Enter an income to see how Australia's 2025-26 tax brackets apply, broken down by marginal rate on each slice of income alongside the overall effective rate. Supports Australian tax residents, non-residents, and working holiday makers, with Medicare levy and LITO offsets applied where relevant.

What is the tax-free threshold?

Australian residents can earn up to $18,200 per year before paying any income tax - this is called the tax-free threshold. Non-residents and working holiday makers are not eligible for the threshold and pay tax from the first dollar earned. You can claim the threshold by completing a Tax File Number (TFN) declaration with your employer. See the ATO website for current eligibility details.

What is the Low Income Tax Offset (LITO)?

The Low Income Tax Offset (LITO) is a tax reduction available to Australian residents earning below $66,667. In 2025-26, the maximum offset is $700 for incomes up to $37,500, tapering to zero at $66,667. LITO reduces the income tax you owe - it is not a cash refund. Non-residents and working holiday makers are not eligible. The offset is applied automatically when you lodge your tax return.

What is the difference between effective rate and marginal rate?

Your effective tax rate is the proportion of your total income paid as income tax, calculated as total tax divided by total income. Your marginal rate is the rate that applies to the next dollar you earn. Because Australia uses a progressive tax system, each bracket of income is taxed at a higher rate, but lower brackets are always taxed at their lower rates. For example, if you earn $90,000, most of your income is taxed at lower rates - your effective rate will be noticeably lower than your marginal rate of 32.5%.

Do working holiday makers pay the same tax as residents?

No. Working holiday makers (visa subclass 417 and 462) pay a separate ATO tax schedule: 15% on the first $45,000, 30% from $45,001 to $135,000, 37% from $135,001 to $190,000, and 45% above $190,000. There is no tax-free threshold. Working holiday makers are not eligible for the Low Income Tax Offset (LITO) and are generally not subject to the Medicare levy under the 2025-26 ATO schedule. Rates apply for the 2025-26 income year - always verify with the ATO or a registered tax agent for your specific visa and residency situation.

Does this calculator include the Medicare levy?

For Australian residents, yes. The Medicare levy is 2% of taxable income, included in the tax payable estimate. A reduced levy applies for lower incomes (shade-in for singles earning between $26,000 and $32,500 approximately). Non-residents and working holiday makers are not subject to the Medicare levy under the 2025-26 ATO schedule. This tool uses ATO 2025-26 rates - always confirm your liability with the ATO or a registered tax agent.