Understanding how much tax you'll pay is the first step to knowing your real take-home pay. Australia's tax system is progressive — the more you earn, the higher your marginal rate. But it's not as simple as applying one percentage to your entire salary. The 2026–27 financial year brings slightly adjusted brackets, and there are several offsets, levies, and repayment obligations that affect your final number.
For Australian residents, the tax-free threshold remains at $18,200. From there:
These are marginal rates — you only pay each rate on the portion of your income in that bracket. Someone earning $95,000 doesn't pay 30% on the whole amount. They pay 0% on the first $18,200, 16% on the next $26,800, and 30% on the remaining $50,000. The resulting tax is about $19,288 before offsets.
Most Australian taxpayers pay a 2% Medicare levy on their taxable income to help fund the public health system. Low-income earners may qualify for a reduction or exemption (single threshold: $26,677 for 2026–27). Some individuals — such as those not eligible for Medicare — can apply for a full or half exemption certificate from Services Australia.
If you have a HECS-HELP debt, you repay it through the tax system once your income exceeds $57,138. The repayment rate scales from 1% at the lowest tier to 10% for incomes above $160,466. The key thing to remember: HECS repayments are calculated on your repayment income, which includes taxable income plus reportable fringe benefits and investment losses added back — so your actual repayment may be slightly higher than a simple calculator suggests.
The Low Income Tax Offset (LITO) provides up to $700 of tax relief for earners below $66,667. It phases in and then tapers out — the maximum $700 applies around $37,000 and reduces by 5 cents per dollar above $45,000. The old Low and Middle Income Tax Offset (LMTO) ended on 30 June 2022 and no longer applies.
Non-residents for tax purposes face different rates: 32.5% from the first dollar up to $120,000, 37% to $190,000, and 45% above. There is no tax-free threshold and no LITO. The higher rates reflect that non-residents typically don't pay the Medicare levy and may be taxed in their home country as well.
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