Australian Tax Brackets 2025-26: What You Need to Know
IntuitiveCalc Team
Financial Content Specialist
Understanding Australian tax brackets is essential for financial planning. This comprehensive guide covers the 2025-26 tax year, including income tax rates, Medicare levy, HECS/HELP, and how to calculate your take-home pay.
Australian Tax Brackets 2025-26
The Australian tax system uses progressive tax brackets, meaning you pay different rates on different portions of your income. Here are the current tax brackets for the 2025-26 financial year:
Income Tax Rates 2025-26
| Taxable Income | Tax Rate | Tax on This Income |
|---|---|---|
| $0 - $18,200 | 0% | Nil |
| $18,201 - $45,000 | 19% | 19c for each $1 over $18,200 |
| $45,001 - $135,000 | 32.5% | $5,092 + 32.5c for each $1 over $45,000 |
| $135,001 - $190,000 | 37% | $34,342 + 37c for each $1 over $135,000 |
| $190,001+ | 45% | $54,692 + 45c for each $1 over $190,000 |
Important Note:
These rates do NOT include the Medicare Levy (2%), which is calculated separately and added to your total tax.
Understanding Progressive Tax
Many Australians misunderstand how tax brackets work. You don't pay your highest tax rate on all your income - only on the portion that falls within that bracket.
Example: $80,000 Salary
Let's break down the tax on an $80,000 income:
| Income Bracket | Amount | Rate | Tax |
|---|---|---|---|
| $0 - $18,200 | $18,200 | 0% | $0 |
| $18,201 - $45,000 | $26,800 | 19% | $5,092 |
| $45,001 - $80,000 | $35,000 | 32.5% | $11,375 |
| Total Income Tax | $16,467 | ||
Effective tax rate: 20.6% (not 32.5%)
Medicare Levy
In addition to income tax, most Australians pay a 2% Medicare levy on their taxable income. This helps fund Australia's public health system.
Medicare Levy Exemptions and Reductions
You may be exempt or pay a reduced levy if:
- Your income is below the threshold ($26,000 for singles in 2025-26)
- You're a foreign resident (some exceptions apply)
- You're a pensioner or senior Australian
Medicare Levy Surcharge
If you earn over $97,000 (singles) or $194,000 (families) and don't have private hospital cover, you'll pay an additional Medicare Levy Surcharge of 1% to 1.5%.
Medicare Levy Surcharge Rates 2025-26
| Income (Singles) | Income (Families) | Surcharge |
|---|---|---|
| $97,000 or less | $194,000 or less | 0% |
| $97,001 - $113,000 | $194,001 - $226,000 | 1.0% |
| $113,001 - $151,000 | $226,001 - $302,000 | 1.25% |
| $151,001+ | $302,001+ | 1.5% |
HECS-HELP Repayments
If you have a HECS-HELP debt from university, you'll make compulsory repayments once your income exceeds the threshold.
HECS-HELP Repayment Rates 2025-26
| Repayment Income | Repayment Rate |
|---|---|
| Below $51,550 | Nil |
| $51,550 - $59,518 | 1.0% |
| $59,519 - $63,089 | 2.0% |
| $63,090 - $66,875 | 2.5% |
| $66,876 - $70,888 | 3.0% |
| $70,889 - $75,140 | 3.5% |
| $75,141 - $79,649 | 4.0% |
| $79,650 - $84,432 | 4.5% |
| $84,433 - $89,511 | 5.0% |
| $89,512 - $94,910 | 5.5% |
| $94,911 - $100,650 | 6.0% |
| $100,651 - $106,768 | 6.5% |
| $106,769 - $113,299 | 7.0% |
| $113,300 - $120,281 | 7.5% |
| $120,282 - $127,763 | 8.0% |
| $127,764 - $135,796 | 8.5% |
| $135,797 - $144,441 | 9.0% |
| $144,442 - $153,768 | 9.5% |
| $153,769 and above | 10.0% |
Calculating Your Take-Home Pay
Your take-home pay (net income) is calculated by subtracting tax, Medicare levy, and HECS-HELP (if applicable) from your gross income, and adding back superannuation contributions.
Full Example: $90,000 Salary with HECS Debt
| Gross Annual Income | $90,000 |
| Income Tax | -$19,717 |
| Medicare Levy (2%) | -$1,800 |
| HECS-HELP (5%) | -$4,500 |
| Net Annual Income | $63,983 |
| Monthly Take-Home | $5,332 |
| Fortnightly Take-Home | $2,461 |
Tax Planning Strategies
1. Salary Sacrifice to Superannuation
Contributing pre-tax salary to super can reduce your taxable income. Super contributions are taxed at only 15%, which can save you money if you're in a higher tax bracket.
Example:
If you earn $100,000 and salary sacrifice $10,000 to super:
- • Tax saving: $3,250 per year (32.5% tax bracket)
- • Super tax: $1,500 (15% on contribution)
- • Net benefit: $1,750 per year
2. Claim All Deductions
Common deductions include:
- Work-related expenses (uniforms, tools, equipment)
- Home office expenses if working from home
- Self-education expenses related to your job
- Donations to registered charities
- Investment property expenses
3. Income Splitting with Spouse
If one spouse earns significantly less, consider income-producing assets in the lower earner's name to reduce overall family tax.
Common Tax Mistakes to Avoid
1. Not Keeping Records
You must keep receipts and records for all deductions. The ATO can audit tax returns for up to 4 years.
2. Forgetting About Investment Income
Bank interest, dividends, and rental income must all be declared. Banks and investment platforms report to the ATO automatically.
3. Missing Deduction Opportunities
Many Australians miss out on thousands in deductions simply because they don't know what's claimable.
Calculate Your Tax Now
Use our Australian Income Tax Calculator to:
- Calculate exact tax on any income amount
- See breakdown of tax, Medicare levy, and HECS-HELP
- Calculate take-home pay (weekly, fortnightly, monthly)
- Model different salary scenarios
- Plan super contributions and see tax savings
Key Takeaways
- • Tax brackets are progressive - you don't pay your highest rate on all income
- • Don't forget the 2% Medicare levy on top of income tax
- • HECS-HELP repayments start at $51,550 in 2025-26
- • Salary sacrificing to super can provide significant tax savings
- • Keep all receipts and records for deductions
- • Use a calculator to see exact take-home pay and plan finances