Australian Income Tax Brackets 2025–26: What You'll Actually Take Home
Your salary sounds great right up until tax, Medicare, and the general chaos of adult life have their little nibble.
If you want the simple version, this is it: Australia uses marginal tax rates, not one giant flat rate on your whole income. That means a pay rise does not suddenly catapult your entire salary into some tax blender. The ATO is annoying enough without giving it extra superpowers.
This guide walks through the 2025-26 Australian income tax brackets, the 2% Medicare levy, the Low Income Tax Offset (LITO), and what a few common salaries roughly look like after tax. If you want your own number, jump to the Income Tax Calculator, the Pay Calculator, or the HECS/HELP Repayment Calculator.
These examples assume you are an Australian resident for tax purposes, you claim the tax-free threshold, and you do not have deductions, salary sacrifice, private health surcharge issues, or HECS changing the picture.
The 2025-26 Australian income tax brackets
According to the ATO's resident rates for 2025-26, the brackets are:
| Taxable income | Tax on this income |
|---|---|
| $0 to $18,200 | Nil |
| $18,201 to $45,000 | 16c for each $1 over $18,200 |
| $45,001 to $135,000 | $4,288 plus 30c for each $1 over $45,000 |
| $135,001 to $190,000 | $31,288 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,638 plus 45c for each $1 over $190,000 |
Important: these rates do not include the Medicare levy.
How marginal tax actually works
Let us kill the most stubborn money myth in Australia.
If you earn $100,000, you do not pay 30% on the whole $100,000. You pay:
- 0% on the first $18,200
- 16% on the next $26,800
- 30% on the next $55,000
That works out to $20,788 in income tax before Medicare. Add the usual 2% Medicare levy, or $2,000, and your rough total becomes $22,788.
So yes, your marginal rate at $100,000 is 30%. But your average tax rate is much lower. This is why a pay rise is generally good news, not a trap set by your uncle at a barbecue.
The Medicare levy, the sneaky extra line item
For most taxpayers, the Medicare levy is 2% of taxable income on top of income tax.
There are low-income reductions and exemptions. For 2025-26, the ATO says single taxpayers who are not entitled to SAPTO do not pay the levy if taxable income is $28,011 or less, and a reduced levy can apply up to $35,013. So if your income is lower, the examples later in this guide may slightly overstate your total tax.
There is also a Medicare levy surcharge for some higher income earners without eligible private hospital cover. That is separate again. The tax system really loves a side quest.
LITO, the low income tax offset
The Low Income Tax Offset, or LITO, can reduce your tax bill if your taxable income is $66,667 or less.
Based on ATO guidance for 2025-26:
- $37,500 or less: maximum offset of $700
- $37,501 to $45,000: $700 minus 5 cents for each $1 over $37,500
- $45,001 to $66,667: $325 minus 1.5 cents for each $1 over $45,000
- Above $66,667: no LITO
LITO is not a cash payment. It simply reduces the tax you owe, down to zero if applicable. It cannot turn into a bonus refund on its own, sadly. The ATO remains committed to never being that fun.
What common salaries roughly look like after tax
The table below assumes resident rates, the standard 2% Medicare levy, and LITO where it applies. It does not include HECS, deductions, or salary packaging.
| Salary | Income tax | Medicare levy | Approx take-home per year | Approx per month |
|---|---|---|---|---|
| $45,000 | $3,963 | $900 | $40,137 | $3,345 |
| $60,000 | $8,688 | $1,200 | $50,112 | $4,176 |
| $80,000 | $14,788 | $1,600 | $63,612 | $5,301 |
| $100,000 | $20,788 | $2,000 | $77,212 | $6,434 |
| $120,000 | $26,788 | $2,400 | $90,812 | $7,568 |
Want to check weekly or fortnightly pay instead of annual numbers? Use the Pay Calculator. If you have HECS or HELP debt, run the HECS/HELP calculator too, because that extra withholding can make your payslip feel personally targeted.
Three common take-home pay mistakes
1. Confusing taxable income with salary package
Your taxable income is not always the same as the shiny salary number on the job ad. Salary sacrifice, reportable fringe benefits, deductions, bonuses and allowances can all move things around.
2. Forgetting HECS or HELP
If you have a student debt, compulsory repayments are based on income thresholds and can meaningfully reduce your take-home pay. Plenty of people budget off the wrong number, then act shocked later. Fair enough, but still.
3. Ignoring the Medicare levy
People often quote income tax only, then wonder why the actual net pay is lower. The levy is small compared with total tax, but not small enough to ignore when you are trying to work out rent, mortgage borrowing power, or a savings target.
How to use this in real life
If you are comparing job offers, planning a budget, or working out how much house you can afford, do not use gross salary. Use a realistic after-tax number.
- Budgeting for bills or saving? Start with your after-tax pay, not your optimistic fantasy self.
- Comparing jobs? Check the actual pay difference after tax, super, and any salary packaging.
- Thinking about a mortgage? Your take-home pay matters just as much as your headline salary. Pair this with the Mortgage Calculator if you want the debt version of the same reality check.
Quick source check
The bracket rates in this guide are based on the ATO resident tax rates for 2025-26. The LITO rules are based on the ATO's Low income tax offset guidance. The Medicare levy thresholds mentioned are from the ATO's Medicare levy reduction for low-income earners page for 2025-26.
FAQs
What are the Australian resident income tax rates for 2025-26?
They are nil up to $18,200, 16% from $18,201 to $45,000, 30% from $45,001 to $135,000, 37% from $135,001 to $190,000, and 45% over $190,000. These rates do not include the Medicare levy.
Do you pay your top tax bracket on your whole salary?
No. Australia uses marginal tax rates, so only the income within each bracket is taxed at that bracket's rate.
Is the Medicare levy part of the tax brackets?
No. For most people it is an extra 2% of taxable income on top of ordinary income tax, although low-income reductions and exemptions can apply.
What is LITO?
LITO is the Low Income Tax Offset. It can reduce tax by up to $700 for lower income earners, and it phases out completely once taxable income goes above $66,667.