Income Tax Calculator 2026 — Australian Tax & Medicare

How Australian income tax works

Australia taxes individuals on their taxable income — your total assessable income (salary, wages, interest, dividends, rental and business income) minus your allowable deductions. If you are an Australian resident for tax purposes, the first $18,200 you earn each year is tax-free thanks to the tax-free threshold. You only pay income tax on the part of your taxable income that sits above it.

The system is progressive and marginal: income is sliced into bands, and each band is taxed at its own rate. Earning more never reduces your take-home pay, because only the income that falls inside a higher band is taxed at the higher rate — not your whole income. On top of the tax on your brackets, most residents also pay the 2% Medicare levy.

Step-by-step: how your tax is calculated

Total your assessable income for the financial year (1 July to 30 June).
Subtract your deductions — work-related expenses, donations to deductible gift recipients and the cost of managing your tax affairs — to get your taxable income.
Apply the resident tax brackets to your taxable income, band by band.
Subtract the Low Income Tax Offset (LITO) if you are eligible — up to $700.
Add the 2% Medicare levy (and the Medicare levy surcharge if it applies).
Subtract HELP/HECS repayments and PAYG already withheld to find your refund or amount owing.

2025–26 resident tax brackets

These are the income tax rates for Australian residents for the 2025–26 financial year (the year ending 30 June 2026). They do not include the Medicare levy.

0% (tax-free) — taxable income up to $18,200
16% — $18,201 to $45,000
30% — $45,001 to $135,000
37% — $135,001 to $190,000
45% — income above $190,000

Source: the Australian Taxation Office (ATO) — ato.gov.au, “Tax rates – Australian residents”. Different rates apply to foreign residents and working holiday makers, who do not get the tax-free threshold.

Offsets, the Medicare levy and student loans

Low Income Tax Offset (LITO)

The LITO reduces the tax payable by lower and middle income earners. You can receive up to $700 if your taxable income is $37,500 or less. Above that, it phases out gradually and cuts out at $66,667. The LITO is non-refundable — it can reduce your income tax to zero, but it cannot turn into a cash refund by itself.

The 2% Medicare levy

Most taxpayers pay the Medicare levy of 2% of taxable income, which helps fund the public health system. Low-income earners pay a reduced levy or none at all once income falls under the relevant threshold, and some people qualify for a full exemption.

Medicare levy surcharge (MLS)

The Medicare levy surcharge is an additional 1% to 1.5% charged on higher-income earners who do not hold an appropriate level of private hospital cover. It is designed to encourage people to take out private health insurance and ease pressure on the public system.

HELP / HECS repayments

If you have a study or training support loan — HECS-HELP, FEE-HELP, a VET Student Loan or similar — you make compulsory repayments through your tax once your repayment income passes the threshold (around $54,435 for 2025–26). The amount is calculated on income above the threshold and increases as you earn more. Repayments are collected via PAYG withholding through the year and reconciled when you lodge.

Marginal rate vs effective rate

Your marginal tax rate is the rate that applies to your next dollar of income — the rate of your highest bracket. Your effective (average) tax rate is the total tax you pay divided by your total income.

The two are very different. Someone on a $45,000 marginal bracket might sit in the 30% band, but because the first $18,200 is tax-free and the next slice is taxed at only 16%, their effective rate is far lower. This is why a pay rise that pushes you into a higher bracket never leaves you worse off overall — only the income inside the new band is taxed at the higher rate.

Australian tax specifics worth knowing

The financial year runs 1 July to 30 June — not the calendar year. The 2025–26 year covers 1 July 2025 to 30 June 2026.
Tax returns are due 31 October. If you lodge your own return, it must be in by 31 October after the end of the financial year. Using a registered tax agent can extend this, provided you are on their books before the deadline.
PAYG withholding means your employer takes tax out of each pay packet and sends it to the ATO on your behalf, so most of your tax is paid as you earn.
A tax refund arises when the PAYG withheld during the year exceeds your final tax bill. If too little was withheld, you will owe the difference instead.
Superannuation is separate. Compulsory employer super is paid on top of your wages into your super fund and is not part of your income tax calculation.

Frequently asked questions

How much tax will I pay in Australia in 2025–26?

It depends on your taxable income. As a resident you pay no tax on the first $18,200, 16% on income from $18,201 to $45,000, 30% from $45,001 to $135,000, 37% from $135,001 to $190,000 and 45% above $190,000. On a $90,000 salary, for example, your income tax is roughly $19,888 before the Medicare levy, plus about $1,800 Medicare levy. Enter your exact figure into the calculator above for a precise result.

What is the tax-free threshold?

The tax-free threshold is $18,200. If you are an Australian resident for tax purposes, you pay no income tax on the first $18,200 you earn each financial year. You claim it through the tax-free threshold question on your Tax File Number declaration with your main employer.

What are the income tax brackets in Australia for 2025–26?

For residents: 0% up to $18,200; 16% on $18,201–$45,000; 30% on $45,001–$135,000; 37% on $135,001–$190,000; and 45% on income above $190,000. These rates do not include the 2% Medicare levy.

What is the Medicare levy and how much is it?

The Medicare levy helps fund Australia’s public health system. Most taxpayers pay 2% of their taxable income. If your income is below the low-income threshold you may pay a reduced levy or none at all, and some people — such as certain low-income earners and those who hold an exemption — do not pay it.

What is the Medicare levy surcharge?

The Medicare levy surcharge (MLS) is an extra charge of 1% to 1.5% on top of the standard 2% Medicare levy. It applies if you and your dependants do not have an appropriate level of private hospital cover and your income for surcharge purposes is above the threshold (from $101,000 for singles in 2025–26). Taking out private hospital cover can avoid it.

How is the Low Income Tax Offset (LITO) calculated?

LITO gives you up to $700 off your tax if your taxable income is $37,500 or less. It phases out as income rises — reducing as you earn more — and cuts out entirely at $66,667. It is non-refundable, so it can lower your tax bill to zero but cannot create a refund on its own.

How do HECS-HELP and student loan repayments work?

If you have a HELP, HECS, VET Student Loan or similar debt, you make compulsory repayments through the tax system once your repayment income passes the threshold (around $54,435 for 2025–26). Repayments are worked out on a marginal basis on the income above the threshold, and the rate increases as your income rises. They are collected via PAYG withholding through the year.

What is the difference between my marginal and effective tax rate?

Your marginal rate is the rate applied to your next dollar of income — your top bracket, for example 30%. Your effective rate is your total tax divided by your total income, which is always lower because the early brackets are taxed at 0% and 16%. Most people pay a much lower effective rate than their marginal rate suggests.

When is the Australian tax return deadline?

If you lodge your own return, the deadline is 31 October following the end of the financial year (which runs 1 July to 30 June). If you use a registered tax agent, you may have until later — but you generally need to be on the agent’s books before 31 October.

Is superannuation included in this calculator?

No. Compulsory employer super (the Super Guarantee) is paid on top of your wages into your super fund and is not part of your take-home income tax calculation. This calculator focuses on the income tax, Medicare levy and offsets that determine your assessable position.

Will I get a tax refund?

You receive a refund when the PAYG tax withheld from your pay during the year is more than your actual tax liability — including the Medicare levy and any offsets. If too little was withheld, you will have an amount owing instead. Lodging your return reconciles the two.

Australian Income Tax Calculator 2025–26