Australian Income Tax Brackets 2025-26: What You'll Actually Take Home
If your payslip always feels a little ruder than expected, you're not imagining it. Gross salary sounds cheerful. Net pay is the part that shows up in your bank account and quietly starts fights with your grocery bill.
This guide breaks down the 2025-26 Australian income tax brackets, the 2% Medicare levy, the Low Income Tax Offset, and what common salaries roughly look like after tax. If you just want the exact number for your situation, skip straight to the Income Tax Calculator, the Pay Calculator, or the HECS/HELP 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, or Medicare levy surcharge changing the picture. Real life is messier, obviously, but this gets you close fast.
The 2025-26 income tax brackets
Australia uses a progressive tax system. That means different slices of your income are taxed at different rates.
| Taxable income | Resident tax rate | ATO formula |
|---|---|---|
| $0 to $18,200 | 0% | Nil |
| $18,201 to $45,000 | 16% | 16c for each $1 over $18,200 |
| $45,001 to $135,000 | 30% | $4,288 plus 30c for each $1 over $45,000 |
| $135,001 to $190,000 | 37% | $31,288 plus 37c for each $1 over $135,000 |
| $190,001 and over | 45% | $51,638 plus 45c for each $1 over $190,000 |
The key point is the one people keep butchering at barbecues: you do not pay one flat rate on your whole salary. Only the part of your income that falls into each bracket gets taxed at that bracket's rate.
Quick example, because bracket panic is everywhere
Say your taxable income is $100,000.
- The first $18,200 is taxed at 0%
- The next $26,800 is taxed at 16%
- The next $55,000 is taxed at 30%
That gives you $20,788 of income tax before the Medicare levy. Add the standard 2% Medicare levy, which is another $2,000, and your rough total tax becomes $22,788.
So yes, your marginal rate at $100,000 is 30%. No, that does not mean the ATO takes 30% of the whole lot. Your effective tax rate is much lower.
The Medicare levy, the bit people forget until it lands
For most Australian taxpayers, the Medicare levy is 2% of taxable income on top of ordinary income tax. It helps fund Medicare, and it is separate from your income tax brackets.
There are low-income reductions and exemptions, so not everyone pays the full amount. There is also a separate Medicare levy surcharge for some higher income earners without eligible private hospital cover. That surcharge is a different thing again, so do not accidentally bundle it all together and assume the tax office is just freestyling.
LITO, the quiet little tax helper
The Low Income Tax Offset, or LITO, reduces the amount of income tax payable for lower income earners.
For 2025-26:
- Up to $37,500: maximum offset of $700
- $37,501 to $45,000: offset reduces by 5 cents for each $1 over $37,500
- $45,001 to $66,667: the remaining offset reduces by 1.5 cents for each $1 over $45,000
- Above $66,667: no LITO
It is not a cash bonus. It simply reduces your tax liability. Still useful though. Not sexy, but useful. That is basically most tax planning.
What common salaries roughly look like after tax
Here are simplified annual numbers for Australian residents using the 2025-26 tax rates, standard 2% Medicare levy, and LITO where it still applies.
| Salary | Income tax | Medicare levy | 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 |
| $150,000 | $36,838 | $3,000 | $110,162 | $9,180 |
These are useful planning numbers, not your final tax return. If you salary sacrifice into super, claim deductions, have a HELP debt, or trigger the Medicare levy surcharge, your result changes.
Why your payslip does not always match the rough guide
Your employer withholds PAYG tax during the year using ATO schedules. That is an estimate based on your pay cycle and the information they have. Your tax return later reconciles everything using your actual income, deductions, offsets, and other settings.
That is why someone on the same salary as you can have a slightly different take-home pay. Same headline number, different moving parts. Very annoying. Very normal.
HELP debt can make your take-home pay look leaner
If you have a HECS, HELP, VET Student Loan, or other study loan, compulsory repayments can reduce take-home pay once your repayment income is above the ATO threshold for the year.
For 2025-26, the system uses marginal repayment rates rather than the old cliff-style method. That is a nicer design than the old version, because crossing the threshold does not suddenly whack your whole income with one rate. If that sentence made your eyes glaze over, fair enough. Just use the HECS/HELP calculator.
What a pay rise really does
Say you move from $80,000 to $90,000. Most of that extra income sits in the 30% bracket, plus the 2% Medicare levy.
In the simple version, your extra $10,000 would roughly mean:
- About $3,000 more income tax
- About $200 more Medicare levy
- About $6,800 more take-home pay
So no, getting a raise does not somehow make you poorer because you entered a higher bracket. That myth needs to retire. Preferably immediately.
Three SmartKoala calculators worth opening next
- Income Tax Calculator for annual tax and take-home estimates
- Pay Calculator for weekly, fortnightly, monthly, or annual pay views
- HECS/HELP Calculator if student debt is changing your real take-home pay
Frequently asked questions
What are the Australian resident income tax rates for 2025-26?
They are 0% 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% above $190,000. These rates do not include the Medicare levy.
Do you pay one tax rate on your whole salary?
No. Australia uses marginal tax rates, so each slice of your income is taxed at the rate for that bracket. Only the income above each threshold moves into the higher rate.
Does the Medicare levy come on top of income tax?
Usually yes. For most taxpayers it is 2% of taxable income on top of income tax, although some low-income earners may get a reduction or exemption.
What is LITO?
LITO is the Low Income Tax Offset. It can reduce tax by up to $700 for lower income earners, then phases out and disappears completely once income goes above $66,667.
Run your income through the Income Tax Calculator, switch to weekly or fortnightly pay in the Pay Calculator, and add student debt with the HECS/HELP Calculator.
Check your take-home pay →