← All tools

Income Tax Calculator Australia 2025-26

Free Australian tax calculator using current ATO tax rates for 2025-26. Calculate your income tax, Medicare levy, HECS repayments, LITO offset and take-home pay. Updated for the latest tax brackets.

$

How Australian income tax works

Australia uses a progressive tax system — the more you earn, the higher the rate on each additional dollar. Importantly, only the income in each bracket is taxed at that rate, not your entire income. This is a common misconception.

The federal government introduced income tax in 1915 to fund World War 1, taking over from the states. The system has changed dramatically since then — rates have been as high as 75% in the 1950s, compared to a 47% effective top rate today (45% + 2% Medicare levy).

🦘 Fun fact: In the early 1950s, Australia's top marginal tax rate was 75%. Today it's 45% (plus Medicare levy). Meanwhile, Australia has no estate tax, no gift tax, and no net wealth tax — making it unusually light on taxes for wealthy asset holders compared to many other countries.

Income tax calculator by state:

Victoria (VIC) NSW Queensland

Frequently asked questions

What are the Australian income tax brackets for 2025–26?

For Australian residents:

$0–$18,200 — 0% (tax-free threshold)
$18,201–$45,000 — 19c per $1 over $18,200
$45,001–$120,000 — $5,092 + 32.5c per $1 over $45,000
$120,001–$180,000 — $29,467 + 37c per $1 over $120,000
$180,001+ — $51,667 + 45c per $1 over $180,000

Plus 2% Medicare levy on top. The Low Income Tax Offset (LITO) further reduces tax for incomes under $66,667.

How does Australia's tax-free threshold work?

The tax-free threshold is $18,200 for 2025–26 — the first $18,200 of taxable income is not taxed. You claim it from your primary employer on your Tax File Number declaration. Only one employer can apply it at a time. The Low Income Tax Offset (LITO) effectively raises the zero-tax threshold to around $21,884 for most residents.

What is the Medicare levy and who pays it?

The Medicare levy is an additional 2% of taxable income, collected to fund the public health system. Most residents pay it. Low-income earners (single individuals earning under ~$26,000) may be exempt or pay a reduced rate. The separate Medicare levy surcharge (1–1.5% extra) applies to higher-income earners without private hospital cover — it's an incentive to take out private health insurance.

What is the Low Income Tax Offset (LITO)?

The LITO is a tax offset that reduces income tax payable for lower earners. For 2025–26, the maximum LITO is $700, applying to incomes up to $37,500. It phases out: by 5c per $1 earned between $37,500–$45,000, then by 1.5c per $1 between $45,000–$66,667. At $66,667+, no LITO applies. Combined with the tax-free threshold, LITO means most residents pay zero tax up to approximately $21,884.

How much tax do I pay on a $100,000 salary?

On a $100,000 gross salary in 2025–26, an Australian resident pays approximately $22,967 in income tax plus $2,000 Medicare levy = total tax of ~$24,967. Take-home pay is approximately $75,033/year ($6,253/month). Effective tax rate: ~25%. This excludes HECS repayments, deductions, or private health surcharge — enter your exact income above for a precise figure.

How does Australia's tax system compare to other countries?

Australia's top marginal rate of 47% (45% + 2% Medicare levy) is high for ordinary income, but Australia's total tax burden as a share of GDP (~28%) is relatively low compared to Nordic countries (40–50%). Australia has no inheritance tax, no gift tax, and no annual net wealth tax. The main wealth taxes are capital gains tax on asset sales and stamp duty on property. Assets held inside superannuation attract a concessional 15% earnings tax rate.

Related calculators:

Pay Calculator HECS Repayment 🦘 Superannuation Stamp Duty