Australia Tax Brackets 2025-2026: Take-Home Pay Guide
Australia's income tax brackets for the 2025-2026 financial year (1 July 2025 to 30 June 2026) continue to reflect the Stage 3 tax cuts that were fully implemented from 1 July 2024. This guide covers everything Australian taxpayers need to know: the five tax brackets, the Medicare Levy, the overhauled HECS-HELP repayment system, the Super Guarantee increase to 12%, and how it all adds up to determine your actual take-home pay.
Australian income tax brackets (2025-2026)
Australia uses a progressive tax system with a tax-free threshold of $18,200 — meaning the first $18,200 you earn each year is completely untaxed. Above that, income is taxed in slices at increasing rates.
| Taxable income | Tax rate | Tax on this bracket |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 16% | Up to $4,288 |
| $45,001 – $135,000 | 30% | Up to $27,000 |
| $135,001 – $190,000 | 37% | Up to $20,350 |
| Over $190,000 | 45% | No cap |
What changed with the Stage 3 tax cuts?
The Stage 3 tax reforms, effective from 1 July 2024, made several significant changes that remain in effect for 2025-2026. The old 19% bracket was reduced to 16%, saving taxpayers earning above $45,000 up to $804 per year. The 32.5% bracket was simplified to a flat 30% applying from $45,001 all the way to $135,000 — eliminating the old boundary at $120,000. The 37% threshold was raised from $120,001 to $135,001, and the top 45% rate now applies from $190,001 instead of $180,001.
Worked examples at common Australian salaries
Example 1: A$60,000 salary
| Bracket | Income in bracket | Rate | Tax |
|---|---|---|---|
| $0 – $18,200 | $18,200 | 0% | $0 |
| $18,201 – $45,000 | $26,800 | 16% | $4,288 |
| $45,001 – $60,000 | $15,000 | 30% | $4,500 |
| Total income tax | $8,788 |
Add the Medicare Levy of $1,200 (2% of $60,000), and total tax comes to $9,988. Effective tax rate: 16.6%. Take-home pay: approximately $50,012 per year before any HECS repayments.
Example 2: A$90,000 salary
At $90,000, income tax is $15,788 plus $1,800 Medicare Levy, totalling $17,588. Your effective tax rate is 19.5%, and you take home about $72,412 per year. Your marginal rate is 30%, but your effective rate is significantly lower because the first $18,200 is tax-free and the next $26,800 is only taxed at 16%.
Example 3: A$120,000 salary
At $120,000, income tax is $24,788 plus $2,400 Medicare, totalling $27,188. Effective rate: 22.7%. Take-home: approximately $92,812.
The Medicare Levy
Most Australian residents pay a 2% Medicare Levy on their taxable income to help fund the public healthcare system. This is charged on top of income tax — so a $100,000 earner pays $2,000 in Medicare Levy in addition to their $20,788 in income tax.
Low-income earners may be exempt or pay a reduced levy. For the 2025-2026 year, the full exemption applies to singles earning below approximately $26,000. The levy is phased in between the exemption threshold and a higher amount.
Medicare Levy Surcharge
If you earn above $93,000 as a single (or $186,000 as a family) and do not hold an appropriate level of private hospital cover, you may also pay the Medicare Levy Surcharge (MLS) — an additional 1% to 1.5% on top of the standard 2% Medicare Levy. This is the government's incentive for higher earners to take out private health insurance.
Superannuation Guarantee (2025-2026)
The Super Guarantee rate for 2025-2026 is 12%, up from 11.5% the previous year. This is paid by your employer on top of your salary — it is not deducted from your pay.
For an employee earning $90,000, the employer contributes $10,800 per year into their super fund. This money is taxed at a concessional rate of 15% when it enters the fund (rather than at your marginal income tax rate), making super one of the most tax-efficient ways to save for retirement.
Salary sacrifice into super
You can make additional pre-tax (concessional) contributions into super up to a cap of $30,000 per year in 2025-2026 (this cap includes the employer's Super Guarantee contributions). Salary sacrificing into super reduces your taxable income, which means you pay less income tax. The trade-off is that the money is locked until retirement age.
HECS-HELP repayments (2025-2026)
The HECS-HELP repayment system underwent a major overhaul from the 2025-2026 financial year. The two biggest changes are a significantly higher repayment threshold and a shift from flat rates to marginal rates.
