Australian Tax Brackets 2026-27 — How Much Tax Will You Pay? [Updated]
Complete guide to Australian income tax brackets for 2026-27. Calculate your tax, understand the Stage 3 cuts impact, Medicare levy, HELP thresholds, and compare with the previous year.
Australian income tax brackets for 2025-26 (current year)
The current income tax brackets for the 2025-26 financial year (1 July 2025 to 30 June 2026) reflect the revised Stage 3 tax cuts that took effect on 1 July 2024. The brackets are: $0 to $18,200 — nil tax (tax-free threshold); $18,201 to $45,000 — 16 cents per dollar over $18,200; $45,001 to $135,000 — $4,288 plus 30 cents per dollar over $45,000; $135,001 to $190,000 — $31,288 plus 37 cents per dollar over $135,000; $190,001 and above — $51,638 plus 45 cents per dollar over $190,000. These rates do not include the Medicare levy (2% of taxable income) or the Medicare levy surcharge (1-1.5% for higher earners without private hospital cover). The revised Stage 3 cuts delivered significant tax relief compared to the pre-2024 brackets, particularly for lower and middle-income earners. The 19% bracket was reduced to 16%, the 32.5% bracket was reduced to 30%, and the $120,000 threshold was increased to $135,000. Every Australian taxpayer earning over $18,200 received a tax cut, with the average full-time worker saving approximately $1,888 per year.
Expected tax brackets for 2026-27 — what we know so far
As of March 2026, the government has not announced changes to the income tax brackets for the 2026-27 financial year (beginning 1 July 2026). In the absence of new legislation, the current 2025-26 brackets will continue to apply. The Stage 3 tax cuts were designed as a structural change to the tax system, not a temporary measure, so they are expected to remain in place. However, there are factors that could lead to bracket adjustments. The government may choose to index the brackets to inflation (bracket creep) — the tax-free threshold has been $18,200 since 2012-13 and has not kept pace with wage growth. Political pressure to address bracket creep could result in threshold adjustments in the 2026-27 Federal Budget (typically delivered in May 2026). Any changes announced in the Budget would require legislation to pass Parliament before 1 July 2026. We will update this article immediately when the 2026-27 Budget is delivered and any tax changes are announced. In the meantime, you can use the current brackets for planning purposes — they are the most likely rates for 2026-27.
How the Stage 3 tax cuts changed your take-home pay
The revised Stage 3 tax cuts that took effect on 1 July 2024 represented the most significant personal income tax reform in over a decade. Here is how they changed take-home pay at various income levels. At $40,000 per year, the tax cut was $654 (from the 19% to 16% rate reduction on the $18,201-$45,000 bracket), equating to an extra $25 per fortnight. At $60,000, the tax cut was $1,304 ($654 from the lower bracket plus $650 from the 32.5% to 30% rate on $45,001-$60,000), equating to an extra $50 per fortnight. At $80,000, the tax cut was $1,904 (an extra $73 per fortnight). At $100,000, the tax cut was $2,504 (an extra $96 per fortnight). At $120,000, the tax cut was $3,104 (an extra $119 per fortnight). At $150,000, the tax cut was $3,729 (an extra $143 per fortnight). At $200,000, the tax cut was $4,529 (an extra $174 per fortnight). The original Stage 3 design would have given most of the benefit to higher earners, but the revised version spread the cuts more evenly across income levels. If you have not noticed the difference in your pay, it may be because your employer adjusted your PAYG withholding but other changes (rent increases, inflation) absorbed the benefit.
Medicare levy and Medicare levy surcharge explained
On top of income tax, most Australians pay the Medicare levy of 2% of taxable income. This funds the public healthcare system. The Medicare levy applies to everyone with taxable income above the low-income threshold ($26,000 for singles in 2025-26, $43,846 for families). Between the shade-in threshold ($24,276) and the full threshold ($26,000), you pay a reduced rate of 10 cents per dollar. Above the threshold, you pay 2% of your entire taxable income. For an employee earning $80,000, the Medicare levy is $1,600 per year ($80,000 x 2%). The Medicare levy surcharge (MLS) is an additional charge of 1% to 1.5% that applies to higher-income earners who do not have an appropriate level of private hospital insurance. The MLS thresholds for 2025-26 are: $93,000-$108,000 (singles) — 1% surcharge; $108,001-$144,000 — 1.25%; $144,001 and above — 1.5%. For families, the thresholds are doubled plus $1,500 for each dependent child after the first. If you earn above the MLS threshold, compare the cost of private hospital cover against the surcharge — in many cases, basic hospital cover is cheaper than paying the MLS.
