Australia's 2025-26 income tax brackets
The 2025-26 financial year runs from 1 July 2025 to 30 June 2026. The income tax rates for Australian residents are:
- $0–$18,200: 0% (tax-free threshold)
- $18,201–$45,000: 19%
- $45,001–$120,000: 32.5%
- $120,001–$180,000: 37%
- Over $180,000: 45%
These are the marginal rates — you pay each rate only on the income within that band. The effective (average) tax rate is always lower than your marginal rate.
Low Income Tax Offset (LITO)
The LITO reduces tax payable for low to middle income earners. For 2025-26:
- Maximum LITO: $700 (for taxable income up to $37,500)
- Phases out from $37,500 to $45,000 at 5 cents per dollar (reduction of $375)
- Further phases out from $45,000 to $66,667 at 1.5 cents per dollar (elimination of remaining $325)
- No LITO available above $66,667
The LITO means that with the $18,200 tax-free threshold plus the full $700 offset, residents effectively pay no income tax on earnings up to approximately $21,885.
Medicare Levy
Most Australian residents pay a 2% Medicare Levy on top of income tax. This funds Australia's universal healthcare system, Medicare.
Medicare Levy Low Income Threshold (2025-26): The levy is reduced or eliminated for individuals earning below approximately $26,000 (exact threshold announced annually). Families and seniors have higher thresholds.
Medicare Levy Surcharge (MLS): Higher income earners (singles over $93,000; couples over $186,000) without eligible private hospital cover pay an additional 1–1.5% MLS on top of the 2% standard levy.
HECS-HELP repayments 2025-26
Australians with outstanding HECS-HELP student loan debt make compulsory repayments through the tax system once income exceeds the minimum repayment threshold. Rates for 2025-26:
- Below $54,435: 0% repayment
- $54,435–$62,738: 1.0%
- $62,738–$66,502: 2.0%
- $66,502–$70,468: 2.5%
- $70,468–$74,695: 3.0%
- Higher income brackets continue at increasing rates up to 10% above $141,848
Worked examples: take-home pay
$60,000 salary (no HECS)
- Income tax: approximately $11,167
- LITO reduction: -$400
- Net tax: $10,767
- Medicare Levy (2%): $1,200
- Take-home pay: approximately $48,033/year or $4,003/month
$100,000 salary (with HECS)
- Income tax: approximately $24,497
- Medicare Levy: $2,000
- HECS repayment (approx 4.5% on income above threshold): $2,052
- Take-home pay: approximately $71,451/year or $5,954/month
Superannuation
Employer superannuation contributions are an additional cost on top of your salary, not deducted from it. For 2025-26, the Superannuation Guarantee rate is 11.5%. On a $100,000 salary, your employer pays an additional $11,500 per year into your super fund. This money is taxed at 15% inside the fund — significantly less than your marginal income tax rate.