Australia’s income tax brackets are among the most searched tax figures in the country, and also among the most misread. Moving into a higher bracket never means your whole income is taxed at the higher rate. This guide sets out the 2026–27 rates for Australian residents, the one change from last year, how the low income tax offset and the new standard deduction fit in, and the separate rates for foreign residents and working holiday makers.
The 2026–27 income year runs from 1 July 2026 to 30 June 2027. Tax amounts below are calculated live by the income tax calculator.
The short version
Residents pay nothing on the first $18,200 of taxable income, then 15%, 30%, 37% and 45% on successive slices. The Medicare levy of 2% comes on top. On a taxable income of $90,000, income tax and the Medicare levy come to $19,320 for the year.
$19,000
- Income tax after offsets
- $17,220
- Low income tax offset
- $0
- Medicare levy
- $1,780
- Medicare levy surcharge
- $0
- Study loan repayment
- $0
- Taxable income
- $89,000
- Income after tax
- $71,000
- Average rate
- 21.1%
- Marginal tax rate
- 30%
- Rates for 2026–27: nothing on the first $18,200, then 15% to $45,000 (down from 16%), 30% to $135,000, 37% to $190,000 and 45% above.
- The Medicare levy low-income thresholds are those in the law for 2025-26 onwards; a later Budget may raise them for 2026-27.
Tax for the year: $19,000 21.1% of your income, 2026–27
Show the breakdown
| Line | Per year |
|---|---|
| Salary and wages | $90,000 |
| Standard deduction for work expenses | −$1,000 |
| Taxable income | $89,000 |
| Income tax on taxable income | $17,220 |
| Medicare levy | $1,780 |
| Total tax, levies and repayments | $19,000 |
| Income after tax | $71,000 |
- Left after tax$71,00079%
- Income tax$17,22019%
- Medicare levy$1,7802%
Resident tax rates for 2026–27
| Taxable income | Rate on this slice |
|---|---|
| Up to $18,200 | 0% |
| $18,200 to $45,000 | 15% |
| $45,000 to $135,000 | 30% |
| $135,000 to $190,000 | 37% |
| Over $190,000 | 45% |
These rates are set by Schedule 7 of the Income Tax Rates Act 1986, which has a separate table for each income year.Federal Register of Legislation They apply to taxable income: your assessable income, such as salary, interest and rent, less your deductions. They don’t include the Medicare levy, the Medicare levy surcharge or study loan repayments, which are worked out separately.
You are an Australian resident for tax if you normally live here. Residency for tax is not the same as citizenship or a visa status, and someone who moves here part-way through the year can be a resident for only part of it. The calculator assumes residency for the full year.
What changed: the bottom rate falls from 16% to 15%
The rate on income between the tax-free threshold and $45,000 was cut from 1 July 2026 by the Treasury Laws Amendment (More Cost of Living Relief) Act 2025. Every other rate and threshold is the same as in 2024–25 and 2025–26.
Because the cut sits at the bottom of the scale, anyone with taxable income above the tax-free threshold gains something, and the gain stops growing once your income passes the top of that band. The Income Tax Rates Act already contains a further cut to the bottom rate from 2027–28, and a new working Australians tax offset is legislated to start that year. Neither applies to 2026–27.
Tax at different incomes
This table shows income tax after the low income tax offset, plus the Medicare levy, at different taxable incomes for a resident:
| Taxable income | Income tax | Medicare levy | Average rate | Marginal rate |
|---|---|---|---|---|
| $30,000 | $1,070 | $199 | 4.2% | 15% |
| $45,000 | $3,695 | $900 | 10.2% | 15% |
| $60,000 | $8,420 | $1,200 | 16% | 30% |
| $90,000 | $17,520 | $1,800 | 21.5% | 30% |
| $135,000 | $31,020 | $2,700 | 25% | 30% |
| $190,000 | $51,370 | $3,800 | 29% | 37% |
| $250,000 | $78,370 | $5,000 | 33.3% | 45% |
The average rate is income tax plus the Medicare levy as a share of the whole income. The marginal rate is the bracket rate on the last dollar, before the Medicare levy. Here is the slice-by-slice working for $90,000:
| Line | Per year |
|---|---|
| Salary and wages | $90,000 |
| Taxable income | $90,000 |
| Income tax on taxable income | $17,520 |
| Medicare levy | $1,800 |
| Total tax, levies and repayments | $19,320 |
| Income after tax | $70,680 |
Marginal and average rates
Your marginal rate tells you what you keep from a pay rise or extra shift. At $90,000 the next dollar is taxed at 30% plus the 2% Medicare levy, while the average rate on the whole income is only 21.5%.
