Australia has four income tax brackets for FY2025–26. The tax-free threshold covers the first $18,200 of income, then rates of 19%, 32.5%, 37%, and 45% apply to successive bands of income. The 2% Medicare levy applies separately on top of income tax.
Key Takeaways
- The tax-free threshold is $18,200 — no income tax is paid on income below this
- The 32.5% bracket applies to most working Australians ($45,001–$135,000)
- The top rate of 45% applies only to income above $190,000
- The Medicare levy (2%) applies in addition to income tax
- These rates apply to Australian tax residents; non-residents have different rates
FY2025–26 Income Tax Brackets
| Taxable Income | Tax Payable |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 19c for each $1 over $18,200 |
| $45,001 – $135,000 | $5,092 + 32.5c for each $1 over $45,000 |
| $135,001 – $190,000 | $34,342 + 37c for each $1 over $135,000 |
| $190,001+ | $54,682 + 45c for each $1 over $190,000 |
Source: Australian Taxation Office (ATO), FY2025–26 resident tax rates. Does not include Medicare levy.
These brackets apply to Australian residents. Non-resident tax rates are different — the 15% working holiday maker rate and the 32.5% non-resident rate on income from the first dollar apply in other circumstances.
How to Calculate Your Tax
Tax is calculated cumulatively. You do not pay 32.5% on your entire income once you cross $45,000 — you pay:
- Nil on the first $18,200
- 19% on the portion between $18,201 and $45,000
- 32.5% only on the portion above $45,000
Example: $75,000 taxable income
| Bracket | Amount in bracket | Tax |
|---|---|---|
| $0 – $18,200 | $18,200 | $0 |
| $18,201 – $45,000 | $26,800 | $5,092 |
| $45,001 – $75,000 | $30,000 | $9,750 |
| Total | $14,842 |
Plus Medicare levy: $75,000 × 2% = $1,500
Total tax payable: $16,342 Effective tax rate: 21.8% (total tax ÷ taxable income) Marginal tax rate: 32.5% (rate on the last dollar)
Tax at Common Salary Levels
The table below shows estimated income tax and Medicare levy for common salaries in FY2025–26. These assume no HECS debt and no offsets beyond the standard LITO.
| Annual Salary | Income Tax | Medicare Levy | LITO | Total Tax | Effective Rate |
|---|---|---|---|---|---|
| $40,000 | $4,342 | $800 | −$575 | $4,567 | 11.4% |
| $50,000 | $6,717 | $1,000 | $0 | $7,717 | 15.4% |
| $60,000 | $9,967 | $1,200 | $0 | $11,167 | 18.6% |
| $80,000 | $16,467 | $1,600 | $0 | $18,067 | 22.6% |
| $100,000 | $22,967 | $2,000 | $0 | $24,967 | 25.0% |
| $120,000 | $29,467 | $2,400 | $0 | $31,867 | 26.6% |
| $150,000 | $40,567 | $3,000 | $0 | $43,567 | 29.0% |
| $200,000 | $60,667 | $4,000 | $0 | $64,667 | 32.3% |
Estimates only. Does not include HECS-HELP repayments, salary sacrifice, or income from other sources.
Medicare Levy
The Medicare levy is an additional 2% of taxable income. It is calculated separately from income tax but appears on the same tax assessment.
- Low-income threshold for FY2025–26: approximately $26,000 (individuals)
- The levy phases in between ~$26,000 and ~$32,500
- Below ~$26,000: no Medicare levy
See Medicare Levy Explained for full detail.
Low Income Tax Offset (LITO)
The LITO reduces tax payable for lower-income earners. It phases out as income rises:
| Income | LITO |
|---|---|
| Up to $37,500 | $700 |
| $37,501 – $45,000 | Reduces by 5c per $1 ($700 – ((income − $37,500) × 0.05)) |
| $45,001 – $66,667 | Reduces by 1.5c per $1 |
| Above $66,667 | Nil |
LITO is a non-refundable offset — it can reduce your tax to zero but cannot create a refund by itself.
Non-Resident Tax Rates
Non-residents do not have access to the tax-free threshold or LITO. A flat rate of 32.5% applies to all taxable income from $0 to $135,000, then 37% above that and 45% above $190,000. The Medicare levy does not apply to most non-residents.
Frequently Asked Questions
What are the Australian tax brackets for 2025–26? The four brackets are: $0–$18,200 (nil), $18,201–$45,000 (19%), $45,001–$135,000 (32.5%), $135,001–$190,000 (37%), and $190,001+ (45%). The 2% Medicare levy applies separately.
Do the tax brackets change every year? The ATO can adjust rates in the federal budget. The FY2024–25 stage 3 tax cuts significantly restructured the brackets. For FY2025–26, the brackets remain the same as FY2024–25.
How much tax do I pay on $100,000 in Australia? On $100,000 taxable income: $22,967 income tax + $2,000 Medicare levy = approximately $24,967 total, giving an effective rate of around 25%. See $100,000 salary after tax for a full breakdown.
What is the top tax rate in Australia? The top marginal rate is 45% on income above $190,000. The Medicare levy adds another 2%, bringing the effective top rate to 47% on each dollar above $190,000.
Are the tax brackets the same in every state? Yes. Income tax rates are set by the Commonwealth and are the same across all states and territories. State-level taxes are separate (stamp duty, land tax, payroll tax) — see State and Territory Tax.
This article provides general tax information. For advice tailored to your situation, speak with a registered tax agent or accountant. Find one through the Tax Practitioners Board register.