What are the income tax rates in Australia for 2025–26 and 2026–27?
FY 2025–26: 0% up to $18,200; 16% from $18,201 to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; 45% above $190,000. FY 2026–27 (from 1 July 2026): the 16% rate drops to 15% on the $18,201–$45,000 bracket — saving up to $268 per year for anyone earning above $45,000. All other brackets are unchanged. A further drop to 14% is legislated for 1 July 2027.
What is the Low Income Tax Offset (LITO)?
The LITO reduces the tax payable for low to middle income earners. For FY 2025–26: the full offset of $700 applies for incomes up to $37,500. It reduces to $325 between $37,500 and $45,000 (at 5 cents per dollar), and phases out completely at $66,667 (reducing at 1.5 cents per dollar). The LITO is automatically applied when you lodge your tax return.
How is Medicare Levy calculated in Australia?
The Medicare Levy is 2% of your taxable income. However, if your income is below $26,000 (single), no levy is payable. Between $26,000 and $32,500, the levy phases in at 10 cents for every $1 over $26,000. Above $32,500, the full 2% applies. An additional Medicare Levy Surcharge (MLS) of 1–1.5% may apply if your income exceeds $93,000 and you don't hold private hospital cover.
What is the difference between effective tax rate and marginal tax rate?
Your marginal tax rate is the rate you pay on each additional dollar of income — for example, if you earn $100,000 your marginal rate is 30%. Your effective tax rate is your total tax as a percentage of your total income — typically much lower than the marginal rate because the lower brackets are taxed at lower rates. Knowing both is useful: the effective rate shows your overall tax burden; the marginal rate tells you how much tax you'd pay on a bonus, overtime or extra work.
How much tax do I pay on $80,000 in Australia (2025–26)?
On a salary of $80,000 in FY 2025–26: income tax = approximately $14,288 (before LITO, which is $0 at this income level). Medicare Levy = $1,600 (2%). Total tax = approximately $15,888. Take-home pay ≈ $64,112 annually, or ~$5,343/month. Effective rate ≈ 19.9%.
Do I need to include HECS/HELP repayments in my take-home pay calculation?
Yes — if you have a HECS-HELP debt, your employer withholds additional tax to cover compulsory repayments once your repayment income exceeds $69,528 (2026–27 threshold, up significantly from previous years). This calculator shows income tax and Medicare Levy only. Use our HECS/HELP Repayment Calculator to factor in your HECS repayments, then subtract that amount from your take-home figure.