Tax brackets for 2025–2026
Australia uses 5 progressive tax brackets for residents in 2025–2026: the first $18,200 of taxable income is tax-free, and income above that is taxed at marginal rates of 16%, 30%, 37%, 45%. These rates apply to the financial year from 1 July 2025 to 30 June 2026, and a 2% Medicare levy applies on top for most residents.
| Taxable income | Tax rate | Tax on this bracket |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 16% | 16c per $1 over $18,200 |
| $45,001 – $135,000 | 30% | $4,288 + 30c per $1 over $45,000 |
| $135,001 – $190,000 | 37% | $31,288 + 37c per $1 over $135,000 |
| $190,001+ | 45% | $51,638 + 45c per $1 over $190,000 |
Tax on $100,000 in 2025–2026
Legislated cuts from 1 July 2026
Explore Tax Brackets
Your tax story at
$80,000
Only $34,999 is taxed at your top rate of 30%. Your average income tax rate is 18.5%.
Your average rate stays lower because earlier slices keep their lower bracket rates.
Tax brackets applied
Darker means higher rate
| Bracket | Income | Rate | Tax |
|---|---|---|---|
| $0-$18.2k | $18,200 | 0% | $0 |
| $18.2k-$45k | $26,799 | 16% | $4,288 |
| $45k-$135k | $34,999 | 30% | $10,500 |
| Total tax | $79,998 | 18.5% | $14,788 |
This interactive example shows income tax only. For full take-home pay including Medicare levy, HECS/HELP, super, and deductions, use the pay calculator.
Worked example: $80k
How income tax is calculated
Income tax is calculated on your taxable income — assessable income (salary, investment income, etc.) minus allowable deductions — using the progressive marginal brackets above. Some lump sums follow their own rules instead of the brackets — redundancy payouts, for example, get a tax-free limit and concessional flat rates (see the redundancy tax guide). In practice your total tax bill stacks up to four components:
- 1
Income tax
Your taxable income is run through the marginal brackets — each slice of income is taxed at its bracket's rate. - 2
Medicare levy
2% of taxable income for most residents, added on top of income tax. - 3
Medicare Levy Surcharge (if it applies)
An additional 1%–1.5% if your MLS income exceeds $101,000 and you don't hold eligible hospital cover. - 4
HECS/HELP repayments (if you have a loan)
Compulsory repayments apply once your repayment income passes $67,000.
Tax offsets (like the LITO) then reduce the amount of tax you owe — but they don't reduce your taxable income. WageCalculator's pay calculator stacks all four components on your salary in one step.
If you are trying to work out what can still be claimed before lodgment, our tax return checklist is the practical companion to this guide.
Deductions vs offsets
Marginal vs effective tax rate
Your marginal tax rate is the rate charged on the last dollar of income you earn — it never applies to your whole salary. Your effective tax rate is your total tax divided by your total income, and it is always lower than your marginal rate.
Definition
Marginal tax rate
Definition
Effective tax rate
| Taxable income | Marginal rate | Effective rate |
|---|---|---|
| $50,000 | 30% | 11.6% |
| $70,000 | 30% | 16.8% |
| $80,000 | 30% | 18.5% |
| $100,000 | 30% | 20.8% |
| $120,000 | 30% | 22.3% |
| $150,000 | 37% | 24.6% |
| $250,000 | 45% | 31.5% |
This matters because a pay rise won't cause you to lose money. Even if a pay rise pushes you into a higher bracket, only the additional income is taxed at the higher rate — not your entire salary.
Tax offsets — Low Income Tax Offset (LITO)
The Low Income Tax Offset (LITO) reduces the tax you owe by up to $700 in 2025–2026: the full offset applies to taxable incomes up to $37,500, and it phases out completely at $66,667. It is applied automatically when you lodge — you don't need to claim it.
Offsets reduce tax payable, unlike deductions, which reduce your taxable income. Seniors and pensioners may also qualify for the separate Seniors and Pensioners Tax Offset (SAPTO), which stacks on top of LITO for eligible recipients.
Worked example: LITO on $35,000
| Income range | LITO amount |
|---|---|
| $0 – $37,500 | Full $700 offset |
| $37,501 – $45,000 | Reduces by 5c per $1 above $37,500 |
| $45,001 – $66,667 | Reduces by 1.5c per $1 above $45,000 |
| $66,668+ | No offset |
Medicare levy
The Medicare levy is 2% of taxable income for most Australian residents in 2025–2026, charged in addition to income tax. Singles earning up to $29,207 pay no levy, and the levy shades in until the full 2% applies above about $36,509.
Who pays less or nothing:
- Singles earning up to $29,207 — generally no Medicare levy
- Singles earning between $29,207 and about $36,509 — reduced levy (shade-in range)
- Singles earning above about $36,509 — full 2% levy
- Medicare Entitlement Statement holders — exempt
Source: ATO — Medicare levy. Family thresholds and special rules for SAPTO recipients also apply.
