# Income tax in Australia

Source: https://calculatax.com/tax/
Title: Income Tax in Australia 2026-27: Rates & Calculators
Last updated: 2026-11-07

Income tax in Australia is charged on taxable income at 0%, 15%, 30%, 37% and 45% for residents in 2026-27, with the first **$18,200** tax-free. Your employer withholds it from each pay, and the Australian Taxation Office (ATO) settles the final bill after you lodge a return.

Most people also pay the 2% Medicare levy, and some repay HECS-HELP through the same system. Each section below links to the [Australian tax & pay calculators](https://calculatax.com/) that handle one part of the bill. Pay by cycle sits with the [salary and pay calculators](https://calculatax.com/salary/), employer contributions with [superannuation](https://calculatax.com/super/), business sales with [GST in Australia](https://calculatax.com/gst/) and lodging with the [tax return guide](https://calculatax.com/tax-return/).

| Taxable income, 2026-27 | Rate on each dollar in the band | Tax at the top of the band |
|---|---|---|
| $0 to $18,200 | 0% | $0 |
| $18,201 to $45,000 | 15% | $4,020 |
| $45,001 to $135,000 | 30% | $31,020 |
| $135,001 to $190,000 | 37% | $51,370 |
| $190,001 and over | 45% | n/a |

*At a glance: 2026-27 resident tax rates, excluding the Medicare levy. Source: ATO.*

## How Australian income tax is worked out: taxable income, rates, offsets and levies

Your bill starts with taxable income. A $95,000 salary with no deductions shows each step.

1. **Start with taxable income.** That's assessable income such as wages and interest, minus allowable deductions.
2. **Apply the rates band by band.** Only the dollars above each threshold are taxed at the higher rate.
3. **Subtract offsets.** An offset comes off the tax itself. At $95,000 the low income tax offset has already cut out, at $66,667.
4. **Add the Medicare levy.** That's 2% of taxable income for most people.

**A resident on $95,000 in 2026-27, no HELP debt**

| Step | Working | Amount |
|---|---|---|
| First $18,200 | 0% | $0 |
| $18,201 to $45,000 | $26,800 × 15% | +$4,020 |
| $45,001 to $95,000 | $50,000 × 30% | +$15,000 |
| **Income tax before offsets** |  | **$19,020** |
| Low income tax offset | Cuts out at $66,667 | $0 |
| Medicare levy | $95,000 × 2% | +$1,900 |
| **Total tax** |  | **$20,920** |
| **Take-home pay** |  | **$74,080** |

*Worked example for a resident earning $95,000 in 2026-27, no HELP debt. Source: ATO rates; Calculatax calculation.*

The average rate on $95,000 is 22.02%, yet the next dollar you earn costs 32 cents. A pay rise never pushes your whole income into a higher bracket.

## 2026-27 resident rates and what the 15% rate is worth to you

From 1 July 2026 the 16% rate became 15%, under the [Treasury Laws Amendment (More Cost of Living Relief) Act 2025](https://www.legislation.gov.au/C2025A00028). The other thresholds and rates didn't change, as the [ATO tax rates for Australian residents](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents) show. Your saving depends on how much of the $18,201 to $45,000 band you use, and the [tax cuts](https://calculatax.com/tax/tax-cuts/) calculator works it out for any income.

- **$0**: Saving at $20,000 (LITO already wipes out the tax in both years)
- **$118**: Saving at $30,000 (The bill falls from $1,386.90 to $1,268.90)
- **$268**: Saving from $45,000 upwards (Everyone at this level saves the same amount)

The rate drops again to 14% on 1 July 2027, which the [ATO's page on new tax cuts for every Australian taxpayer](https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/personal-income-tax-new-tax-cuts-for-every-australian-taxpayer) says is now law. Full tables for earlier years are with the [tax brackets](https://calculatax.com/tax/tax-brackets/).

## Calculators for working out your tax

- [Income tax calculator](https://calculatax.com/tax/income-tax-calculator/): The [tax calculator](https://calculatax.com/tax/income-tax-calculator/) gives a full-year figure for 2026-27 or 2025-26, with HELP and the Medicare levy surcharge as options.
- [PAYG withholding calculator](https://calculatax.com/tax/payg-withholding-calculator/): Applies the ATO's Schedule 1 formulas to a weekly, fortnightly or monthly pay. The [tax tables](https://calculatax.com/tax/tax-tables/) list the same amounts in rows.
- [Marginal tax rate calculator](https://calculatax.com/tax/marginal-tax-rate-calculator/): Shows what a raise, bonus or deduction is worth, including the hidden rate created when LITO phases out.
- [What changed on 1 July](https://calculatax.com/tax/what-changed-1-july/): Each line of your tax and pay across three financial years.
- [ABN tax calculator](https://calculatax.com/business/abn-tax-calculator/): Tax, GST and what to set aside as a sole trader.
- [Salary after tax](https://calculatax.com/tax/on/): Tax on $20,000 to $300,000, with each page splitting one income into yearly, monthly, fortnightly and weekly take-home pay.

