Australia’s income tax system is simpler than many, but it still trips people up: the tax-free threshold, offsets, the Medicare levy and surcharge, HELP repayments and super all interact. This guide explains each piece for the 2026–27 financial year (1 July 2026 – 30 June 2027).
Resident tax rates for 2026–27
| Taxable income | Tax on this income |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 15c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,020 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,020 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,370 plus 45c for each $1 over $190,000 |
The first rate dropped from 16% to 15% on 1 July 2026, and is legislated to fall again to 14% from 1 July 2027. Foreign residents and working holiday makers have different rates.
The tax-free threshold
Residents pay no tax on the first $18,200. You should claim it from one employer only, normally your main job, on your TFN declaration. Claiming it twice means too little is withheld and you’ll get a bill at tax time.
Tax offsets
The low income tax offset (LITO) reduces tax by up to $700 for taxable incomes up to $37,500. It phases out by 5c per dollar to $45,000, then 1.5c per dollar until it reaches zero at $66,667. It’s applied automatically when you lodge. Other offsets include the senior and pensioner offset (SAPTO) and offsets for dependants and some private health insurance rebates.
The Medicare levy and surcharge
Most residents pay a 2% Medicare levy, reduced for low incomes (zero up to $28,011 for singles on the latest published thresholds). Higher earners without private hospital cover may also pay the Medicare levy surcharge of 1%–1.5% once income exceeds $105,000 (singles, 2026–27). Read the full Medicare levy guide.
HELP and study loans
Compulsory repayments start at $69,528 of repayment income in 2026–27 and are now marginal: 15c per dollar above the threshold, 17c above $129,717, and a flat 10% of total income above $186,050. See the full HELP table.
Superannuation
Employers must contribute 12% of your ordinary earnings to super on top of your salary, unless your pay is quoted as a package including super. Employer contributions are taxed at 15% in the fund, not at your marginal rate. Salary sacrifice and personal deductible contributions count toward the concessional cap. Package vs base + super explained.
PAYG withholding
Your employer withholds tax from each pay using the ATO’s tax tables, based on your TFN declaration (tax-free threshold, HELP debt and residency). Withholding is an estimate. Your actual tax is worked out when you lodge your return after 30 June.
Worked example: $85,000
| Amount | |
|---|---|
| Gross salary | $85,000 |
| Income tax | $16,020 |
| Medicare levy | $1,700 |
| Take-home pay | $67,280 |
| Total tax & contributions | $17,720 |
| Employer super (12%, paid on top) | $10,200 |
That’s $5,607 a month or $2,588 a fortnight, with $10,200 of super paid on top.
Take-home pay at common salaries
| Salary | Income tax | Medicare levy | Take-home | Per fortnight |
|---|---|---|---|---|
| $40,000 | $2,695 | $800 | $36,505 | $1,404 |
| $60,000 | $8,420 | $1,200 | $50,380 | $1,938 |
| $80,000 | $14,520 | $1,600 | $63,880 | $2,457 |
| $100,000 | $20,520 | $2,000 | $77,480 | $2,980 |
| $135,000 | $31,020 | $2,700 | $101,280 | $3,895 |
| $190,000 | $51,370 | $3,800 | $134,830 | $5,186 |
| $250,000 | $78,370 | $5,000 | $166,630 | $6,409 |
More detail: $50k, $100k, $150k, $200k.
Tax returns and deductions
Lodge by 31 October if you do it yourself (later if you use a registered tax agent). You can claim work-related expenses you paid for and weren’t reimbursed: working from home costs (fixed rate per hour or actual cost), tools and equipment, union fees, self-education related to your current job, and some travel. Keep records for five years.
Marginal and average rates at a glance
| Salary | Marginal rate (incl. Medicare) | Average rate |
|---|---|---|
| $30,000 | 25.0% | 4.2% |
| $50,000 | 33.5% | 12.5% |
| $70,000 | 32.0% | 18.5% |
| $100,000 | 32.0% | 22.5% |
| $150,000 | 39.0% | 26.4% |
| $200,000 | 47.0% | 29.9% |
Bonuses and overtime
Bonuses and back pay are withheld using Schedule 5 of the ATO tax tables, which can look high in the pay period they’re paid. Your actual tax is calculated on total income at the end of the year, so over-withholding comes back as a refund. Salary-sacrificing a bonus into super means it’s taxed at 15% in the fund instead of your marginal rate.
Second jobs and the tax-free threshold
Only claim the tax-free threshold from one employer. Your second job withholds at a higher rate from the first dollar. If you have a HELP debt, tell both employers so repayments are withheld correctly.
Working from home deductions
You can claim working-from-home costs using the fixed rate method (a set cents-per-hour amount covering energy, internet, phone and stationery, with a record of actual hours worked) or the actual cost method. Equipment such as a desk, chair or monitor can be claimed separately, or depreciated if it costs over $300.
Key dates
| Date | What happens |
|---|---|
| 1 July 2026 | New financial year; 15% rate starts |
| 14 July | Income statements usually “tax ready” in myGov by this date |
| 31 October 2026 | Deadline to lodge 2025–26 returns yourself |
| 1 July 2027 | First rate scheduled to fall to 14% |
Common mistakes
- Claiming the tax-free threshold from two employers.
- Claiming deductions without records, or for costs your employer reimbursed.
- Forgetting the Medicare levy surcharge if you earn over $105,000 without hospital cover.
- Lodging before your income statement is marked “tax ready”.
Super contribution caps
Contributions to super are limited by caps:
- Concessional (before-tax) cap: $32,500 a year from 1 July 2026 (up from $30,000). This includes your employer’s 12% super guarantee, salary sacrifice and personal contributions you claim as a deduction. If your total super balance was under $500,000 on 30 June, you can carry forward unused cap from the previous five years.
- Non-concessional (after-tax) cap: $130,000 a year, or up to $390,000 using the three-year bring-forward rule, if your total super balance on 30 June 2026 was under $1.84 million.
On a $100,000 salary your employer’s 12% uses $12,000 of the cap, leaving up to $20,500 for salary sacrifice taxed at 15% instead of your 32% marginal rate.
Walking through your tax return
- Wait until your income statement in myGov is marked tax ready (usually by mid-July).
- Check pre-filled income: salary, interest, dividends, government payments.
- Add work-related deductions with records (working from home, tools, self-education, union fees).
- Answer the private health insurance and Medicare questions, which drive the levy and surcharge.
- Review the estimate: if you claimed the tax-free threshold correctly and have no other income, most employees get a small refund.
Frequently asked questions
What is the tax-free threshold in Australia?
$18,200 for residents.
What tax bracket am I in on $100,000?
The 30% bracket ($45,001 to $135,000), plus the 2% Medicare levy.
When is the tax return deadline?
31 October for self-lodgers. Registered tax agents can lodge later under their program.
Will the 15% rate change again?
Legislation reduces it to 14% from 1 July 2027.
