Australian Income Tax Calculator 2025-26 — What You'll Take Home

Working out how much tax you'll pay in Australia has never been straightforward — but it doesn't have to be complicated either. With the Stage 3 tax cuts now in their second full year (effective from 1 July 2024), the 2025-26 financial year brings lower marginal rates for most Australians, a significantly higher HECS-HELP repayment threshold, and a Medicare Levy Surcharge that now kicks in above $101,000 for singles.

Whether you're a salaried employee in Sydney, a contractor in Melbourne, or a small business owner in Brisbane, this guide walks you through exactly how your income is taxed — marginal rates, Medicare levy, LITO, and HECS-HELP repayments — so you know what actually lands in your bank account each fortnight.

Use the free Australian income tax calculator to get your personalised take-home pay estimate in seconds, based on current 2025-26 ATO rates.

Last updated: May 2026.

Disclaimer: This calculator provides indicative figures only. For personalised tax advice, consult a registered tax agent or accountant.

Key takeaways

• The 2025-26 tax-free threshold is $18,200 — income below this is taxed at nil.
• Marginal rates for residents are 16%, 30%, 37% and 45% — the Stage 3 cuts reduced the bottom two rates from 19% and 32.5%.
• The Medicare levy is 2% on top of income tax for most residents — it is not optional.
• The HECS-HELP repayment threshold rose to $67,000 in 2025-26 (up from $54,435), and repayments now use a marginal system — only income above the threshold is counted.
• The Low Income Tax Offset (LITO) gives low earners up to $700 back, effectively raising the tax-free threshold to around $26,000.
• The Medicare Levy Surcharge (MLS) applies to singles earning above $101,000 who do not hold qualifying private hospital cover — it adds 1% to 1.5% on top of the standard levy.

Table of contents

1. 2025-26 Australian income tax brackets
2. Worked examples — take-home pay
3. Medicare levy and Medicare Levy Surcharge explained
4. Low Income Tax Offset (LITO)
5. HECS-HELP repayment thresholds 2025-26
6. Working Holiday Maker tax rates
7. Key tax terms explained
8. Frequently asked questions

2025-26 Australian income tax brackets {#tax-brackets}

Australian residents are taxed on a progressive (marginal) rate system — only the income that falls within each bracket is taxed at that bracket's rate. You do not pay the top rate on your entire income.

The Stage 3 tax cuts, legislated under the previous government and effective from 1 July 2024, restructured the bottom brackets. The 32.5% rate dropped to 30%, the 19% rate dropped to 16%, and the $45,000 threshold that separated the two lower rates was retained.

2025-26 resident individual tax rates

Source: Australian Taxation Office — Tax rates for Australian residents

The Medicare levy of 2% is added to income tax for most residents. It is calculated separately and is not included in the bracket rates above (see Medicare levy section below).

These ranges are indicative figures based on ATO published rates for 2025-26. Your actual tax depends on your full circumstances — use the Leadkit income tax calculator for a personalised estimate.

Worked examples — take-home pay {#worked-examples}

The table below shows estimated annual tax, Medicare levy, and take-home pay for four common salary levels under 2025-26 rates. These figures assume: Australian resident, no HECS-HELP debt, LITO applied, no private health insurance surcharge, no other offsets or deductions.

What is the effective tax rate? Your effective tax rate is total tax paid divided by gross income — it's always lower than your top marginal rate because only the income in each bracket is taxed at that bracket's rate. Someone earning $90,000 is in the 30% bracket, but their effective rate is around 25% because the first $18,200 is taxed at nil and the next $26,800 at only 16%.

What is PAYG withholding? PAYG (Pay As You Go) withholding is the mechanism your employer uses to deduct tax from each pay cycle before you receive your salary. The ATO publishes withholding tables — your employer applies these so you don't face a large bill at tax time. If your employer withholds too much or too little, you reconcile the difference in your annual tax return.

Estimates are based on ATO 2025-26 rates run through Leadkit's income tax calculator. This is a price indication only — your actual liability depends on your full tax position, deductions and offsets. Consult a registered tax agent for personalised advice.

Want to run your own numbers? Use the Leadkit income tax calculator — enter your gross salary and get your take-home pay instantly, including Medicare and LITO.

Medicare levy and Medicare Levy Surcharge explained {#medicare-levy}

Medicare levy — the 2% everyone pays

The Medicare levy is a 2% tax on your taxable income that funds Australia's public health system, administered by Services Australia. For most full-time workers, it's unavoidable and is included in your PAYG withholding.

A Medicare levy reduction applies for low-income earners. If your taxable income is below $26,000 (approximately, for singles in 2025-26), you pay a reduced levy or none at all. The phase-in range means the full 2% only applies once income exceeds roughly $32,500.

