Income Tax Calculator Australia 2025–26

Use this calculator to estimate your Australian income tax, Medicare levy, HELP/HECS repayment, and take-home pay for the 2025–26 financial year. Enter your gross income, select your pay frequency, and the calculator applies the current ATO tax brackets including the Low Income Tax Offset (LITO). It covers Australian residents, non-residents, and working holiday makers.

How Australian Income Tax Works

Australia uses a progressive tax system. Rather than paying a single rate on all your income, you pay different rates on different portions. The first $18,200 is tax-free, the next portion is taxed at 16%, and so on up to 45% on income above $190,000.

Your employer withholds tax from each pay through the PAYG (Pay As You Go) system, based on the ATO weekly tax table or fortnightly tax table. At the end of the financial year, you lodge a tax return and the ATO reconciles what was withheld against your actual tax liability. You may receive a refund or owe additional tax depending on your deductions and other income.

Key concepts:

• Taxable income is your total income minus allowable deductions. This is the figure the tax brackets apply to.
• PAYG withholding is tax deducted from your wages by your employer each pay cycle. See our PAYG tax table guide for a comprehensive overview.
• Medicare levy is an additional 2% charge that funds Australia’s public healthcare system.
• LITO (Low Income Tax Offset) automatically reduces tax for incomes up to $66,667.

2025–26 Tax Brackets for Australian Residents

The following rates apply to Australian residents for the 2025–26 financial year. These are the Stage 3 tax rates that took effect on 1 July 2024 and continue unchanged into 2025–26.

These rates do not include the 2% Medicare levy, which is calculated separately.

Non-Resident Tax Rates

Non-residents (foreign residents for tax purposes) have no tax-free threshold:

Non-residents do not pay the Medicare levy and are not eligible for LITO.

Working Holiday Maker Tax Rates

Working holiday makers (visa subclass 417 and 462) pay a flat 15% on the first $45,000:

Worked Example: $45,000 Income

A resident earning $45,000 per year in 2025–26:

• Tax on $0 – $18,200: $0
• Tax on $18,201 – $45,000: ($45,000 - $18,200) x 16% = $26,800 x 0.16 = $4,288
• Income tax before LITO: $4,288
• LITO: $700 - ($45,000 - $37,500) x 0.05 = $700 - $375 = $325
• Income tax after LITO: $4,288 - $325 = $3,963
• Medicare levy: $45,000 x 2% = $900
• Total tax: $4,863
• Take-home pay: $40,137 ($772/week)
• Effective tax rate: 10.81%

At $45,000, you sit at the top of the 16% bracket. Every additional dollar earned above this is taxed at 30%.

Worked Example: $90,000 Income

A resident earning $90,000 per year:

• Tax on $0 – $18,200: $0
• Tax on $18,201 – $45,000: $26,800 x 16% = $4,288
• Tax on $45,001 – $90,000: $45,000 x 30% = $13,500
• Income tax before LITO: $17,788
• LITO: $0 (income above $66,667)
• Income tax: $17,788
• Medicare levy: $90,000 x 2% = $1,800
• Total tax: $19,588
• Take-home pay: $70,412 ($1,354/week)
• Effective tax rate: 21.76%
• Marginal rate: 30% (plus 2% Medicare = 32% on the next dollar)

With HELP Debt

If the same person has a HELP debt, the new 2025–26 marginal system applies:

• Repayment income: $90,000
• Income above $67,000 threshold: $23,000
• HELP repayment: $23,000 x 15% = $3,450
• Total deductions: $19,588 + $3,450 = $23,038
• Take-home pay with HELP: $66,962 ($1,288/week)

Under the old flat-rate system (2024–25), the same income would have triggered a 5% rate on total income = $4,500 repayment. The new marginal system saves $1,050 per year.

Worked Example: $180,000 Income

A resident earning $180,000 per year without private health insurance:

• Tax on $0 – $18,200: $0
• Tax on $18,201 – $45,000: $26,800 x 16% = $4,288
• Tax on $45,001 – $135,000: $90,000 x 30% = $27,000
• Tax on $135,001 – $180,000: $45,000 x 37% = $16,650
• Income tax before LITO: $47,938
• LITO: $0 (income above $66,667)
• Medicare levy: $180,000 x 2% = $3,600
• Medicare Levy Surcharge: $180,000 x 1.5% = $2,700 (no private health, income above $158,000)
• Total tax: $54,238
• Take-home pay: $125,762 ($2,419/week)
• Effective tax rate: 30.13%

The $2,700 MLS could be avoided by taking out private hospital cover (typically $1,200–$1,800 per year for a basic policy), saving $900–$1,500 per year.

Medicare Levy

The Medicare levy funds Australia’s public healthcare system. Most residents pay 2% of their taxable income.

Low-Income Phase-In

If your taxable income is below $27,222, you pay no Medicare levy. Between $27,222 and $34,027, the levy phases in at 10 cents per dollar above the lower threshold. Above $34,027, you pay the full 2%.

