There is no special bonus tax rate
A bonus is not taxed under a separate bonus tax scale. It is added to your ordinary income for the year and assessed under the same tax brackets that apply to salary and wages. The often-quoted 47% figure is a withholding ceiling — the top marginal rate of 45% plus the 2% Medicare levy — not a bonus tax rate.
The confusion comes from the payslip: the amount withheld from a one-off payment can look much harsher than the tax you eventually owe. That usually doesn't mean payroll got it wrong — it means payroll followed the ATO withholding method for irregular payments. For the broader context on marginal brackets and the Medicare levy, see the income tax guide.
Why bonus withholding looks high — and when it really is
Schedule 5 does not apply to every bonus. It is the ATO schedule for a bonus, commission, back payment or similar payment that relates to more than one pay period or an undefined period. A payment relating only to one pay period generally uses the ordinary Schedule 1 withholding table. For an eligible payment, Method A uses the employee's relevant pay periods and earnings to calculate withholding; that period can be less than 12 months, such as for an employee who started during the year. Method B makes a fuller annual comparison and will often be closer to the final tax, but the required method depends on the payment and payroll information available. Neither result is a separate bonus tax rate. Any remaining overpayment is refunded only after eligible ATO or Commonwealth debt offsets.
Example
On a $95,000 salary with a $5,000 bonus, the actual additional tax is about $1,600, and this guide's Schedule 5 estimate is $1,612. That comparison is illustrative: the result changes with the payment's period, the method used, and the employee's pay record. A higher withholding is not a second tax; it is reconciled in the assessment, subject to any eligible debt offsets.
Actual tax vs withholding
The cleanest way to think about it:
Actual tax on bonus = tax on (salary + bonus) − tax on (salary alone)
That number can include more than income tax — depending on your circumstances the bonus can also increase the Medicare levy, HELP repayments, or the Medicare Levy Surcharge. For an eligible payment, Schedule 5 withholding can be close to this figure, but it depends on the method, payment period and payroll information. Method B will often be closer to an annual comparison than Method A; neither will necessarily match to the cent. At lower incomes the per-period tables over-withhold (they carry no low-income offset), so a credit can arise at lodgment after any outstanding debts are offset. The Medicare Levy Surcharge is never withheld, so where it applies the withholding sits below the assessed tax and the difference is payable. And for very high earners the 47% cap can hold withholding just below the tax owed, again leaving a shortfall. The withholding figure here assumes a fortnightly pay cycle (26 periods) — the most common Australian cycle; other cycles differ slightly. The tax refund guide explains that reconciliation.
How HECS and MLS change the result
HELP repayments
On a $90,000 salary with an $8,000 bonus and a study loan, the bonus adds about $1,200 in HELP repayment on top of ordinary tax and Medicare. The HECS/HELP repayment guide covers the bands.
Medicare Levy Surcharge
On a $110,000 salary with no eligible private hospital cover, a $10,000 bonus adds about $100 in extra MLS. The MLS guide covers thresholds and the private health angle.
Source: ATO — Study and training loan thresholds and rates and ATO — Medicare levy surcharge thresholds and rates.
Super on bonuses
Bonuses that relate to your work are generally qualifying earnings — the Superannuation Guarantee base from 1 July 2026 — so employer super is usually payable on them. Not every lump sum is treated the same way — overtime-linked payments and termination-related amounts like redundancy payouts can differ (the redundancy tax guide covers those rules), so the label on the payment matters.
What that looks like
A $10,000 bonus can mean about $1,200 in additional employer super where the payment is part of ordinary time earnings, based on the current 12% SG rate.
Source: ATO — How much super to pay.
Salary sacrificing a bonus
Instead of taking the bonus as cash taxed at your marginal rate, you can often direct it into super, where concessional contributions are taxed at a lower rate inside the fund. Two guardrails: the sacrifice agreement generally must be in place before you become entitled to the bonus, and the sacrificed amount counts toward your concessional contributions cap for the year. The salary sacrifice guide covers the cap mechanics, and the super sacrifice calculator shows the saving for your own numbers.
Worked examples
| Base salary | Bonus | Actual extra tax | Schedule 5 withholding | You keep |
|---|---|---|---|---|
| $18,000 | $5,000 | $20 | $624 | $4,980 |
| $80,000 | $10,000 | $3,200 | $3,172 | $6,800 |
| $95,000 | $5,000 | $1,600 | $1,612 | $3,400 |
| $130,000 | $20,000 | $7,700 | $7,436 | $12,300 |
Frequently asked questions
Is there a special bonus tax rate in Australia?
No. A bonus is ordinary income and is assessed at your marginal rates. Schedule 5 can apply to a bonus, commission or similar payment that relates to more than one pay period or an undefined period; a payment that relates only to one pay period generally uses the ordinary Schedule 1 table. Withholding is an estimate, not the final tax. Any remaining overpayment is refunded only after the ATO offsets eligible outstanding debts.
Are bonuses taxed more than salary?
No — a bonus is added to your salary and the same marginal brackets apply to both. The withholding can still differ from the final tax because Schedule 5 is an estimate and does not include every part of an assessment. Method B is designed to give a closer annual comparison than Method A, but payroll must use the method that fits the payment and its records. Any remaining overpayment is refunded only after eligible ATO debt offsets.
Why does the tax on my payslip look higher than the actual tax?
It can be a close match, but it is not exact. Schedule 5 is used only for eligible multi-period or undefined-period payments, and its result depends on the selected method and pay records. Method B generally gives a closer annual comparison than Method A. At lower incomes the per-period tables can over-withhold because they do not include LITO; any remaining credit is refunded after eligible outstanding debts are offset.
Can a bonus affect HECS repayments?
Yes. A bonus increases repayment income. That can push more of your income into HELP repayment bands, so the extra amount withheld is not always just income tax and Medicare.
Can a bonus affect the Medicare Levy Surcharge?
Yes. If you are near the MLS threshold and do not hold appropriate private hospital cover, a bonus can increase the surcharge you owe or move you into a higher MLS tier.
Does my employer pay super on a bonus?
Often yes — a performance bonus generally counts as qualifying earnings, the Superannuation Guarantee base from 1 July 2026. But not every one-off payment is treated the same way, so overtime-linked or termination-related amounts can differ.
Can I salary sacrifice my bonus into super?
Usually, if the sacrifice arrangement is agreed before you become entitled to the bonus. Timing matters: an agreement made after the entitlement arises is not an effective salary sacrifice. A valid sacrificed bonus is generally taxed at the concessional contributions rate inside super, subject to the concessional cap for the year.