The average rate is what matters for budgeting, because it tells you what share of your income goes in tax overall. The marginal rate is what matters for decisions at the edge: overtime, a second job, salary sacrifice or a deduction. Each dollar of deduction saves you your marginal rate plus the Medicare levy, not your average rate.
A few things push the real marginal rate above the bracket rate. In the range where the low income tax offset is tapering away, each extra dollar also costs you part of the offset. The Medicare levy phases in quickly just above its low-income threshold. And a study loan adds its own rate once you pass the repayment threshold. The take-home pay guide covers how these stack up in your pay.
The low income tax offset
The low income tax offset (LITO) is $700 for residents with taxable income up to $37,500. It reduces by 5% of income above that until $45,000, where it is $325, then by 1.5% until it reaches nil at $66,667.Federal Register of Legislation
| Taxable income | Low income tax offset |
|---|---|
| $30,000 | $700 |
| $40,000 | $575 |
| $45,000 | $325 |
| $55,000 | $175 |
| $65,000 | $25 |
The offset can reduce your income tax to nil but is never paid as a refund on its own. Together with the tax-free threshold, it means a resident on a taxable income of $22,000 pays income tax of $0. You don’t apply for it: the ATO works it out from your return, and the PAYG tax tables already allow for it if you claim the tax-free threshold.
The standard deduction for work expenses
New from 2026–27, resident employees can deduct up to $1,000 for work-related expenses without receipts. If you claim actual work expenses, the standard deduction is reduced by those claims, so you get whichever is larger. Some deductions don’t reduce it, including union and professional association fees and income protection insurance premiums.Federal Register of Legislation
On an $80,000 salary:
- with no expenses claimed, taxable income is $79,000;
- with $600 of actual expenses, it is still $79,000, because the standard deduction tops your claim up;
- with $2,500 of actual expenses, it is $77,500.
Foreign residents
Foreign residents for tax have no tax-free threshold and pay tax from the first dollar:Federal Register of Legislation
| Taxable income | Rate |
|---|---|
| Up to $135,000 | 30% |
| $135,000 to $190,000 | 37% |
| Over $190,000 | 45% |
They can’t claim the low income tax offset or the standard deduction, but they don’t pay the Medicare levy either. On $80,000 a foreign resident pays $24,000, against $15,800 for a resident employee including the levy.
Working holiday makers
Working holiday makers on a 417 or 462 visa have their own scale for working holiday income. The first $45,000 is taxed at 15%, then the ordinary rates of 30%, 37% and 45% apply.Federal Register of Legislation On $40,000 of working holiday income, the tax is $6,000. The calculator treats a working holiday maker as a foreign resident, so it adds no Medicare levy and no offset.
Employers withhold at these rates through a separate working holiday maker tax table, based on how much they have already paid you in the income year. Your return then applies the same rates to your actual working holiday income.
Common misunderstandings
“A pay rise could push me into a higher bracket and leave me worse off.” It can’t. Only the dollars above a threshold pay the higher rate. Someone on a taxable income of $136,000 pays 37% on just the top slice; the rest of their income is taxed exactly as before.
“The Medicare levy is part of the brackets.” It isn’t. The levy of 2% is charged separately on your whole taxable income, with its own low-income thresholds. A resident on the top bracket therefore pays 45% plus the levy on each extra dollar.
“Everyone gets the tax-free threshold.” Only residents do. Foreign residents pay tax from the first dollar, and in the pay system you should claim the threshold from only one employer at a time.
“The offset is a refund.” The low income tax offset only reduces tax you would otherwise pay. If your income tax is already nil, it is worth nothing to you.
“Bracket thresholds rise with inflation.” They don’t rise automatically. The tax-free threshold of $18,200 and the other thresholds stay the same until Parliament changes them, so as wages rise, more of each person’s income falls into the higher brackets over time.
Brackets and your pay
You don’t pay tax bracket by bracket during the year. Your employer withholds tax from each pay using the ATO’s tax tables, which spread the tax-free threshold, the brackets, the Medicare levy and the low income tax offset across your pays.Australian Taxation Office Your return then applies the brackets to your actual taxable income for the year.
To see what your salary leaves you each pay, use the pay calculator or the salary after tax guide. For other income, deductions and the Medicare levy surcharge, use the income tax calculator. The Medicare levy guide covers the levy that sits on top of these rates.
Figures are estimates for 2026–27 worked out from the Income Tax Rates Act 1986 and the Income Tax Assessment Act 1997. They are not tax advice.