Key changes for 2025-2026
New minimum threshold: Compulsory repayments now start at $67,000 of repayment income, up dramatically from $54,435 in the previous year. If you earn below $67,000, you make no compulsory repayment at all.
Marginal rate system: Previously, once you crossed a threshold, the repayment rate applied to your entire income. Now, you only repay on the income above $67,000. This is a fundamental improvement that significantly reduces repayments for most borrowers.
20% debt reduction: All outstanding HELP, HECS-HELP, FEE-HELP, VET Student Loans, and other eligible study debts received a 20% balance reduction applied automatically from 1 June 2025.
HECS-HELP repayment rates (2025-2026)
| Repayment income | Marginal rate on income above threshold |
|---|---|
| Below $67,000 | No repayment |
| $67,001 – $125,000 | 15 cents per $1 over $67,000 |
| $125,001 – $179,285 | $8,700 + 17 cents per $1 over $125,000 |
| $179,286 and above | 10% of total repayment income |
HECS repayment examples under the new system
| Repayment income | Old system (2024-25) | New system (2025-26) | Savings |
|---|---|---|---|
| $60,000 | $600 | $0 | $600 |
| $80,000 | $2,800 | $1,950 | $850 |
| $100,000 | $5,500 | $4,950 | $550 |
| $120,000 | $8,400 | $7,950 | $450 |
| $140,000 | $11,900 | $11,250 | $650 |
Low Income Tax Offset (LITO)
The Low Income Tax Offset reduces tax for lower-income earners. For 2025-2026, LITO provides up to $700 for taxable incomes up to $37,500. It phases out between $37,500 and $66,667, reducing by 5 cents per dollar between $37,500 and $45,000, then by 1.5 cents per dollar up to $66,667.
Note that the old Low and Middle Income Tax Offset (LMITO, also known as the "Lamington") expired after the 2022-2023 year and is no longer available.
Complete take-home pay breakdown at common salaries
The following table shows what various Australian salaries look like after income tax and Medicare Levy (excluding HECS and before super):
| Gross salary | Income tax | Medicare (2%) | Total tax | Take-home | Effective rate |
|---|---|---|---|---|---|
| $50,000 | $5,788 | $1,000 | $6,788 | $43,212 | 13.6% |
| $65,000 | $10,288 | $1,300 | $11,588 | $53,412 | 17.8% |
| $80,000 | $14,788 | $1,600 | $16,388 | $63,612 | 20.5% |
| $100,000 | $20,788 | $2,000 | $22,788 | $77,212 | 22.8% |
| $120,000 | $26,788 | $2,400 | $29,188 | $90,812 | 24.3% |
| $150,000 | $37,838 | $3,000 | $40,838 | $109,162 | 27.2% |
| $200,000 | $56,338 | $4,000 | $60,338 | $139,662 | 30.2% |
Upcoming tax changes (2026-2027)
Legislated changes from the March 2025 Federal Budget will reduce the 16% bracket to 15% from 1 July 2026, and further to 14% from 1 July 2027. For anyone earning above $45,000, this will save an additional $268 per year from 2026-2027, and $536 per year from 2027-2028 compared to current rates.
All other brackets remain unchanged. The HECS-HELP thresholds and rates will continue to be indexed annually in line with average weekly earnings.
Tips to reduce your Australian tax
Salary sacrifice into super. Contributions up to the $30,000 annual cap are taxed at only 15% inside your super fund, instead of your marginal rate of up to 45%. This is the most powerful tax reduction tool available to Australian employees.
Claim all eligible deductions. Work-related expenses such as home office costs, uniforms, tools, professional development, and travel between workplaces are deductible. Keep records and receipts for everything. The ATO allows a fixed rate of 67 cents per hour for work-from-home expenses.
Check your private health insurance. If you earn above $93,000 and do not have hospital cover, you may be paying an extra 1-1.5% Medicare Levy Surcharge. Often, the cost of a basic hospital policy is less than the surcharge.
Use the carry-forward super rule. If you have not used your full $30,000 concessional super cap in previous years, you can carry forward unused amounts from up to five prior years (if your total super balance is under $500,000). This lets you make a larger one-off contribution and claim a bigger tax deduction.