Income Tax Calculator Australia

How Australian income tax works for FY2025-26

Australia uses a progressive tax system where each additional dollar of income is taxed at a higher marginal rate — but only that portion of income, not all income. For FY2025-26, the tax-free threshold is AU$18,200. Above that, the marginal rates are 19% (up to AU$45,000), 32.5% (up to AU$135,000), 37% (up to AU$190,000), and 45% above AU$190,000. Note that the 2024 Stage 3 tax cuts reduced the 32.5% rate from an earlier rate and widened the 32.5% bracket — a change that took effect from 1 July 2024. Your effective tax rate (total tax divided by total income) will always be lower than your marginal rate.

On top of income tax, most Australian residents pay the Medicare levy of 2%. Higher income earners without private hospital cover may owe the Medicare Levy Surcharge (MLS) of 1%–1.5% on top of that. The Low Income Tax Offset (LITO) provides a tax reduction of up to AU$700 for individuals earning under AU$37,500, phasing out at AU$66,667. The Low and Middle Income Tax Offset (LMITO) ended after FY2021-22 and no longer applies. Individuals with HELP, VSL, SSL, or other study debt also face compulsory repayments once income exceeds AU$54,435, calculated as a separate percentage applied to repayment income.

This calculator is for estimation purposes only. It does not account for rental income, capital gains, foreign income, trust distributions, deductions, private health rebates, or other individual circumstances. For advice specific to your situation, consult a registered tax agent or use the ATO's myTax. Employers use a separate withholding calculation (see our PAYG withholding calculator) to deduct the right amount from wages each pay period.

How to use this income tax calculator

1. Enter your annual taxable income — this is your gross income minus any deductions (work expenses, super contributions, investment losses, etc.).
2. Select whether you are a resident or non-resident for tax purposes — non-residents do not get the tax-free threshold and face different rates.
3. Indicate whether you have a HELP/HECS debt so the compulsory repayment amount is included in the estimate.
4. Review the breakdown of income tax, Medicare levy, and any offsets — and compare this to the PAYG withheld on your payment summaries to see whether you are likely to receive a refund or owe tax at year end.

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

Your marginal rate is the rate that applies to your next dollar of income. Your effective rate is the average rate across all your income (total tax ÷ total income). For example, someone earning AU$90,000 has a marginal rate of 32.5% but an effective income tax rate of around 21%. The effective rate is what matters for budgeting and comparing take-home pay — the marginal rate matters most for decisions about additional income or deductions.

Do sole traders and company owners use this calculator?

This calculator is for individual tax on personal income. Sole traders pay income tax on their business profit at the individual rates shown here. Companies pay corporate tax at 25% (base rate entity) or 30% (general rate) — not at these individual rates. Trust distributions flow to beneficiaries who pay tax at their individual rates. If you are a director drawing a salary, your salary is taxed at individual rates; any additional company distributions or dividends are a separate calculation.

Will I get a tax refund this year?

You receive a refund if the PAYG withheld from your wages (or instalments paid during the year) exceeds your actual tax liability after deductions and offsets. Common reasons for a larger refund include work-related deductions, investment losses, spouse offset, or a reduced income year. A tax bill at year end typically means your employer under-withheld (common when someone has multiple jobs or a HELP debt not disclosed), or you earned significant additional income outside of employment.