Medicare Levy Surcharge — for those without private health

The Medicare Levy Surcharge (MLS) is an additional tax on top of the standard 2% levy. It applies if you:

• Do not hold qualifying private hospital cover, and
• Earn above the MLS income threshold

For 2025-26, the MLS thresholds and rates are:

Source: ATO — Medicare Levy Surcharge income thresholds and rates

For a single person earning $110,000 without hospital cover, the MLS adds 1% — an extra $1,100 per year. A basic private hospital policy often costs less than this, so comparing the cost of cover against the surcharge is worth doing.

Low Income Tax Offset (LITO) {#lito}

The Low Income Tax Offset (LITO) is a tax reduction — not a cash payment — that reduces the income tax owed by lower-income earners. It works by reducing your calculated tax bill before any Medicare levy is applied.

For 2025-26:

• Maximum LITO: $700 (applies to taxable incomes up to $37,500)
• Phases out between $37,500 and $45,000 (reducing by 5 cents per dollar)
• Phases out again between $45,001 and $66,667 (reducing by 1.5 cents per dollar)
• At $66,668 and above: LITO is nil

Why it matters: The LITO effectively raises the point at which a low-income earner starts paying income tax. With a $700 offset, a single resident earning up to approximately $26,000 may pay zero income tax (the LITO cancels out the tax that would otherwise apply to income between $18,201 and ~$26,000).

What happened to the LMITO? The Low and Middle Income Tax Offset (LMITO) — which provided up to $1,500 for earners up to $126,000 — was not renewed. It ended with the 2021-22 income year. The Stage 3 tax cuts (effective 1 July 2024) were designed to replace the benefit the LMITO had provided, by reducing the marginal rates for those income bands instead. The LMITO no longer applies in 2025-26.

HECS-HELP repayment thresholds 2025-26 {#hecs-help}

If you have a HECS-HELP debt (a study loan from the Commonwealth Government's Study Assist programme), compulsory repayments are triggered once your repayment income crosses the annual threshold.

The big 2025-26 changes: The threshold rose substantially from $54,435 to $67,000, and the system shifted from a flat rate applied to total income to a marginal system — meaning you only repay on income above the threshold, not on your entire income. This eliminated the previous "cliff effect" where a small pay rise could trigger a large repayment jump.

Additionally, all HELP debts received a 20% reduction applied as of 1 June 2025 (before indexation), giving significant relief to borrowers.

2025-26 HECS-HELP repayment rates

Source: ATO — Study and training loan repayment thresholds and rates

Example: If your repayment income is $80,000, your HECS repayment is 15% of ($80,000 − $67,000) = 15% × $13,000 = $1,950 per year, or approximately $75 per fortnight. Under the old flat-rate system, the same income would have triggered a much higher repayment.

HECS-HELP repayments are collected through your tax return and adjusted via PAYG withholding once you notify your employer (via your Tax File Number declaration or withholding variation). They reduce your take-home pay — so if you have a student debt and earn above $67,000, factor this into your budget calculations.

The Leadkit income tax calculator can help you estimate take-home pay with and without HECS-HELP repayments factored in.

Working Holiday Maker tax rates {#working-holiday-maker}

Working Holiday Makers (WHMs) holding visa subclasses 417 or 462 are taxed under a different schedule — they do not receive the tax-free threshold that Australian residents enjoy. Every dollar of income is taxed from the first dollar earned.

2025-26 WHM tax rates

Source: ATO — Tax rates for working holiday makers

WHMs do not pay the Medicare levy as they are generally ineligible for Medicare benefits. Employers must be registered with the ATO as WHM employers to withhold at the 15% rate — unregistered employers must withhold at the foreign resident rate of 30% from the first dollar, which results in a larger withheld amount than necessary.

A WHM earning $40,000 for the year pays $6,000 in income tax (15% of $40,000) — an effective rate of 15%, with no Medicare levy and no LITO entitlement.

Key tax terms explained {#tax-terms}

Taxable income: Assessable income (salary, investment income, business income) minus allowable deductions. Income tax is calculated on taxable income — not gross income.

Marginal tax rate: The rate on the last dollar you earn — the highest bracket you reach. Only income within that bracket is taxed at that rate.

Effective tax rate: Total tax paid divided by gross income. Always lower than the marginal rate because the lower brackets are taxed at lower rates.

PAYG withholding: Pay As You Go withholding — employers deduct tax each pay cycle and remit it to the ATO so you don't face a large bill at year end.

Medicare levy: A mandatory 2% contribution to Australia's public health system, administered by Services Australia. Separate from income tax.

Frequently asked questions {#faqs}

Q: How much tax do I pay on $80,000 in Australia in 2025-26?

