Australia Income Tax Calculator

Australian income tax rates 2026–26

Australia uses a progressive income tax system, which means different portions of your income are taxed at different rates. You do not pay the highest rate on all your income — only on the slice that falls within each bracket. The 2026–26 financial year (1 July 2026 to 30 June 2026) reflects the Stage 3 tax cuts, which restructured the middle brackets and delivered tax relief to most Australians earning between $18,000 and $150,000.

These rates apply to Australian residents. A separate rate schedule applies to non-residents (no tax-free threshold, 32.5% from the first dollar) and working holiday makers (15% on the first $45,000). Plus, most residents pay an additional 2% Medicare levy on top of these rates.

The Stage 3 tax cuts — what changed from 1 July 2026

The most significant change to Australian income tax in over a decade took effect at the start of FY 2026–26. The Stage 3 tax cuts, legislated by the Albanese Government in a modified form from the Morrison Government's original design, restructured the middle tax brackets in the following ways: the top of the 19% bracket moved from $37,000 to $45,000; the 32.5% bracket was extended from a ceiling of $90,000 up to $120,000; and the 37% bracket — which previously started at $120,000 — was retained but compressed, now applying only between $120,001 and $180,000 rather than starting at $90,001. The 45% rate threshold remained unchanged at $180,001.

The practical effect is a meaningful tax reduction for middle-income earners. Someone earning $60,000 saves around $1,179 per year. Someone on $100,000 saves roughly $2,179. Very high earners above $200,000 see little change relative to the 2026–25 rates. The cuts were designed to reduce bracket creep — the phenomenon where wage inflation pushes workers into higher tax brackets without any real increase in purchasing power.

Medicare levy and surcharge

On top of income tax, most Australian residents pay a Medicare levy of 2% of their taxable income. This funds Australia's universal public health system. The levy is reduced or waived for very low income earners — the phase-in threshold for singles is $26,000, meaning below this amount no levy is payable, with a gradual shade-in between $26,000 and $32,500.

The Medicare Levy Surcharge (MLS) is a separate additional charge of 1% that applies to higher-income earners who do not hold an appropriate level of private hospital cover. The singles threshold is $93,000 for 2026–26. The purpose is to reduce pressure on the public health system by incentivising private health insurance uptake. For someone earning $100,000 without private hospital cover, the surcharge adds $1,000 to their annual tax bill — often making private cover a cost-neutral or cheaper option.

HECS-HELP debt: compulsory repayment through tax

If you have an outstanding HECS-HELP debt — the income-contingent loan that covers Australian university fees — you are required to make compulsory repayments through the tax system once your repayment income exceeds $54,435 (2026–26). The repayment is calculated as a percentage of your total income, starting at 1% and reaching 10% for incomes above $159,664. Unlike UK student loans, HECS-HELP repayments are calculated on the full income, not just the amount above the threshold. This means at $70,000 income you repay 3% of $70,000 = $2,100, not 3% of ($70,000 − $54,435).

Your HELP debt is indexed each year on 1 June to the Consumer Price Index (CPI), which means the real value of your debt stays constant but the nominal balance grows. In 2023, CPI indexation was 7.1% — unusually high due to inflation — and significantly increased many outstanding HECS balances. Voluntary repayments can be made at any time through the ATO, but there is no longer a discount for doing so (the 5% and 10% bonus schemes were abolished in 2017).

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