Australian Income Tax Brackets 2025–26: What You'll Actually Take Home
Every year, Australians have income tax withheld from their pay — but most have only a vague idea of how much they're actually paying and why. Here's a clear breakdown of the 2025–26 tax brackets, the LITO offset, the Medicare levy, and what you'll actually take home at common salary levels.
2025–26 income tax brackets
Australia has a progressive tax system. You pay different rates on different portions of your income — not one flat rate on the whole thing.
| Taxable Income | Marginal Tax Rate | Tax on this bracket |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 16¢ per $1 over $18,200 | Up to $4,288 |
| $45,001 – $135,000 | 30¢ per $1 over $45,000 | Up to $27,000 |
| $135,001 – $190,000 | 37¢ per $1 over $135,000 | Up to $20,350 |
| Over $190,000 | 45¢ per $1 over $190,000 | Unlimited |
Note: These are the 2025-26 resident rates. The lower brackets are now 16% from $18,201 to $45,000 and 30% from $45,001 to $135,000.
The Medicare Levy (2%)
On top of income tax, most Australians pay a 2% Medicare Levy. This funds Medicare (public health services). It applies to your full taxable income once you earn above the low-income threshold (~$26,000 for individuals in 2025-26).
Medicare Levy Surcharge (MLS)
If you earn over $93,000 (single) or $186,000 (family) and don't have private hospital cover, you pay an additional surcharge:
- $93,001–$108,000: +1%
- $108,001–$144,000: +1.25%
- Over $144,000: +1.5%
This makes private health insurance financially compelling for higher earners.
Low Income Tax Offset (LITO)
The LITO reduces your tax payable — effectively raising the tax-free threshold. For 2025-26:
- Earnings up to $37,500: full LITO of $700
- $37,501–$45,000: reduces by 5¢ per $1
- $45,001–$66,667: reduces by 1.5¢ per $1
- Over $66,667: no LITO
Combined with the tax-free threshold, the effective tax-free threshold for most Australians is around $21,884.
Low and Middle Income Tax Offset (LMITO)
The LMITO was a temporary offset that applied until 2021-22. It has now ended and is no longer available.
What you actually take home: worked examples
| Annual Salary | Income Tax | Medicare (2%) | Net Take-Home | Monthly |
|---|---|---|---|---|
| $60,000 | $8,788 | $1,200 | $50,012 | $4,168 |
| $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 |
| $200,000 | $56,138 | $4,000 | $139,862 | $11,655 |
Figures assume resident individual, standard deductions, LITO applied, no Medicare Levy Surcharge, no HELP debt. Use the calculator below for your exact situation.
Effective vs marginal tax rate
People often confuse marginal and effective tax rates. Your marginal rate is the rate you pay on your next dollar of income. Your effective rate is the total tax as a percentage of your total income.
Example at $100,000:
- Marginal rate: 30%
- Effective rate: tax paid ($20,788) ÷ income ($100,000) = 20.8%
You're not paying 30% on all $100,000. You're paying 30% only on the portion from $45,001 to $100,000.
Super: the 12% on top
Don't forget superannuation. For 2025–26, your employer is required to pay 12% of your ordinary time earnings into your super fund. This is on top of your salary — it's not taken out of your take-home pay.
So at $100,000 salary: employer pays $12,000 into super. Your take-home is still ~$77,212. But your total remuneration package is $112,000.
Salary sacrifice reduces your tax
Contributions made via salary sacrifice reduce your taxable income. If you earn $100,000 and sacrifice $10,000 into super, you pay income tax on only $90,000 — saving roughly $3,000 in income tax at the 30% marginal rate. The $10,000 goes into super taxed at 15% instead.
Use our Superannuation Calculator and Income Tax Calculator to model the impact.
Fortnightly and weekly tax
Your employer withholds tax each pay cycle. For a $100,000 salary:
- Annual tax + Medicare: ~$22,788
- Monthly withholding: ~$1,899
- Fortnightly withholding: ~$876
- Weekly withholding: ~$438
Use our Pay Calculator to see your exact fortnightly or weekly take-home at any salary.
Frequently asked questions
What are the Australian income tax rates for 2025-26?
$0–$18,200: 0%; $18,201–$45,000: 16%; $45,001–$135,000: 30%; $135,001–$190,000: 37%; Over $190,000: 45%. These are marginal rates — only income in each bracket is taxed at that rate.
What is the Medicare levy in Australia?
The Medicare levy is 2% of your taxable income, applied to fund the public health system. High earners without private hospital cover also pay the Medicare Levy Surcharge (1–1.5% on top).
What is LITO and how does it reduce my tax?
The Low Income Tax Offset (LITO) provides a tax reduction of up to $700 for taxpayers earning under $66,667. At $37,500 and below, you get the full $700 offset.
Do I have to pay tax if I earn under $18,200?
No. The tax-free threshold in Australia is $18,200. Combined with LITO, the effective tax-free threshold is closer to $21,884 for most Australian residents.
Use our Income Tax Calculator or Pay Calculator to see your actual take-home based on your salary and deductions.