Medicare Levy Surcharge (MLS)
If your income for MLS purposes is above the threshold and you don't hold appropriate private hospital cover, you may pay an additional Medicare Levy Surcharge on top of the standard levy:
| Income (single) | Surcharge rate |
|---|---|
| $101,001 – $118,000 | 1% |
| $118,001 – $158,000 | 1.3% |
| $158,001+ | 1.5% |
MLS income is broader than salary alone and can include reportable fringe benefits, net investment losses, and reportable super contributions. For many people close to the threshold, taking out hospital cover costs less than paying the surcharge. Use our calculator to estimate whether you're in the surcharge zone, or read the dedicated Medicare Levy Surcharge guide for the deeper rules.
HECS/HELP repayments
If you have a HECS-HELP debt, compulsory repayments start once your repayment income exceeds $67,000 for 2025–2026.
From 1 July 2025, repayments use a marginal system rather than a single percentage on your whole income. For repayment income between $67,001 and $125,000, the repayment is 15c per dollar above $67,000. Between $125,001 and $179,285, it is $8,700 plus 17c per dollar above $125,000. At $179,286 or more, it is 10% of total repayment income.
Repayment income is broader than taxable income — it adds reportable fringe benefits, reportable super, net investment losses, and exempt foreign employment income. For indexation timing, voluntary repayment trade-offs, and full threshold tables, see the dedicated HECS/HELP repayment guide.
Source: ATO — Study and training loan repayment thresholds and rates.
Reducing your tax bill
The most effective everyday ways to reduce tax are pre-tax super contributions, claiming all eligible deductions, salary packaging, and holding private hospital cover once your income passes the MLS threshold. Each lever works differently — and the higher your marginal rate, the more the pre-tax strategies are worth:
Salary sacrifice into super
Claim all eligible deductions
Novated lease (salary sacrifice for a car)
Private health insurance (avoid MLS)
Frequently asked questions
What are the income tax brackets in Australia for 2025-26?
For 2025-26: $0 – $18,200 at 0%, $18,201 – $45,000 at 16%, $45,001 – $135,000 at 30%, $135,001 – $190,000 at 37%, $190,001+ at 45%. These are marginal rates, so you only pay each rate on the slice of income that falls within that bracket.
What is the difference between marginal and effective tax rate?
Your marginal rate is the tax rate on your last dollar of income. Your effective rate is your total tax divided by your total income. On an $80,000 salary, your marginal rate is 30% but your effective income-tax rate is about 18.5% before the Medicare levy.
What is the Low Income Tax Offset (LITO)?
The LITO is a non-refundable tax offset of up to $700 for lower-income earners. It reduces the tax you owe rather than your taxable income. For 2025-26, the full $700 applies up to $37,500 and phases out completely once taxable income reaches $66,667.
Do I have to pay the Medicare levy?
Most Australian residents pay a Medicare levy of 2% of taxable income. For 2025-26, singles on taxable income up to $29,207 generally pay no levy, and the levy phases in until the full 2% applies above about $36,509. Separate family and SAPTO thresholds also apply.
How do HECS-HELP repayments work?
From 1 July 2025, HECS-HELP uses a marginal repayment system. Repayments start once your repayment income exceeds $67,000. Between $67,001 and $125,000, the repayment is 15c per dollar above $67,000; between $125,001 and $179,285, it is $8,700 plus 17c per dollar above $125,000; and at $179,286 or more it is 10% of total repayment income.
How much tax do I pay on $70,000 in Australia?
On a taxable income of $70,000 for 2025-26, income tax is $11,788 before offsets, plus a Medicare levy of $1,400 (2%). Your total before LITO, HECS, or MLS is $13,188 — an effective rate of about 18.8%.
How much tax do I pay on $100,000 in Australia?
On a taxable income of $100,000 for 2025-26, income tax is $20,788 before offsets, plus a Medicare levy of $2,000 (2%). Your total before LITO, HECS, or MLS is $22,788 — an effective rate of about 22.8%.
How much tax do I pay on $400,000 in Australia?
On a taxable income of $400,000 for 2025-26, income tax is $146,138 before offsets — most of it taxed at the top 45% marginal rate. Add $8,000 Medicare levy and you may also owe the Medicare Levy Surcharge if you don't hold private hospital cover. The combined effective rate before MLS is about 38.5%.
How much is the Medicare levy on $100,000?
At 2% of taxable income, a $100,000 income produces a Medicare levy of $2,000. The Medicare Levy Surcharge does not apply at this income level for singles (the threshold is $101,000).
What is the 30% tax bracket in Australia?
For 2025-26, the 30% rate applies to taxable income between $45,000 and $135,000. It is the bracket most full-time salaries fall into. Because rates are marginal, only the income inside that range is taxed at 30% — the slices below it are still taxed at the lower rates.
How much tax do I pay on $120,000 in Australia?
On a taxable income of $120,000 for 2025-26, income tax is $26,788 before offsets, plus a Medicare levy of $2,400 (2%). The total before LITO, HECS, or MLS is $29,188 — an effective rate of about 24.3%.
What is the difference between the Medicare levy and the Medicare Levy Surcharge?
The Medicare levy is 2% of taxable income and is paid by most residents regardless of insurance. The Medicare Levy Surcharge is an extra 1%–1.5% that only applies if your income for MLS purposes exceeds $101,000 (singles) and you don't hold eligible private hospital cover.