Resident income tax rates
Australia taxes residents on a marginal scale: the first slice of income is tax-free, and each band above it is taxed at a higher rate — but only the income within that band, not your whole salary. This page shows the FY 2026–27 resident brackets and how the marginal system works.
A marginal scale, not a single rate
Australia taxes residents on a marginal scale. The first $18,200 you earn is tax-free; income above that is split into bands, and each band is taxed at its own rate. Crucially, a higher rate only ever applies to the income inside that band — not to your whole salary. Earning your way into a higher bracket never lowers your take-home pay; only the slice of income above the threshold is taxed at the higher rate. It is a common worry that a pay rise could push you into a bracket that leaves you worse off — under a marginal system, that cannot happen.
Your employer withholds this tax from each pay under the PAYG (pay-as-you-go) system and forwards it to the ATO on your behalf, so most employees never file to work out the tax itself — it is deducted before the money reaches your account. The scale below is the one the calculator applies to your gross salary.
Resident income-tax rates
The resident marginal brackets for the current financial year. These exclude the Medicare levy, which is charged separately (below).
| Taxable income | Tax on this band |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 15% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| Over $190,000 | 45% |
Which tax bracket am I in?
The bracket you are in is the one your last dollar of taxable income falls into — the bottom row of the table above that your income still reaches. That rate is your marginal rate: it is what the next dollar you earn is taxed at, not what your salary as a whole is taxed at.
The lowest bracket is the tax-free one: the first $18,200of a resident’s taxable income carries no income tax at all, and everyone gets it — a high earner has exactly the same nil band as a low earner. The highest is 45%, and it applies only to income above the top threshold, never to the income beneath it.
Because the brackets stack, your average rate is always lower than your marginal one, and it is the average that decides your take-home pay. What tax bracket am I in? works through the difference, and what the bracket table leaves out.
The second bracket was cut to 15%
For the current financial year the rate on the second band — $18,201 – $45,000 — is 15%. This is a cut from the previous year, when that band was taxed one percentage point higher; the reduction is legislated and in force from 1 July 2026, so it applies to the whole of FY 2026–27. The thresholds themselves are unchanged from the prior year — it is the rate on that band that moved. Because it sits near the bottom of the scale, the cut flows through to everyone who earns above the tax-free threshold, not only to lower earners.
The Medicare levy
On top of income tax, most residents pay the Medicare levy — 2% of taxable income, which helps fund the public health system. It is charged separately from the brackets above and is not reduced by any tax offset. Lower incomes pay a reduced levy or none at all: below the lower threshold no levy applies, and between the lower and upper thresholds it shades in gradually — 10% of each dollar above the lower threshold — until the full 2% is reached at the upper threshold.
| Taxable income | Medicare levy |
|---|---|
| Up to $28,011 | Nil |
| $28,012 – $35,013 | Shades in (10% of each $1 over $28,011) |
| Over $35,013 | 2% |
The low-income shade-in thresholds shown are the latest published (2025–26) figures, carried into 2026–27 until the new ones are legislated — the ATO-consistent choice while the current-year thresholds are unpublished. Family and senior (SAPTO) thresholds are higher and depend on household circumstances; they are not modelled here.
The Medicare Levy Surcharge
Higher earners who do not hold an appropriate private hospital policy pay an extra charge — the Medicare Levy Surcharge (MLS) — on top of the levy. Unlike income tax, it is applied to your whole income at the tier rate, not marginally. Holding private hospital cover removes it. The calculator assumes you hold cover by default (so no surcharge); turn the private-cover toggle off and the surcharge is added once your income passes the first tier.
| Income for surcharge purposes | Surcharge |
|---|---|
| $0 – $105,000 | Nil |
| $105,001 – $123,000 | 1% |
| $123,001 – $164,000 | 1.25% |
| Over $164,000 | 1.5% |
The surcharge tiers shown are the latest published (2025–26) single-income figures. Family tiers differ and need household facts, so only the single tiers are modelled.
The Low Income Tax Offset (LITO)
The Low Income Tax Offset reduces the income tax lower earners pay. The maximum offset is $700 for incomes up to $37,500; above that it tapers away, first more steeply and then more gently, until it is fully gone at $66,667. Two limits matter: LITO can never turn your tax negative — it cannot create a refund — and it cannot reduce the Medicare levy, only the income tax itself. The calculator applies it automatically, so it already sits inside the take-home figure; it is not a toggle.
And separately — super, which is not a deduction
None of the above is superannuation. Your 12% super guarantee is paid by your employer on top of your wage, straight into your super fund — it is never part of this tax and never comes out of your take-home pay. The top marginal rate on the income scale is 45%, reached only on income above the highest threshold. The calculator on the home page applies this whole scale, the Medicare levy, the surcharge (if you switch off private cover) and the LITO together to show your take-home pay — with super kept beside it, never inside it.
The figures shown are taken from the ATO and cited on this page. If a rule changed recently it may not be reflected here yet, and none of them has been through our final sign-off — for an official amount, the ATO is the binding one.