Published: 3 March 2026

How Much Tax Do I Pay in Australia?

Whether you've just landed your first job or you're trying to figure out if your payslip looks right, understanding how much tax you pay in Australia is surprisingly straightforward once you know the system. This guide breaks down Australian income tax, the Medicare levy, and other common deductions — so you can work out exactly what you should be taking home.

Australia's Income Tax Brackets (2025–26)

Australia uses a progressive tax system, meaning you pay a higher rate only on the income above each threshold — not on your entire salary. For the 2025–26 financial year, the resident individual tax rates are:

• $0 – $18,200: 0% (tax-free threshold)
• $18,201 – $45,000: 16 cents for each $1 over $18,200
• $45,001 – $135,000: $4,288 + 30 cents for each $1 over $45,000
• $135,001 – $190,000: $31,288 + 37 cents for each $1 over $135,000
• $190,001 and over: $51,638 + 45 cents for each $1 over $190,000

These rates apply to Australian residents. Non-residents and working holiday makers have different rates — check the ATO website for details.

The Tax-Free Threshold

If you are an Australian resident, the first $18,200 you earn each financial year is tax-free. This is called the tax-free threshold, and you claim it by ticking the right box on your Tax File Number (TFN) declaration when you start a job.

If you hold multiple jobs, you should only claim the tax-free threshold with one employer — typically your primary or highest-paying job. Claiming it with more than one employer can result in a tax debt at the end of the year.

Medicare Levy

On top of income tax, most Australian residents pay a Medicare levy of 2% of their taxable income. This funds Australia's public health system, Medicare.

For example, on a $70,000 income, the Medicare levy would be $1,400. Low-income earners may be exempt or pay a reduced levy — singles earning below $26,000 (approximately) are generally exempt.

If you don't have private hospital cover and earn above the Medicare Levy Surcharge threshold (~$93,000 for singles in 2025–26), you may also owe an additional Medicare Levy Surcharge of 1–1.5%.

A Practical Example: $80,000 Salary

Let's say you earn $80,000 per year. Here's roughly how your tax breaks down:

• Income tax: approximately $16,288
• Medicare levy (2%): $1,600
• Total tax: approximately $17,888
• Take-home pay: approximately $62,112 per year ($2,389 per fortnight)

Your effective tax rate — the actual percentage of your income paid in tax — would be around 22.4%, even though you're in the 30% bracket for some of your earnings. This is the key difference between marginal rates and effective rates.

HECS-HELP Student Loan Repayments

If you studied at university and have a HECS-HELP debt, repayments are automatically deducted through the tax system once your income exceeds the minimum repayment threshold (approximately $67,000 in 2025–26). Repayment rates range from 1% to 10% depending on your income.

Your employer withholds additional tax to cover these repayments — so if you have a HECS debt, your take-home pay will be slightly lower than someone on the same salary without one.

How Tax Is Collected: PAYG Withholding

You don't write a cheque to the ATO each year. Instead, your employer withholds tax from each pay cycle under the Pay As You Go (PAYG) withholding system and sends it directly to the ATO on your behalf.

At the end of the financial year (30 June), you lodge a tax return. If your employer withheld too much, you get a refund. If too little was withheld — perhaps because you had multiple jobs — you'll have a tax debt to pay.

What About Superannuation?

Superannuation contributions made by your employer (currently 12% of your ordinary time earnings in FY2025–26) are not deducted from your take-home pay — they're paid on top of your salary. However, super is taxed at 15% within the fund, which for most people is much lower than their income tax rate. It's a genuinely good deal for long-term savings.

Tips to Manage Your Tax

• Claim the tax-free threshold correctly — with one employer only.
• Lodge your tax return on time — by 31 October if doing it yourself, or later if using a registered tax agent.
• Keep records of work-related expenses — you may be able to claim deductions for things like uniforms, tools, or home office costs.
• Check your super — use myGov to confirm your employer is paying the right amount.

Use a Calculator to Get Exact Numbers

Tax calculations can get complicated once you factor in offsets, HECS debts, and multiple income sources. The easiest way to see your exact take-home pay is to use our free calculator — just enter your salary and it does the rest.