Australia Income Tax Calculator 2026 — Take-Home Pay
Calculate Australian income tax owed to the ATO (Australian Taxation Office) for the 2026-27 year. Includes Medicare levy, LITO and SAPTO offsets, and the new 15% bracket rate.
How the ATO Calculates Australian Income Tax
- Enter your taxable income
- Set your options
- Review your tax breakdown
Understanding the Australian Tax System: 2026-27 Guide
Australia uses a progressive income tax system, meaning higher portions of your income are taxed at higher rates. The Australian Taxation Office (ATO) collects income tax on behalf of the federal government, and tax is generally withheld by employers through the Pay As You Go (PAYG) withholding system. At the end of each financial year (1 July to 30 June), you lodge a tax return to reconcile any difference between what was withheld and your actual liability.
2026-27 Income Tax Rates
The Stage 3 tax cuts of 1 July 2024 restructured Australia's tax brackets, and a further legislated cut lowered the 16% rate to 15% from 1 July 2026. These rates apply for 2026-27:
| Taxable Income | Rate | Tax on Band |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 15% | Up to $4,020 |
| $45,001 – $135,000 | 30% | Up to $27,000 |
| $135,001 – $190,000 | 37% | Up to $20,350 |
| $190,001+ | 45% | On each dollar above |
Stage 3 cut the 19% bracket rate to 16%, eliminated the 32.5% rate, and expanded the 30% bracket from $45,000 up to $135,000. From 1 July 2026 the 16% rate fell again to 15% — worth up to $268 a year — and it is legislated to drop to 14% from 1 July 2027.
Medicare Levy
The Medicare levy is 2% of your taxable income and is charged in addition to income tax. It funds Australia's universal healthcare system. Most residents pay the full levy, but there are thresholds for low-income earners. Under the latest legislated (2025-26) thresholds, individuals with taxable income below $28,011 pay no levy. The levy phases in from $28,011 and is fully applied on income above $35,013. Foreign residents and working holiday makers are not liable for the Medicare levy.
Note: High-income earners without private hospital cover also pay the Medicare Levy Surcharge (MLS) at 1–1.5% — this calculator does not include MLS. Use our Medicare Levy Calculator for a full MLS breakdown.
Low Income Tax Offset (LITO)
LITO reduces the amount of income tax payable for lower-income Australian residents. For 2026-27:
- Income up to $45,000: Full LITO of $700
- $45,001 – $66,667: LITO reduces by 5 cents per dollar over $45,000
- Above $66,667: LITO is nil
LITO can only reduce your tax to zero — it cannot create a refund by itself. Combined with the tax-free threshold, LITO effectively makes approximately $21,884 of income tax-free for residents.
SAPTO — Seniors and Pensioners Tax Offset
Australian residents aged 65 or older who are eligible for a government pension or allowance may receive the Seniors and Pensioners Tax Offset (SAPTO). For singles, the maximum SAPTO is $2,230 for 2026-27. It phases out at 12.5 cents per dollar of income above the single threshold of $32,279. SAPTO can significantly reduce — or eliminate — the tax liability of eligible seniors. Once SAPTO reduces your tax to zero, any unused portion can be transferred to a spouse.
Foreign Residents and Working Holiday Makers
Foreign residents are taxed differently — there is no tax-free threshold, no LITO, and no Medicare levy. The first $135,000 is taxed at a flat 30%, then 37% up to $190,000, and 45% above that. Working holiday makers (visa subclass 417 or 462) pay 15% on the first $45,000 of income, then standard resident rates above that. Working holiday makers also do not pay the Medicare levy. For salary and take-home pay calculations, also see our Australian Salary Calculator.
Sources: Australian Taxation Office (ATO) tax rates 2026-27, Australian Government official guidance.
Frequently Asked Questions
For Australian residents in 2026-27, the tax brackets are: $0–$18,200 at 0% (tax-free threshold), $18,201–$45,000 at 15%, $45,001–$135,000 at 30%, $135,001–$190,000 at 37%, and $190,001 and above at 45%. The 15% rate is a legislated cut from 16%, effective 1 July 2026; it drops again to 14% from 1 July 2027.
The Medicare levy is 2% of your taxable income and funds Australia's public health system. Most Australian tax residents pay the full levy. Low-income earners may pay a reduced amount or nothing at all — under the latest legislated (2025-26) thresholds, no levy applies below $28,011 and the full levy phases in between $28,011 and $35,013. Foreign residents and working holiday makers do not pay the Medicare levy.
The Low Income Tax Offset (LITO) reduces the amount of tax payable for lower-income Australian residents. For 2026-27, LITO is $700 for taxable incomes up to $45,000. It phases out by 5 cents per dollar for income between $45,001 and $66,667, after which LITO is nil. LITO cannot produce a refund — it only reduces tax to zero.
The tax-free threshold for Australian residents is $18,200 for the 2026-27 financial year. This means you do not pay income tax on the first $18,200 of your income. When you combine the tax-free threshold with the Low Income Tax Offset, the effective tax-free income can be up to approximately $22,867. Foreign residents are not entitled to the tax-free threshold.
Foreign residents for Australian tax purposes are taxed at a flat 30% on the first $135,000 of taxable income, 37% on income from $135,001 to $190,000, and 45% on income above $190,000. There is no tax-free threshold, no LITO, and no Medicare levy for foreign residents. Working holiday makers have a special 15% rate on their first $45,000, then standard resident rates above that.
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