Income Tax Calculator
2025–26 ATO rates. Stage 3 tax cuts apply — same brackets as 2024–25.
The numbers above are a starting point. For decisions involving your full financial picture — tax, debt, super, investments — a qualified Australian financial adviser can give tailored guidance.
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How does Australia's income tax system work?
Australia uses a progressive tax system — you pay a higher rate only on the income that falls within each bracket, not on your entire income. This is a common misunderstanding: earning $46,000 does not mean your entire income is taxed at 30%. Only the $1,000 above $45,000 is.
The Stage 3 tax cuts, which took effect on 1 July 2024, significantly reduced taxes for low and middle income earners. The 19% bracket was cut to 16%, and the 32.5% bracket was cut to 30%. These same rates apply unchanged in 2025–26. A further cut is legislated from 1 July 2026 (16% drops to 15%, then 14% in 2027).
On top of income tax, most Australians also pay the Medicare Levy (2% of taxable income), which funds the public healthcare system. Higher earners without private hospital cover may also pay the Medicare Levy Surcharge (1%–1.5%).
- Tax-free threshold: The first $18,200 of income is tax-free for Australian residents. You should always claim this on your TFN declaration with your employer.
- Low Income Tax Offset (LITO): Earners below $66,667 receive a tax offset of up to $700, reducing their actual tax bill. This is applied automatically — you do not need to claim it.
- Stage 3 cuts: From 1 July 2024, the rate on $18,201–$45,000 dropped from 19% to 16%, and $45,001–$135,000 dropped from 32.5% to 30%. This saves most workers $800–$4,500 per year.
- Medicare Levy Surcharge: If your income exceeds $93,000 and you do not hold private hospital cover, you pay an extra 1%–1.5% surcharge. Private cover often costs less than the surcharge.
- Deductions reduce taxable income: Work-related expenses, tax agent fees, investment property costs, and salary sacrifice all reduce the income on which tax is calculated.
Frequently asked questions
On $80,000 in 2025–26, your income tax is approximately $14,088 before offsets. After the LITO offset ($0 at this income) and adding the Medicare Levy ($1,600), your total tax is approximately $15,688, leaving a take-home of around $64,312, or about $2,474 per fortnight. Use the calculator above for an exact breakdown.
The Medicare Levy Surcharge (MLS) is an additional tax of 1% to 1.5% for singles earning over $93,000 (or families over $186,000) who do not hold private hospital cover. The simplest way to avoid it is to take out a basic hospital policy. These can cost as little as $35–50 per month, which is often less than the surcharge itself.
You must lodge a tax return if your taxable income exceeds the tax-free threshold ($18,200), you had tax withheld by an employer, or you are a resident with any foreign income. Even if you think you owe nothing, lodging may result in a refund if too much tax was withheld. The deadline is 31 October unless you use a registered tax agent, who may get you an extension to May.
Salary sacrifice means agreeing with your employer to take some of your pre-tax pay as a benefit — most commonly extra superannuation contributions. Because those contributions never appear as income, you pay no income tax on them (only the 15% contributions tax). For a $100,000 earner, sacrificing $10,000 into super saves approximately $1,500 in income tax.
Common missed deductions include: home office expenses (if you work from home), mobile phone and internet (work portion), union fees, professional subscriptions, work uniforms and their laundry, tools and equipment under $300, training and education directly related to your current role, and the cost of managing your tax affairs (including your tax agent fee). Keep receipts throughout the year — the ATO's myDeductions app makes this easy.