rate. That's the extra take-home pay from $1,000 more taxable income.
| Current taxable income | Tax on the next $1,000 | You keep |
|---|---|---|
| $20,000 | $0 | $1,000 |
| $30,000 | $250 | $750 |
| $40,000 | $220 | $780 |
| $62,000 | $335 | $665 |
| $100,000 | $320 | $680 |
| $150,000 | $390 | $610 |
| $200,000 | $470 | $530 |
A $62,000 earner keeps $15 less from an extra $1,000 than a $100,000 earner does. A $30,000 earner keeps less than someone on $40,000, because the Medicare levy is still phasing in.
The LITO phase-out raises the real marginal rate below $66,667
Each cent of offset you lose is a cent of extra tax, so the phase-out sits on top of the bracket rate.
$37,500
Offset starts shrinking
Below $62,000
LITO is $700 up to here, then falls by 5 cents per dollar. Between $37,501 and $45,000 the 15% bracket becomes 22% with the levy.
$45,000
Offset is down to $325
Below $62,000
It now falls by 1.5 cents per dollar. Between $45,001 and $66,667 the 30% bracket becomes 33.5%.
$62,000
Default income
$66,667
Offset reaches nil
$4,667 above
At $62,000 the offset is down to $70, so the higher rate lasts for another $4,667.
A $5,000 pay rise from $62,000 adds $3,330 to take-home pay: most of it is taxed at 33.5% and the last $333 at 32%. The pay rise calculator runs the same sum for any salary, and the low income tax offset calculator shows the offset at each income.
Pricing a deduction, salary sacrifice or negative gearing loss with your marginal rate
A deduction is worth your marginal rate times the amount, as long as it stays within one band. These are the savings at $62,000.
- Off your tax for a $1,000 work-related deductionThe $1,000 standard deduction for work-related expenses, available from 2026-27 without receipts, is worth the same.
- $335
- Off income tax and the levy for sacrificing $5,000 into superTake-home pay falls by $3,325. The super fund then deducts its own contributions tax, which the salary sacrifice super calculator includes.
- $1,675
- Off your tax for an $8,000 net rental lossOften called negative gearing. The other $5,320 of the loss is still out of your pocket.
- $2,680
When a deduction or bonus crosses a band
Large deductions cross band lines, and then a single marginal rate overstates the saving. A $20,000 deduction at $62,000 saves $6,355, not $6,700. The first $17,000 is priced at 33.5%, but the last $3,000 falls in the 22% band below $45,000.
Bonuses follow the same logic. A $3,000 bonus at $62,000 adds $1,005 of tax, because all of it stays below $66,667. A $10,000 bonus at $130,000 adds $3,550: $5,000 is taxed at 32% and $5,000 at 39% once income passes $135,000.
Withholding on the payday can differ, and the bonus tax calculator estimates what reaches your account.
What the marginal rate calculator leaves out
The calculator assumes a single resident with private hospital cover and no study loan. Several common situations push the real rate higher.
- A HELP debt adds 15 cents per dollar of repayment income between $69,528 and $129,717. At $80,000 that turns a 32% marginal rate into 47%.
- Without private hospital cover, the Medicare levy surcharge starts above $105,000 and is charged on the whole of your income for surcharge purposes.
- Seniors in the SAPTO shade-out range face higher rates too. Using the latest published (2025-26) SAPTO and Medicare thresholds, a single senior with $46,000 to $52,000 of income loses 54 cents of each extra dollar.
- Anyone losing a Centrelink payment as income rises faces a similar effect, which the calculator doesn't model.
- PAYG withholding calculatorTax per pay.
- Income tax calculatorThe year's total.
- ATO tax tablesThe employer amounts.
Marginal rate questions: effective rates, the top rate and pay rises
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Last reviewed
What is a marginal tax rate?
It's the tax charged on your next dollar of taxable income. In 2026-27 the bracket rates are 0%, 15%, 30%, 37% and 45%. The effective marginal rate adds the 2% Medicare levy and any offset phase-out. At $62,000 it's 33.5%, so $335 of a $1,000 raise goes in tax.
How do you calculate an effective tax rate from an income statement?
Divide the total tax for the year by taxable income, then multiply by 100. Use the assessed tax on your notice of assessment, because the tax withheld on your income statement is only a prepayment. For $62,000 taxable income in 2026-27, total tax of $10,290 gives an effective, or average, rate of 16.60%.
What is the top marginal tax rate in Australia?
It's 45% on taxable income above $190,000 in 2026-27, or 47% with the 2% Medicare levy. It applies only to the dollars over $190,000. On $250,000, $60,000 is taxed at 45% and the average total rate is 33.35%.
Can a pay rise leave you worse off?
Rarely, but yes, at the Medicare levy surcharge threshold. A single person without private hospital cover earning $105,000 pays no surcharge. At $106,000, a 1% surcharge applies to all $106,000, which is $1,060. That $1,000 raise lowers take-home pay by $380. Normal brackets never do this, because higher rates apply only to extra dollars.
Estimates only, based on published rates for 2026-27. General information, not tax or financial advice.
Keep going
Sources
- ATO: Tax rates, Australian residents (opens in a new tab)
- ATO: Low income tax offset (opens in a new tab)
- ATO: Medicare levy reduction for low-income earners (opens in a new tab)
- ATO: Medicare levy surcharge income thresholds and rates (opens in a new tab)
- ATO: Study and training support loans rates and repayment thresholds (opens in a new tab)
Provisional: the Medicare levy low-income thresholds ($28,011 and $35,013) are carried over from the previous financial year until the ATO publishes the 2026-27 figures.