Australian Income Tax Brackets 2025–26: What You'll Actually Take Home

If you have ever looked at your payslip and thought, "Right, and where exactly did that chunk wander off to?" this is for you.

Australia's tax system is not actually that wild once you strip out the jargon. The confusing bit is that people hear "I'm in the 30% bracket" and assume the ATO is taking 30% of everything. It is not. If it did, group chats every July would be even more feral.

This guide breaks down the 2025–26 Australian resident tax brackets, how the Low Income Tax Offset works, what the Medicare levy does, and what take-home pay looks like at a few common salaries.

These examples assume you are an Australian resident for tax purposes, entitled to the full tax-free threshold, with no HELP debt, no salary sacrifice, and no Medicare levy surcharge. For your exact number, use the Income Tax Calculator and Pay Calculator.

The 2025–26 tax brackets, in plain English

Australia uses a progressive tax system. That means different slices of your income are taxed at different rates.

The important bit is this: moving into a higher bracket does not drag all your income into that higher rate. Only the dollars above the threshold are taxed at the new rate.

Quick example, why the bracket panic is mostly nonsense

Say you earn $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 other adjustments like HELP debt or salary sacrifice. Your marginal rate is 30%, but your effective income tax rate is much lower.

That is why a pay rise does not make you "worse off because tax". That myth really needs a long holiday.

The Medicare levy, yes, it sits on top

For most workers, the Medicare levy is 2% of taxable income on top of normal income tax.

There are low-income reductions and exemptions, and the ATO works those out when you lodge your return. If you are on a fairly normal full-time salary, the simple assumption is that the 2% levy applies.

There is also a Medicare levy surcharge for higher income earners without eligible private hospital cover. For 2025–26, the ATO lists these single income thresholds:

• $101,000 or less: 0%
• $101,001 to $118,000: 1%
• $118,001 to $158,000: 1.25%
• $158,001 and over: 1.5%

That surcharge is a separate issue from standard income tax. If you are close to those thresholds, check the exact ATO rules because reportable fringe benefits and some other items can affect the calculation.

LITO, the quiet little tax helper

The Low Income Tax Offset, or LITO, reduces tax for lower income earners. It is not a cash bonus and it is not a magical secret loophole your uncle discovered on Facebook. It simply reduces the tax payable.

For 2025–26:

• Up to $37,500: maximum offset of $700
• $37,501 to $45,000: offset reduces by 5 cents per dollar over $37,500
• $45,001 to $66,667: remaining offset reduces by 1.5 cents per dollar over $45,000
• Above $66,667: no LITO

In practice, LITO matters most at lower incomes. By the time you are solidly above the mid-$60k range, it is gone.

What you'll actually take home

Here are some rough annual and monthly numbers using the 2025–26 resident tax rates, 2% Medicare levy, and LITO where it still applies.

Those numbers are useful for ballpark planning, but they are still simplified. If you have a HELP or HECS repayment, salary sacrifice, reportable fringe benefits, deductions, bonuses, or irregular income, your actual result can shift.

Why your payslip and your tax return are not always identical twins

Your employer uses ATO withholding tables during the year. That is a good estimate, but it is still an estimate.

At tax time, the final result gets trued up based on your actual income, deductions, offsets, Medicare position, and any HELP debt. That is why some people get a refund and others get a bill. It is not a reward or a punishment, just arithmetic arriving late.

What a pay rise really means

If you go from $80,000 to $90,000, your extra $10,000 sits in the 30% bracket. That means the extra slice is taxed at 30%, plus Medicare levy in the simple version. You still keep the rest.

Very rough simple version:

• Extra gross pay: $10,000
• Income tax on that slice: about $3,000
• Medicare levy on that slice: about $200
• Extra take-home: about $6,800

So yes, tax increases. No, the raise was not secretly a scam.

Do not forget super

In 2025–26, the super guarantee rate is 12%. For most employees, that is paid by your employer on top of ordinary time earnings.

So if your salary is $100,000, a typical setup is:

• Take-home pay, roughly $77,212 in this simplified example
• Employer super contribution, roughly $12,000

That does not help with this week's groceries, sadly, but it absolutely matters for your long-term wealth.

Three calculators worth using next

If this post got you close but not quite there, these are the useful next steps:

• Income Tax Calculator, for annual tax and take-home estimates
• Pay Calculator, for weekly, fortnightly and monthly pay
• HECS/HELP Repayment Calculator, if your payslip feels lighter than this guide suggests