Are bonuses taxed at a higher rate in Australia?

No. There is no special tax rate for bonuses in Australia. Bonuses are added to your total taxable income and taxed at your marginal tax rate. However, your employer may withhold tax at a higher rate on your bonus payment to account for the fact that the bonus pushes your income into a higher bracket. Any over-withholding is refunded when you lodge your tax return.

How is bonus tax calculated in Australia?

The ATO treats bonuses as part of your ordinary income. To calculate the tax on a bonus, work out your total tax on salary alone, then calculate total tax on salary plus bonus. The difference is the tax attributable to your bonus. This means the bonus is effectively taxed at your marginal rate (16%, 30%, 37%, or 45% for 2025-26) plus the 2% Medicare levy.

Why does my employer withhold so much tax on my bonus?

Employers use ATO Schedule 5 (tax table for back payments and bonuses) to calculate withholding on lump-sum payments. This method often withholds more tax than is actually owed because it assumes the bonus payment level continues for the whole year. The excess withholding is refunded when you lodge your annual tax return.

Do I pay super on a bonus?

It depends on your employment contract and the type of bonus. Under the Superannuation Guarantee, employers must pay 12% super on ordinary time earnings (OTE). Bonuses that relate to your ordinary hours of work are generally classified as OTE and attract super. However, discretionary one-off bonuses may not. Check your contract or ask your employer.

Can I salary sacrifice my bonus to reduce tax?

Yes, if your employer allows it and you arrange the salary sacrifice before the bonus is paid. By sacrificing part of your bonus into superannuation, you pay only 15% contributions tax instead of your marginal tax rate. However, you must stay within the $30,000 annual concessional contributions cap (which includes employer super contributions).

Bonus Tax Calculator Australia 2026 — How Much Tax on Your Bonus?

How Bonus Tax Works in Australia

One of the most common tax misconceptions in Australia is that bonuses are taxed at a special, higher rate. In reality, the ATO does not distinguish between your regular salary and a bonus — they are both treated as ordinary income and taxed according to the same marginal tax brackets.

Why does my bonus seem to be taxed more?

When your employer processes a bonus payment, they use ATO withholding schedules that often result in higher tax being withheld upfront. This is because the withholding calculation assumes you earn that higher amount every pay period. The excess tax withheld is refunded to you when you lodge your tax return.

Marginal rate vs effective rate

Your bonus is taxed at your marginal rate — the rate that applies to the top portion of your income. For example, if your salary is $90,000 and you receive a $10,000 bonus, the bonus falls entirely within the 30% bracket (plus 2% Medicare levy), so you pay 32% tax on the bonus. Your effective tax rate across your total income is lower because the first $18,200 is tax-free and income up to $45,000 is taxed at 16%.

2025-26 tax brackets

$0 - $18,200: 0% (tax-free threshold)
$18,201 - $45,000: 16%
$45,001 - $135,000: 30%
$135,001 - $190,000: 37%
$190,001+: 45%
Plus 2% Medicare levy on all taxable income

Bonus Tax Calculator Australia 2025-26

How Bonus Tax Works in Australia

Why does my bonus seem to be taxed more?

Marginal rate vs effective rate

2025-26 tax brackets

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