Your income tax isn't a single percentage. It's a stack of layers — brackets, Medicare levy, an offset or two. Each layer has its own threshold. The Income Tax Calculator applies each layer to your actual income and returns your exact take-home. Run your numbers first. Then come back here to understand what each line means.
General information only — not financial or taxation advice. Rates current as at 21 August 2026. Source: Australian Taxation Office.
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Why your "tax rate" isn't a single number
When someone says they're "in the 37% bracket," they mean one slice of their income. Not the tax rate on all of it. Australia uses a progressive system: each dollar of income gets taxed only at the rate that applies to that particular dollar.
This matters in practice. Someone earning $120,000 doesn't pay 37 cents on every dollar. They pay nothing on the first $18,200, then 15 cents per dollar up to $45,000, then 30 cents up to $135,000. Most of their income is taxed at rates well below 37%.
The Income Tax Calculator handles this automatically. The explanation below shows you exactly how.
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The 2026–27 income tax brackets
These brackets apply to Australian residents for the full 2026–27 financial year (1 July 2026 to 30 June 2027). These are the Stage 3 rates as modified and legislated.
| Taxable income | Rate on this slice |
|---|---|
| $0 – $18,200 | 0% (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 |
Source: ATO — Tax rates for residents 2026–27
The 15% rate on the $18,201–$45,000 band is the lowest marginal rate Australians have paid in decades. The old 19% rate became 16% on 1 July 2024, when the 32.5% rate also became 30% and the 37% and 45% thresholds moved to $135,000 and $190,000. From 1 July 2026 the remaining 16% rate was cut to 15%. For someone on $45,000 or more, that second cut is worth up to $268 a year against 2025–26.
If a calculator is still on last year's brackets, it is overstating the bill. The Income Tax Calculator uses the 2026–27 rates. The FY 2026–27 tax changes guide lists what else moved on 1 July, including HECS and Division 296.
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The Medicare levy
Most Australian residents pay a 2% Medicare levy on top of their income tax. It isn't buried in the brackets — it gets added separately on your taxable income.
A low-income threshold applies. If you earn below a certain amount, you pay a reduced levy or none at all. Families with dependants get a higher threshold. The ATO indexes these thresholds each year. The Medicare Levy Calculator applies the current figures to your situation.
Some people also pay the Medicare levy surcharge — an extra 1% to 1.5% if income is over the threshold and they do not hold compliant private hospital cover. For singles the surcharge starts above $105,000. A single on $120,000 without that cover is paying the 2% levy and up to another 1.5% on top. The Medicare levy surcharge calculator applies the tiers, and the private health rebate calculator covers the rebate that sits alongside the cover.
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The Low Income Tax Offset (LITO)
The Low Income Tax Offset reduces tax payable for lower-income earners. It's applied after your basic income tax is calculated — it's an offset against tax, not a deduction from income.
For 2026–27, LITO reduces to zero as income rises through the phase-out range. The Income Tax Calculator includes LITO automatically.
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A worked example
Take someone earning $80,000 in taxable income for 2026–27.
Income tax on $80,000:
- $0–$18,200: $0
- $18,201–$45,000: $4,020 (15% on $26,800)
- $45,001–$80,000: $10,500 (30% on $35,000)
- Basic income tax: $14,520
Medicare levy:
- 2% × $80,000 = $1,600
Total tax and levy: $16,120
Take-home (before super, before any deductions): $63,880
That's an effective tax rate of about 20.2% — meaningfully lower than the 30% marginal rate on the top slice of income at that level.
The same method at $100,000, with no deductions and the full 2% levy:
- $0–$18,200: $0
- $18,201–$45,000: $4,020 (15% of $26,800)
- $45,001–$100,000: $16,500 (30% of $55,000)
- Income tax: $20,520
- Medicare levy: $2,000
- Total: $22,520
- Take-home: $77,480 a year, about $1,490 a week
The low income tax offset has phased out by this income, so it does not reduce the $100,000 figure. Both examples match the Income Tax Calculator.
A deduction is worth your marginal rate, not your effective rate. At 30%, $1,000 of work expenses saves $300. The work-from-home calculator prices the fixed-rate hours, the car logbook calculator compares the two car methods, and salary packaging is the pre-tax route where an employer offers it. Salary sacrifice into super is taxed at 15% inside the fund instead of your marginal rate, up to the concessional cap. Above $250,000, Division 293 lifts that contributions tax to 30%.
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What "taxable income" means
The calculation starts from taxable income, not gross income. Taxable income is what's left after deductions: work-related expenses, investment income deductions, and contributions to certain super arrangements, among others.
If your deductions are significant, your taxable income — and your tax — may be considerably lower than your gross income suggests. The Tax Return Estimator lets you factor in your deductions to see the impact on your end-of-year position.
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PAYG withholding and your tax return
If you're employed, your employer withholds tax from each pay cycle under the Pay As You Go (PAYG) system and remits it to the ATO. The amount withheld is based on ATO tax tables for your income level.
Withholding is an estimate. Your actual tax liability is worked out when you lodge your return. If more was withheld than you owe, you get a refund. If less was withheld — because you have multiple income sources, investment income, or other circumstances — you'll have a bill to pay.
The PAYG Withholding Calculator shows you what your employer should be withholding each cycle, and the Tax Return Estimator gives you a sense of where you're likely to land at lodgement time.
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Non-residents
Non-residents for tax purposes are taxed at different rates and don't get the tax-free threshold. The Income Tax Calculator includes a residency toggle. Select non-resident to apply the correct schedule to your income.
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Frequently asked questions
What is the tax-free threshold in Australia for 2026–27?
The tax-free threshold is $18,200. Australian residents earning below this amount pay no income tax. If you earn above it, you pay tax only on the portion above $18,200 — not on the full amount. You claim the threshold by ticking the box on your Tax File Number declaration when you start a job. If you have more than one employer, claim it with just one.
Source: ATO — Tax-free threshold
Why does my effective tax rate look lower than my marginal rate?
Your marginal rate is the rate on your last dollar of income. Your effective rate is total tax divided by total income. Because lower brackets are taxed at lower rates — including a zero-rate band up to $18,200 — the effective rate is always lower than the marginal rate. Often much lower. A person earning $90,000 faces a 30% marginal rate but an effective income tax rate (before Medicare levy) of around 18–19%.
Does the calculator include the Medicare Levy Surcharge?
The standard Income Tax Calculator includes the base 2% Medicare levy. The Medicare Levy Surcharge — which applies to higher earners without compliant private hospital cover — is handled separately by the Medicare Levy Calculator. It walks through the surcharge thresholds and tiers.
What about super — is it included in take-home pay?
Superannuation Guarantee contributions (12% of ordinary time earnings from 1 July 2025) are paid by your employer on top of your salary. They're not deducted from your take-home pay. They go directly to your super fund and are taxed at 15% inside the fund, not at your marginal rate. The income tax calculator returns your after-tax income from your salary. Super is a separate figure. The Super Balance Projector shows how those contributions compound over time. A HELP debt is separate again: once income passes the repayment threshold the ATO withholds a compulsory repayment that is not income tax. The HECS repayment, indexation and voluntary repayment calculators cover that line. A capital gain is added to the same taxable income — the CGT calculators apply the 50% discount and the main-residence rules before the brackets do.
I have income from multiple sources. Can I still use this calculator?
Yes. Enter your total taxable income from all sources. The brackets apply to combined taxable income, not to each source separately. If you have significant investment income, rental income, or a second job, add it all together before entering the figure.
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