Income Tax Calculator 2025-26

What is Income Tax?

Income tax is a progressive tax on your earnings, meaning you pay higher rates on higher portions of your income. Australia uses a bracket system where different rates apply to different income ranges.

How this calculator works

This calculator applies the 2025-26 ATO tax brackets to your taxable income. It starts with the tax-free threshold ($18,200), then applies 16% on income up to $45,000, 30% up to $135,000, 37% up to $190,000, and 45% above that. The Low Income Tax Offset (LITO) of up to $700 is automatically applied if eligible. Medicare levy (2%) is added unless you earn below $26,000. The result shows your take-home pay after all deductions, broken down by week, fortnight, and month.

How Marginal Tax Brackets Work

Australia uses a progressive system: you don't pay one flat rate on all your income, you pay each rate only on the income within its bracket. Example: on $80,000 salary, you pay $0 on the first $18,200, 16% on $18,201-$45,000 ($4,288), and 30% on $45,001-$80,000 ($10,500). Total: $14,788 before LITO and Medicare. Your 'effective rate' (~18.5%) is much lower than your top 'marginal rate' (30%).

Stage 3 Tax Cuts (Now Implemented)

From 1 July 2024, the redesigned Stage 3 tax cuts kicked in: the 19% rate dropped to 16% (helping low-income earners more), the $120k-$180k 32.5% bracket was abolished and merged into 30%, and the top 45% threshold was lifted from $180k to $190k. Compared to FY 2023-24, anyone earning over $20k benefits — average saving ~$1,400/yr at $80k income, ~$3,700/yr at $200k+.

Medicare Levy and Surcharge

Medicare Levy: 2% of taxable income, full exemption below $27,222 (FY 2025-26 indexed), reduced rate $27,222-$34,027. Medicare Levy Surcharge (MLS): additional 1-1.5% if you DON'T have private hospital cover AND earn over $101,001 single / $202,001 family (with $1,500 uplift per dependent child after the first). MLS is the most common reason high earners take out hospital cover.

LITO — Low Income Tax Offset

LITO is automatically applied — you don't claim it. Max $700 for income up to $37,500. Reduces by 5¢ per $1 from $37,501 to $45,000 (down to $325), then by 1.5¢ per $1 to $66,667 where it phases out. LITO is non-refundable (can only reduce tax to zero, not below). The old LMITO ('Lamington') of up to $1,500 ended after FY 2021-22 and was NOT replaced — many taxpayers saw smaller refunds from FY 2022-23.

Resident vs Non-Resident Tax Rates

Tax residency determines hugely different tax treatment. RESIDENTS: $18,200 tax-free threshold, LITO eligible, taxed on worldwide income. NON-RESIDENTS: 30% from $1 to $135,000, 37% to $190,000, 45% above, taxed only on Australian-sourced income, no Medicare levy. Many people fall into ambiguous categories (Australian citizens living abroad, expatriates) — the residency test (s 6(1) ITAA 1936 + domicile/183-day tests) is complex. Get advice if uncertain.

Common Deductions Worth Claiming

Work-related vehicle expenses (cents-per-km 88¢ or logbook), working-from-home ($0.70/hr fixed rate or actual cost), professional memberships and union fees, work uniforms with logo, self-education directly related to current job, mobile phone and internet (work-use %), donations to DGR charities ($2+), tax agent fees, income protection insurance premiums, investment loan interest, ETF/share management fees. Save receipts for 5 years post-lodgement.

Updated for the 2025-26 financial year (1 July 2025 to 30 June 2026).

All calculations are performed in your browser — your data never leaves your device. Results are for general guidance only and should not be considered professional financial advice.

Built and maintained by Konstantin Iakovlev. Data sourced from the ATO and official Australian government sources.