Australian income tax calculator

What the result means

This is the tax the ATO assesses on a whole year of taxable income — not the amount your employer takes out of each pay. It applies the resident bracket table for the year you choose, subtracts the Low Income Tax Offset if you qualify, then adds the 2% Medicare levy on top, because the levy is not built into the bracket rates. Switching to foreign resident removes the tax-free threshold, LITO and the Medicare levy and uses the higher foreign resident table instead. The Medicare levy surcharge is never added here.

How it is calculated

Total = max(bracket tax − LITO, 0) + Medicare levy + optional HELP repayment

• Taxable income: Assessable income minus deductions — not gross salary, unless you have no deductions at all.
• Bracket tax: The base amount for your row plus that row's rate on the excess over the row's floor.
• LITO: Up to $700, tapering 5c in the dollar from $37,500 and 1.5c from $45,000, nil at $66,667. Capped at your income tax, so it cannot create a refund.
• Medicare levy: 2% of taxable income for residents, with the single low-income shade-in applied below $35,013.
• HELP repayment: Only when you tick the study-loan box. Estimated from the taxable income you enter, not from full ATO repayment income.
• Effective rate: Total tax, including any HELP repayment, divided by the income you entered.

The formula is a subtraction chain because each piece is legislated separately. Bracket tax comes first. LITO is a tax offset, so it reduces income tax and stops at zero — it cannot pay you a refund and it cannot touch the Medicare levy. The levy is then added on its own thresholds. That ordering is why the headline rates of 15, 30, 37 and 45% understate what each extra dollar really costs by two percentage points.

Worked example

$95,000 taxable income in 2026–27

An Australian resident for the full year, with no standard deduction applied, no study loan and appropriate hospital cover so no surcharge arises.

Bracket row

$45,000–$135,000: $4,020 + 30% of the excess

Income tax

$4,020 + 30% × $50,000 = $19,020

LITO

$0 — income is above the $66,667 cut-out

Medicare levy

2% × $95,000 = $1,900

Total tax

$19,020 + $1,900 = $20,920

Average rate

$20,920 ÷ $95,000 = 22.0%

Total tax is $20,920 — an average rate of 22.0%, while the next dollar is taxed at 32%. If that $95,000 was also gross salary, about $74,080 is left. Tick the standard deduction and taxable income drops to $94,000, saving $320: $300 of income tax and $20 of Medicare levy.

How to read the bracket table: a base amount plus a rate on the excess

The 2026–27 resident table is not four rates you average together. Each row carries a fixed base amount plus a single rate on the dollars above that row's floor. Nothing is taxed below $18,200. From $18,200 to $45,000 the rate is 15%. From $45,000 to $135,000 you pay $4,020 plus 30% of the excess over $45,000. From $135,000 to $190,000 it is $31,020 plus 37% of the excess over $135,000, and above $190,000 it is $51,370 plus 45% of the excess.

Each base is simply the running total of the bands beneath it, which is why the table never jumps. 15% of the whole $26,800 second band is $4,020 — exactly the base for the next row. Tax on $135,000 is $4,020 + 30% × $90,000 = $31,020, exactly the base for the row after that. So $136,000 of taxable income is $31,020 + 37% × $1,000 = $31,390, and there is no cliff at $135,000 to be afraid of.

Your marginal rate is not your average rate

The marginal rate is what your next dollar costs. The average, or effective, rate is total tax divided by total income. On $95,000 of taxable income in 2026–27, income tax is $19,020 and the Medicare levy is $1,900, so total tax is $20,920 — an average rate of 22.0%. But the next dollar is taxed at 30% plus the 2% levy, a marginal rate of 32%. The gap between 22% and 32% is the tax-free threshold and the lower bands doing their work.

This is why the complaint that a pay rise pushed you into a higher bracket and left you worse off is a misreading of the table. Go from $134,000 to $138,000 and only the $3,000 above $135,000 is taxed at 37%; the $1,000 below it is still 30%. The extra income tax is $1,410 and the extra levy is $80, so you keep $2,510 of the $4,000. None of the income you already had is re-taxed at the new rate. The tax-comparison and pay-rise calculators show that slice rate between two salaries directly.

Residency for tax purposes changes the answer more than anything else on this page

Tax residency is a separate ATO test — it is not decided by your visa or your citizenship, and it is possible to be a tax resident without being a permanent resident. Foreign residents get no tax-free threshold, no LITO and no Medicare levy, and their first bracket is 30% from the very first dollar. On $30,000 a resident pays about $1,269 all up: $1,770 of bracket tax less the $700 LITO, plus $199 of levy after the low-income reduction. A foreign resident on the same $30,000 pays $9,000. At $95,000 the comparison is $20,920 against $28,500.

The calculator applies one status to the entire year. If you arrived or departed partway through, you may be a part-year resident with a pro-rated tax-free threshold, which is not modelled here and is worth getting right — the difference at low incomes is several thousand dollars.

What changing the income year actually does

The dropdown switches the whole rate set, not just a label. In 2026–27 the $18,200–$45,000 band is taxed at 15% with a base of $4,020 in the next row; in 2025–26 that band was 16% with a base of $4,288. Because the band is $26,800 wide, the one-point cut is worth exactly $268 a year to anyone with taxable income of $45,000 or more, and proportionally less below that. LITO and the Medicare levy thresholds are unchanged between the two years.

The $1,000 standard work-related deduction is a 2026–27 measure only, so ticking that box while 2025–26 is selected changes nothing — the dataset records the amount as zero for that year. Leave the box off if you have already entered a taxable income figure, or you will deduct $1,000 twice.

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