A: On an $80,000 salary, you pay approximately $14,788 in income tax plus $1,600 in Medicare levy — a total of $16,388, leaving a take-home of around $63,612. Your effective tax rate is about 20.5%. This assumes you are an Australian resident with no HECS-HELP debt and no other offsets or deductions beyond the LITO. Use the Leadkit income tax calculator to model your specific situation, including HECS or investment income.

Q: Is the Medicare levy mandatory in Australia?

A: Yes — for most Australian residents, the 2% Medicare levy is mandatory and collected through PAYG withholding or your annual tax return. You may be exempt if you are a foreign resident, a temporary visa holder ineligible for Medicare, or a low-income earner below the reduction threshold (around $26,000 for singles in 2025-26). You cannot opt out of the levy simply because you hold private health insurance — private cover only helps you avoid the Medicare Levy Surcharge (the additional 1%–1.5% applied to higher earners without hospital cover).

Q: What are the tax brackets in Australia for 2025-26?

A: For Australian residents in 2025-26: $0–$18,200 (0%), $18,201–$45,000 (16%), $45,001–$135,000 (30%), $135,001–$190,000 (37%), $190,001+ (45%), plus the 2% Medicare levy. The Stage 3 tax cuts (effective 1 July 2024) reduced the previous 19% rate to 16% and the 32.5% rate to 30%. These are the current ATO-published rates for the 2025-26 financial year.

Q: Do I still need to pay HECS-HELP if I earn $60,000?

A: No — under the 2025-26 rules, the compulsory HECS-HELP repayment threshold is $67,000. If your repayment income is below $67,000, you make no compulsory repayment that year. This is a significant increase from the previous $54,435 threshold. If you earn $60,000 and have a HECS-HELP debt, you will not be required to make a compulsory repayment until your income exceeds $67,000, though you can still make voluntary repayments at any time through Study Assist.

Q: How does the Medicare Levy Surcharge work if I don't have private health?

A: The Medicare Levy Surcharge (MLS) is an additional tax — 1%, 1.25%, or 1.5% depending on your income — that applies if you earn above $101,000 (singles) or $202,000 (families) and do not hold qualifying private hospital cover for the full income year. It is calculated on your adjusted taxable income and added on top of the standard 2% levy. For example, a single person earning $110,000 without hospital cover pays an extra $1,100 (1% MLS) on top of the standard $2,200 Medicare levy — $3,300 total. Many basic hospital policies cost less than the surcharge, making it worth comparing your options.

Q: What is the difference between a tax offset and a tax deduction?

A: A tax deduction reduces your taxable income before tax is calculated — so a $1,000 deduction saves you tax at your marginal rate (e.g. $300 if you're in the 30% bracket). A tax offset (like the LITO) directly reduces the tax you owe after it has been calculated — so a $700 offset reduces your tax bill by $700 regardless of your marginal rate. Offsets are generally more valuable for lower-income earners. Neither is the same as a cash rebate — they reduce what you owe the ATO, not give you money back beyond what you've paid.

How Leadkit calculated these figures

The worked examples and bracket calculations in this guide are generated using the Leadkit income tax calculator, which applies current ATO-published 2025-26 rates including resident marginal rates, Medicare levy, and LITO. Leadkit's calculators run on Australian rates and are updated when official thresholds change. All figures are indicative — they do not account for individual deductions, salary packaging, fringe benefits, or investment income beyond salary.

For business owners and investors, the GST calculator and capital gains tax calculator cover the other major tax obligations you'll encounter. ASIC's MoneySmart resource is also worth bookmarking for broader financial planning guidance.

Final thoughts — know your take-home before you budget

Australia's income tax system is progressive, which means your effective rate is always lower than your marginal rate — but it's also layered, with Medicare levy, HECS-HELP repayments, and potentially the MLS all sitting on top of the base income tax. For most Australians, the 2025-26 financial year is marginally better than 2023-24 thanks to the Stage 3 rate reductions, but the detail matters — especially if you're near the HECS threshold, newly earning above the MLS threshold, or a Working Holiday Maker managing tax for the first time.

Across the accounting enquiries processed through Leadkit's platform, the most common source of surprise isn't the tax rate — it's forgetting to factor in HECS-HELP repayments or the Medicare Levy Surcharge when a salary increase pushes someone into a new tier. Knowing the numbers before the end of financial year means no nasty surprises at tax time.

Want to see exactly what you'll take home in 2025-26? Use the free Australian income tax calculator — enter your gross salary, tick whether you have a HECS debt, and get your net pay in seconds. No signup required.

Disclaimer: This guide provides general tax information based on ATO-published 2025-26 rates. It is not personal tax advice. For your specific tax position — including deductions, investment income, salary packaging or business income — consult a registered tax agent or accountant.