Australian Tax Brackets 2025-26: Rates, Thresholds & How Much You'll Pay

The Australian income tax brackets for the 2025-26 financial year reflect the revised Stage 3 tax cuts that took effect on 1 July 2024. The brackets are: $0 to $18,200 — nil (tax-free threshold); $18,201 to $45,000 — 16 cents per dollar; $45,001 to $135,000 — 30 cents per dollar; $135,001 to $190,000 — 37 cents per dollar; and $190,001 and above — 45 cents per dollar.

Worth knowing: On top of these rates, most taxpayers also pay the 2% Medicare levy on their entire taxable income once it exceeds certain thresholds. These brackets apply to Australian resident individuals for tax purposes. Foreign residents pay different (generally higher) rates with no tax-free threshold.

The revised Stage 3 cuts provided more relief to low and middle income earners compared to the original design, with the 16% rate (down from 19%) and $135,000 threshold being the most significant changes.

Here are some worked examples of total tax payable (including Medicare levy) for common salaries in 2025-26. On a $60,000 salary: income tax of $8,788 plus Medicare levy of $1,200, totalling $9,988 — an effective tax rate of 16.6%.

On $80,000: income tax of $14,788 plus Medicare levy of $1,600, totalling $16,388 — effective rate 20.5%. On $100,000: income tax of $20,788 plus Medicare levy of $2,000, totalling $22,788 — effective rate 22.8%. On $120,000: income tax of $26,788 plus Medicare levy of $2,400, totalling $29,188 — effective rate 24.3%.

On $150,000: income tax of $36,338 plus Medicare levy of $3,000, totalling $39,338 — effective rate 26.2%. On $200,000: income tax of $54,838 plus Medicare levy of $4,000, totalling $58,838 — effective rate 29.4%. These figures assume no deductions, offsets, or HECS-HELP debt.

Bottom line? Use our Tax Calculator for a personalised calculation.

The original Stage 3 tax cuts (legislated under the Morrison government) would have created a flat 30% rate for all income between $45,001 and $200,000, primarily benefiting high-income earners. The Albanese government revised the plan in January 2024 to provide more benefit to lower and middle-income earners.

Key changes in the revised Stage 3 cuts: the 19% rate was reduced to 16%, the 32.5% rate was reduced to 30%, the threshold for the 37% rate was raised from $120,000 to $135,000, and the 45% rate was retained for income above $190,000 (the original plan would have eliminated the 37% bracket entirely). So every taxpayer earning above $18,200 receives a tax cut, with the largest dollar savings going to those earning between $100,000 and $190,000. Someone earning $100,000 saves approximately $2,179 per year compared to the pre-Stage 3 rates.

If you're an employee, your employer deducts tax from your pay through the PAYG (Pay As You Go) withholding system. The amount withheld is based on your income level and the information you provide on your Tax File Number Declaration (the form you complete when starting a new job).

Your employer uses ATO-published withholding tables to calculate the correct amount. The withholding system is designed so that the tax deducted across the year approximates your final tax liability, minimising any large balance owing or refund when you lodge your tax return. However, the withholding calculation doesn't account for deductions, offsets, or income from other sources, which is why most people receive a refund.

So what does this actually mean? If you've a HECS-HELP debt, additional withholding applies once your income exceeds the repayment threshold. You can request your employer to vary the withholding amount by applying to the ATO for a variation.

Several tax offsets can reduce your tax bill below the standard bracket calculations. The Low Income Tax Offset (LITO) provides up to $700 for incomes up to $37,500, phasing out completely at $66,667.

This means some low-income earners effectively pay no tax on income up to around $24,000. The Medicare levy low-income threshold means individuals earning below $27,222 (approximately) pay a reduced Medicare levy or none at all. Senior Australians and pensioners may also be eligible for the Seniors and Pensioners Tax Offset (SAPTO), which provides up to $2,230 for singles.

These offsets are applied automatically by the ATO when you lodge your tax return — you don't need to claim them separately. Together with the tax-free threshold, they mean that the Australian tax system is considerably more progressive than the bracket rates alone suggest. Simple as that.

Understanding your tax bracket is the first step, but what matters most is your actual take-home pay after tax, Medicare levy, and any HECS-HELP repayments. Use our Take Home Pay Calculator to see exactly how much lands in your bank account each pay period.

In plain English: You can enter your annual salary, pay frequency (weekly, fortnightly, or monthly), and any salary sacrifice arrangements to get a precise breakdown. The calculator also shows your effective tax rate, marginal tax rate, and how your income is distributed across the brackets. If you're comparing job offers, knowing the after-tax difference between two salaries is more meaningful than the gross difference.

For example, a $10,000 pay rise from $100,000 to $110,000 only adds approximately $6,800 to your take-home pay after tax and Medicare levy.