For example, at $30,000 income: ($30,000 - $27,222) x 10% = $277.80 (instead of the full $600 at 2%).

Medicare Levy Surcharge (MLS)

The MLS is a separate charge for high earners without private hospital cover. For singles in 2025–26:

Family thresholds are higher ($202,000 base, plus $1,500 per dependent child after the first). If you have an appropriate level of private hospital cover, you pay no MLS regardless of income.

HELP/HECS Repayment (2025–26 — New Marginal System)

From 1 July 2025, HELP, VSL, SFSS, and TSL repayments use a new marginal rate system. Previously, once your income crossed a threshold, a percentage was applied to your entire income. The new system works like tax brackets — you only pay on the portion above each threshold.

This is a significant change. Under the old system, an income increase from $66,000 to $68,000 could increase your repayment by hundreds of dollars because the entire income was subject to the rate. Under the new marginal system, you only pay 15% on the $1,000 above $67,000, which is $150.

Additionally, the government has reduced all existing HELP debts by 20% (applied from 1 June 2025) and changed the indexation method from CPI to the lower of CPI or the Wage Price Index.

Tax Offsets: Low Income Tax Offset (LITO)

LITO is a non-refundable tax offset automatically applied by the ATO. It reduces the amount of tax you pay but cannot create a refund on its own.

LITO is only available to Australian residents. Combined with the tax-free threshold, a resident with no other income or offsets pays no income tax on taxable income up to approximately $24,497.

How to Reduce Your Income Tax

There are several legitimate strategies to reduce your tax bill:

1. Claim all eligible deductions. Work-related expenses, home office costs, and self-education expenses reduce your taxable income. Keep receipts and records for at least five years.

2. Salary sacrifice into super. Amounts salary sacrificed into superannuation are taxed at 15% inside the fund rather than your marginal rate (up to the $30,000 concessional cap).

3. Invest in negatively geared property. If your investment property expenses exceed rental income, the loss reduces your taxable income. Use our negative gearing calculator to estimate the tax benefit, and our investment property calculator for a comprehensive analysis.

4. Make personal super contributions. Self-employed individuals and some employees can claim a tax deduction for personal super contributions.

5. Manage your capital gains. Hold assets for more than 12 months to qualify for the 50% CGT discount. Time disposals across financial years to manage your marginal rate.

6. Take out private health insurance. If your income exceeds $101,000 (single), the cost of basic hospital cover may be less than the Medicare Levy Surcharge.

7. Prepay deductible expenses before 30 June. Interest on investment loans, income protection insurance, and professional subscriptions can be prepaid up to 12 months in advance.

PAYG Withholding: How Tax is Deducted From Your Pay

Your employer uses ATO-published tax tables to calculate how much tax to withhold each pay period. The weekly tax table (NAT 1005) and fortnightly tax table (NAT 1006) show pre-calculated withholding amounts.

The withholding amounts already include:

• Income tax at the applicable marginal rates
• The 2% Medicare levy (for residents who have claimed the tax-free threshold)
• LITO

The withholding amounts do not include:

• HELP/HECS repayments (calculated separately by your employer if you have declared a study debt)
• Medicare Levy Surcharge
• Additional withholding you may request

If you have two jobs, you can only claim the tax-free threshold from one employer. Your second employer withholds at higher “no tax-free threshold” rates. You may receive a refund at tax time if you have been over-withheld.

For a comprehensive overview of the PAYG system including employer obligations, see our PAYG tax table guide.

Small Business and Sole Traders

If you are self-employed, your business income is added to your personal income and taxed at the individual rates shown above. There is no separate business tax rate for sole traders.

Self-employed individuals may also need to make quarterly PAYG instalment payments. Use our sole trader tax calculator for an estimate that includes business expenses, super contributions, and quarterly PAYG instalments.

If your business is registered for GST, use our GST calculator to work out GST amounts on sales and purchases.

Property Investors

Property investment income (rent) is added to your other taxable income. Expenses related to the property (interest, rates, insurance, depreciation, management fees) are deductible. If expenses exceed rental income, the property is negatively geared, and the loss reduces your overall taxable income.

Key calculators for property investors:

• Negative Gearing Calculator — estimate the weekly tax saving from a negatively geared property
• Investment Property Calculator — all-in-one analysis including yield, cash flow, and tax position
• Capital Gains Tax Calculator — estimate CGT when you sell

For a deeper analysis with multi-year projections and scenario comparison, see our premium property investment spreadsheet.

Related Tools

• Weekly Tax Table — look up weekly PAYG withholding amounts
• Fortnightly Tax Table — look up fortnightly PAYG withholding amounts
• PAYG Tax Table Guide — comprehensive PAYG withholding reference
• Sole Trader Tax Calculator — includes business expenses and quarterly PAYG instalments
• Redundancy Tax Calculator — calculate tax on genuine redundancy and ETP payments
• GST Calculator — add or remove 10% GST from any amount