HELP and student loan repayment thresholds for 2026-27
If you have a HELP (formerly HECS), VET Student Loan, or other government study loan, compulsory repayments are deducted from your income through the tax system once you earn above the minimum repayment threshold. For 2025-26, the minimum repayment threshold is $54,435. Below this amount, no repayment is required. The repayment rates are progressive: $54,435-$62,850 — 1% of total repayment income; $62,851-$66,620 — 2%; $66,621-$70,618 — 2.5%; $70,619-$74,855 — 3%; $74,856-$79,346 — 3.5%; $79,347-$84,107 — 4%; $84,108-$89,154 — 4.5%; $89,155-$94,503 — 5%; and so on up to 10% for incomes above $151,201. These thresholds are indexed annually. Repayment income includes your taxable income plus any reportable fringe benefits, net rental losses, and other specified amounts. At $80,000, your compulsory HELP repayment would be approximately $3,200 (4% of $80,000). This is withheld from your pay by your employer if you have indicated on your TFN declaration that you have a HELP debt. HELP debts are indexed on 1 June each year — previously at CPI, but the government capped indexation at the lower of CPI or the Wage Price Index from 1 June 2023. Use our Take Home Pay Calculator to see your pay after tax, Medicare, and HELP repayments.
Low income tax offset and other offsets you may be entitled to
Several tax offsets can reduce your tax liability below the amounts calculated from the bracket rates alone. The Low Income Tax Offset (LITO) provides up to $700 in tax offset for lower-income earners. For 2025-26, you receive the full $700 if your taxable income is $37,500 or less. It reduces by 5 cents per dollar between $37,501 and $45,000, and by 1.5 cents per dollar between $45,001 and $66,667, where it phases out completely. The LITO effectively means that Australians earning up to approximately $21,884 pay no income tax at all (after combining the tax-free threshold and the LITO). The Senior Australians and Pensioners Tax Offset (SAPTO) provides additional tax relief for eligible seniors and pensioners, with a maximum offset of $2,230 for singles and $1,602 for each member of a couple. The effect is that single seniors can earn up to approximately $33,532 before paying any tax. Other offsets include the private health insurance offset (a rebate that reduces the cost of private cover), the franking credit offset (for Australian dividends), and the foreign income tax offset. These offsets are non-refundable — they can reduce your tax to zero but cannot generate a refund by themselves.
How to calculate your 2026-27 tax — step by step with examples
Here is how to calculate your income tax for the current brackets, using a $90,000 salary as an example. Step one — apply the tax brackets: first $18,200 at 0% = $0; next $26,800 ($18,201-$45,000) at 16% = $4,288; next $45,000 ($45,001-$90,000) at 30% = $13,500. Total income tax = $17,788. Step two — add the Medicare levy: $90,000 x 2% = $1,800. Step three — subtract the LITO: at $90,000, the LITO has fully phased out, so no offset. Step four — subtract any HELP repayment: at $90,000, the HELP repayment rate is approximately 4.5%, so $4,050. Step five — calculate annual take-home: $90,000 - $17,788 (tax) - $1,800 (Medicare) - $4,050 (HELP) = $66,362 annual take-home, or $2,552.38 per fortnight. Without HELP: $70,412 annual, or $2,708.15 per fortnight. Your effective tax rate at $90,000 (excluding Medicare and HELP) is 19.8% — well below the 30% marginal rate. This is because of the progressive bracket system and the tax-free threshold. Use our Take Home Pay Calculator to run these numbers for your specific salary, with options for Medicare levy surcharge, HELP debt, and salary sacrifice.
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General information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.
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