Australia Personal Tax Guide 2025-26
Australia taxes residents on worldwide income using progressive rates from 0% to 45%. The tax year runs 1 July to 30 June. The first $18,200 is tax-free. A 2% Medicare levy applies to most taxpayers, with an additional 1-1.5% surcharge for high-income earners without private hospital cover. Offsets like LITO ($700 max) and SAPTO reduce tax for low-income earners and seniors. Foreign residents pay 30-45% with no tax-free threshold.
2025-26 Tax Rates — Residents
Residents pay tax on their worldwide income at these progressive rates. The Stage 3 tax cuts (from 1 July 2024) widened the 30% bracket and reduced the 19% rate to 16%.
| Taxable Income | Marginal Rate | Tax on This Bracket |
|---|---|---|
| $0 – $18,200 | 0% | $0 (tax-free threshold) |
| $18,201 – $45,000 | 16% | 16% of income over $18,200 |
| $45,001 – $135,000 | 30% | $4,288 + 30% over $45,000 |
| $135,001 – $190,000 | 37% | $31,288 + 37% over $135,000 |
| $190,001+ | 45% | $51,638 + 45% over $190,000 |
The Medicare levy of 2% is added to the total tax (see below). The LITO and SAPTO offsets reduce tax payable — they are not refundable (they cannot reduce tax below zero).
Worked Example — $95,000 Salary
An employee earning $95,000 in 2025-26 with no other income or deductions:
| Tax on first $18,200 | $0 |
| Tax at 16% ($18,201 to $45,000) | $4,288 |
| Tax at 30% ($45,001 to $95,000) | $15,000 |
| Income tax subtotal | $19,288 |
| Medicare levy (2%) | $1,900 |
| Total tax + Medicare | $21,188 |
Effective tax rate: 22.3%. Take-home: ~$73,812. The LITO phases out completely at $66,667, so no LITO applies here.
Medicare Levy & Surcharge
Medicare levy (2%): Applies to most residents' taxable income. Exemptions exist for low-income earners (below ~$24,276 for singles), foreign residents, and Norfolk Island residents. The levy funds Australia's public healthcare system.
Medicare levy surcharge (1-1.5%): Additional tax for singles earning over $93,000 (or families over $186,000) who do not have appropriate private hospital cover. The surcharge rate increases with income:
- 1%: Singles $93,001–$108,000 / Families $186,001–$216,000 (+$1,500 per child after the first)
- 1.25%: Singles $108,001–$144,000 / Families $216,001–$288,000
- 1.5%: Singles $144,001+ / Families $288,001+
For a single earning $110,000 without hospital cover: $110,000 × 2% (standard) + $110,000 × 1.25% (surcharge) = $3,575 total Medicare-related tax. Buying private hospital insurance eliminates the surcharge and may be cheaper than paying it.
Key Tax Offsets
- Low Income Tax Offset (LITO): Maximum $700 for incomes below $45,000. Phases out at 5 cents per dollar between $45,001 and $66,667. Fully gone by $66,667. Not available to foreign residents.
- Senior and Pensioners Tax Offset (SAPTO): Maximum $2,230 for singles, $1,602 per member of a couple. Phases out from income thresholds of $32,279 (single) or $28,974 (each member of a couple).
- Low and Middle Income Tax Offset (LMITO): Expired after 2021-22. Not available for 2025-26.
Foreign Resident Tax Rates
Foreign residents pay tax only on Australian-source income. No tax-free threshold applies, and Medicare levy does not apply.
| Taxable Income | Rate |
|---|---|
| $0 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001+ | 45% |
Filing & Deadlines
- Tax year: 1 July to 30 June. Most individuals file by 31 October (if using a tax agent, extended deadlines apply).
- Pay-as-you-go (PAYG): Employers withhold tax from salary. Most employees receive refunds when filing because withholding is slightly higher than required.
- Self-employed: Must pay quarterly PAYG instalments. File annual return by 31 October.
- myTax: Free online lodgment through the ATO's myTax portal. Most refunds processed within 2 weeks.
- Tax agents: Registered tax agents can lodge returns until May of the following year. Fees are tax-deductible.