## Medicare levy and the surcharge sit on top of the tax bill

The [Medicare levy](https://calculatax.com/tax/medicare-levy-calculator/) adds 2% of taxable income, so $95,000 attracts $1,900. Low earners pay less or nothing. The [Medicare levy surcharge](https://calculatax.com/tax/medicare-levy-surcharge-calculator/) is a separate charge of 1% to 1.5% if you don't have private hospital cover.

### Thresholds

The latest announced levy thresholds are for 2025-26: no levy up to $28,011 for a single person, phasing in fully by $35,013. Families start at $47,238, plus $4,338 per dependent child.

For 2026-27 the surcharge starts above $105,000 for singles and $210,000 for families. Our $95,000 earner is under the line.

## Offsets that cut your bill: LITO and SAPTO

An offset comes off the tax bill itself. The [low income tax offset](https://calculatax.com/tax/low-income-tax-offset/) is worth up to $700 and falls to nothing at $66,667. With the tax-free threshold, it means a resident pays no income tax on taxable income up to $22,866.

### Seniors and other offsets

Older Australians may also get the Seniors and Pensioners Tax Offset. Under the latest published table (2025-26) a single person gets up to $2,230, and the [SAPTO](https://calculatax.com/tax/sapto-calculator/) calculator works out the shaded amount.

Other offsets, from the spouse super offset to the foreign income tax offset, are grouped under [tax offsets](https://calculatax.com/tax/tax-offsets/).

## HECS-HELP repayments collected through your tax

A HELP debt is repaid through your tax return once repayment income passes $69,528 in 2026-27. On $95,000 the compulsory repayment is $3,820.80, which cuts take-home pay to $70,259.20.

### How the rate works

Since 1 July 2025 the rate applies only to income above the threshold: 15 cents per dollar up to $129,717, then higher.

The [HECS repayment calculator](https://calculatax.com/tax/hecs-help-repayment-calculator/) does the sum, and the [HECS repayment threshold](https://calculatax.com/tax/hecs-repayment-thresholds/) table lists every band for 2026-27 and 2025-26.

## Three rate scales: residents, foreign residents and working holiday makers

Your residency for tax purposes decides which scale applies, and the gap is large.

| $95,000 taxable income | Australian resident | Working holiday maker | Foreign resident |
|---|---|---|---|
| Income tax | $19,020 | $21,750 | $28,500 |
| Medicare levy | $1,900 | Usually nil | n/a |
| Total | $20,920 | $21,750 | $28,500 |

*2026-27 rates. Foreign residents pay no Medicare levy and get no tax-free threshold; most working holiday makers are foreign residents for tax purposes. Sources: ATO foreign resident rates; ATO Schedule 15.*

Working holiday makers pay 15% from the first dollar to $45,000. Foreign residents pay 30% from $1 to $135,000. The [foreign resident tax rates](https://calculatax.com/tax/foreign-resident-tax-calculator/) and [working holiday maker tax rates](https://calculatax.com/tax/working-holiday-maker-tax-calculator/) calculators handle each scale.

## The tax tables employers use

Employers don't apply the brackets directly. They use the ATO's Schedule 1 formulas, which apply to payments made from 1 July 2026 and build in the tax-free threshold and the Medicare levy.

For $95,000 paid weekly, the formula withholds $403 a week, or $20,956 a year. The assessed bill is $20,920, so you'd get about $36 back if nothing else changed. Larger gaps come from deductions, second jobs or HELP debts.

## Tax questions: the average wage, second jobs and the income year

### What is income tax?

It's a federal tax on taxable income, collected by the ATO. For 2026-27 residents pay nothing on the first $18,200, then 15%, 30%, 37% and 45% on higher bands. Wages, interest, rent and business income all count as assessable income.

### How much income tax is paid on the average full-time wage?

About $25,193 a year, including the Medicare levy. Average full-time adult ordinary earnings were $2,083.70 a week in May 2026 (ABS), or $108,352 a year. On that income, 2026-27 income tax is $23,025.60 and the levy is $2,167.04. That leaves take-home pay of about $83,159 and an average rate of 23.25%.

### Is a second job taxed at a higher rate?

No. Both jobs are added together and taxed as one income at the end of the year. A $25,000 second job on top of a $60,000 salary adds $8,100 of tax: 30% plus the 2% Medicare levy on $25,000, and the last $100 of LITO. Your second employer often withholds less than that, which can leave you with a bill at tax time.

### When does the income tax year start and end?

The Australian income year runs from 1 July to 30 June, so 2026-27 covers 1 July 2026 to 30 June 2027. If you lodge your own return, it's normally due by 31 October. For 2025-26 returns that date fell on a Saturday, so the deadline moved to Monday 2 November 2026.

## Sources

- [ATO: Tax rates, Australian residents](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents)
- [ATO: Personal income tax, new tax cuts for every Australian taxpayer](https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/personal-income-tax-new-tax-cuts-for-every-australian-taxpayer)
- [Federal Register of Legislation: Treasury Laws Amendment (More Cost of Living Relief) Act 2025](https://www.legislation.gov.au/C2025A00028)
- [ATO: Low income tax offset](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/tax-offsets/low-income-tax-offset)
- [ATO: Tax rates, foreign residents](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-foreign-residents)