Australian Income Tax Rates 2025–26
Australia operates a progressive income tax system — higher rates apply only to income above each threshold, not to all income. The following rates apply to Australian residents for the 2025–26 financial year (1 July 2025 to 30 June 2026).
| Taxable Income | Tax Rate | Tax Calculation |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 19% | 19c for each $1 over $18,200 |
| $45,001 – $120,000 | 32.5% | $5,092 + 32.5c for each $1 over $45,000 |
| $120,001 – $180,000 | 37% | $29,467 + 37c for each $1 over $120,000 |
| Over $180,000 | 45% | $51,667 + 45c for each $1 over $180,000 |
Low Income Tax Offset (LITO)
Australian residents earning under $66,667 benefit from the Low Income Tax Offset, reducing their tax payable. The maximum offset of $700 applies to incomes up to $37,500, phasing out to zero at $66,667. Combined with the tax-free threshold, LITO effectively means Australian residents pay no income tax until their income reaches approximately $21,884.
Medicare Levy
The Medicare Levy is 2% of taxable income, funding Australia's universal public health system (Medicare). Most Australian residents pay this levy. Low-income earners may be exempt or pay a reduced rate (below ~$26,000 for singles in 2025–26). The Medicare Levy Surcharge (1–1.5% extra) applies to high earners over $93,000 who don't have adequate private hospital cover.
Common Tax Deductions for Australians
- Work-related tools, equipment and protective clothing
- Work vehicle use (88c/km method or logbook method)
- Home office expenses (67c/hr fixed rate or actual cost method)
- Self-education directly related to your current role
- Income protection insurance premiums
- Charitable donations to registered DGRs (deductible gift recipients)
- Union fees, professional memberships and subscriptions