Tax
In short
Australia has a progressive income tax system - you only pay the higher rate on the part of your income inside each bracket, not on everything. For 2026-27 the tax-free threshold is $18,200 and the lowest rate dropped to 15%. This page explains the brackets, the Medicare levy, offsets, deductions and study-loan repayments, with a private estimator.
Income tax brackets - FY 2026-27 (residents)
These rates apply to income earned from 1 July 2026 to 30 June 2027 for people who are Australian residents for tax purposes. Only the income within each band is taxed at that band\u2019s rate.
| Taxable income | Tax on this income |
|---|---|
| $0 - $18,200 | Nil (tax-free threshold) |
| $18,201 - $45,000 | 15c for each $1 over $18,200 |
| $45,001 - $135,000 | $4,020 plus 30c for each $1 over $45,000 |
| $135,001 - $190,000 | $31,020 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,370 plus 45c for each $1 over $190,000 |
The second bracket rate fell from 16% to 15% (legislated in the Treasury Laws Amendment (More Cost of Living Relief) Act 2025). It is scheduled to fall again to 14% from 1 July 2027. Everything else held steady from 2025-26.
Try your own numbers in the tax and take-home estimator.
The Medicare levy
Most residents pay an extra 2% of taxable income as the Medicare levy, which helps fund the public health system. Low-income earners pay a reduced levy or none - for singles, no levy is payable below about $28,011 (2025-26 figure, indexed each year), with a shade-in above that. Higher earners without private hospital cover may also pay a Medicare levy surcharge on top.
Tax offsets - the Low Income Tax Offset
An offset directly reduces the tax you owe (unlike a deduction, which reduces your taxable income). The Low Income Tax Offset (LITO) is applied automatically:
- Up to $700 if your taxable income is $37,500 or less.
- Reduces by 5c per $1 between $37,501 and $45,000.
- Reduces by 1.5c per $1 between $45,001 and $66,667, then nil.
Combined with the tax-free threshold, LITO means most residents pay no income tax until they earn roughly $22,575. Seniors and pensioners may get a further offset (SAPTO).
Deductions - what you can claim
A deduction lowers your taxable income. You can generally claim work-related expenses if you paid for them yourself, they relate directly to earning your income, and you have a record. Common examples: work-related travel (not normal home-to-work commuting), tools and equipment, some work-from-home costs, union fees, and self-education directly related to your current job.
You need evidence (receipts, logbooks) for what you claim. The ATO data-matches heavily. Do not claim private expenses as work expenses. If in doubt, a registered tax agent\u2019s fee is itself deductible. The ATO deductions guide lists what applies to your occupation.
Lodging your tax return
The tax year ends 30 June. If you lodge yourself, the deadline is usually 31 October. You can lodge free through myTax in ATO online services (via myGov), or use a registered tax agent - if you are on an agent\u2019s books by 31 October, you often get longer. Most of your information (wages, bank interest, health cover) is pre-filled by late July, so lodging after that is easier and more accurate.
Study and training loan (HELP) repayments 2026-27
If you have a HELP/HECS or similar study loan, repayments start once your repayment income passes the threshold. From 2025-26 the system became marginal - you only repay on income above each threshold, like tax brackets. For 2026-27:
| Repayment income | Compulsory repayment |
|---|---|
| Up to $69,528 | Nil |
| $69,529 - $129,717 | 15c for each $1 over $69,528 |
| $129,718 - $186,050 | Above, plus 17c for each $1 over $129,717 |
| Over $186,050 | 10% of your whole repayment income |
Repayment income is broader than taxable income - it adds back things like reportable super contributions and net investment losses. Remember HELP has no interest, only annual indexation (2.8% on 1 June 2026), so it is usually the lowest-priority debt. A one-off 20% reduction to balances was applied in 2025.
Common tax mistakes
- Not lodging because you think you earned too little - you may be owed a refund of withheld tax.
- Claiming deductions with no receipts, or claiming private costs.
- Forgetting to tell a second employer you already claim the tax-free threshold elsewhere (causing a tax bill).
- Ignoring a study-loan line and getting a surprise bill at assessment.
Sources for this page
Every figure below was checked against the official source shown. Verified 20 July 2026. Figures and rules change - always confirm before acting.
- Australian Taxation Office - Tax rates - Australian residents. ato.gov.au - 2026-27 brackets
- Australian Taxation Office - Study and training loan repayment thresholds and rates. ato.gov.au - 2026-27 marginal rates
- Australian Taxation Office - Deductions you can claim. ato.gov.au - work-related deductions
- Australian Taxation Office - Lodge your tax return with myTax. ato.gov.au - free lodgment
Medicare levy low-income thresholds and LITO amounts are indexed. The 2026-27 Medicare levy thresholds are confirmed by the ATO after each Budget - confirm the current figure before relying on it.
Verified 20 July 2026