How to Use the Income Tax Calculator Australia
- Enter your taxable income for the year — your total income after deductions.
- Select Calculate to see your tax payable, Medicare levy and effective and marginal tax rates.
- Check the bracket-by-bracket table to see exactly how much tax is charged at each rate.
How Income Tax Is Calculated in Australia
Income tax is worked out on your taxable income for the financial year, which runs from 1 July to 30 June. Taxable income is everything you earn, such as your salary, interest and rent, minus any deductions you can claim. Your employer takes tax out of each pay, and your tax return at the end of the year settles up the difference.
2026–27 Resident Tax Brackets
Australia uses a progressive system with five brackets. Each rate applies only to the portion of income inside that bracket. From 1 July 2026, the rate on income between $18,201 and $45,000 fell from 16% to 15%. Source: ATO — tax rates for Australian residents.
| Taxable income | Tax rate |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 15% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001 and over | 45% |
Marginal vs Effective Tax Rate
Your marginal tax rate is the rate on your last dollar of income. Your effective tax rate is the share of your whole income that goes to tax. For example, on $80,000 your marginal rate is 30%, but your total tax of $16,120 is only about 20.2% of your income.
Low Income Tax Offset
If your taxable income is $37,500 or less, you get a tax offset of $700. It reduces gradually as your income rises and cuts out completely at about $66,667. An offset reduces your tax directly, but it can't reduce it below zero and doesn't reduce the Medicare levy.
Medicare Levy
On top of income tax, most residents pay a Medicare levy of 2% of taxable income. Singles earning $28,011 or less pay no levy. Higher earners without private hospital cover may also pay the Medicare levy surcharge, which is not included here. Source: ATO — Medicare levy.
How Tax Is Withheld From Your Pay (PAYG)
You don't usually pay your whole year's tax in one go. Under the Pay As You Go (PAYG) system, your employer withholds an estimated amount of tax from every pay, based on ATO withholding schedules and whatever you declared on your Tax File Number declaration — including whether you have a HELP debt or claim the tax-free threshold. These schedules are built to roughly match your expected annual tax, spread evenly across the year, but they're an approximation. When you lodge your tax return, the ATO compares the tax actually withheld against your real tax payable for the year, worked out the way this calculator does it, and either refunds the difference or asks you to pay a shortfall.
Beyond Income Tax
This calculator shows your tax for the year. Get your net pay breakdown using our Take Home Pay Calculator Australia, which also covers the Medicare levy and HECS-HELP repayments. If you're also curious about compulsory super contributions, check your super contributions with our Super Calculator Australia. Running a business or invoicing clients? Add or remove GST from your prices with our GST Calculator Australia. If you don't have private hospital cover, work out the Medicare levy surcharge with our Medicare Levy Calculator.