Australian Income Tax Brackets Explained (2025–26)
Llandora·Updated 2026-10-14
⚠️ Disclaimer: For general information only — not tax, financial, legal, or medical advice. Figures may be outdated or incorrect; tax rules change frequently. Verify important decisions with the CRA/IRS or a qualified professional (for health topics, a licensed healthcare provider). You use this information at your own risk.
The short answer
Australia's tax year runs from 1 July to 30 June, and income tax is charged at marginal rates: each slice of your income is taxed at a different rate. For residents, the first $18,200 of taxable income is tax-free.
The 2025–26 resident tax rates
Taxable income
Tax on this income
$0 – $18,200
Nil
$18,201 – $45,000
16c for each $1 over $18,200
$45,001 – $135,000
$4,288 plus 30c for each $1 over $45,000
$135,001 – $190,000
$31,288 plus 37c for each $1 over $135,000
$190,001 and over
$51,638 plus 45c for each $1 over $190,000
On top of this, most residents pay the Medicare levy of 2% of taxable income (see below). Non-residents are taxed under a separate schedule with no tax-free threshold.
Marginal rates, in plain language
"Marginal" means only the dollars inside a bracket are taxed at that bracket's rate. Earning $50,000 does not mean all $50,000 is taxed at 30% — the first $18,200 is tax-free, the next $26,800 is taxed at 16%, and only the $5,000 above $45,000 is taxed at 30%. Your marginal rate is the tax on your next dollar of income; your average rate is always lower.
Worked example: $100,000 of taxable income (2025–26)
$0 – $18,200: $0 tax
$18,201 – $45,000: $26,800 × 16% = $4,288
$45,001 – $100,000: $55,000 × 30% = $16,500
Income tax total: $20,788
Medicare levy: $100,000 × 2% = $2,000
Total payable: $22,788 → take-home ≈ $77,212
Your marginal rate here is 30% (an extra $1,000 of income costs you $300 in income tax), while your average income-tax rate is about 20.8%.
The Medicare levy
Most residents pay an extra 2% of taxable income as the Medicare levy, which helps fund Australia's public health system. It is calculated on top of the brackets above. Low-income earners can qualify for a reduction or full exemption, and a separate Medicare levy surcharge applies to higher earners without private hospital cover.
Changing from 1 July 2026
This change is legislated: from 1 July 2026, the 16% rate in the second bracket drops to 15%. On a $100,000 taxable income that saves $268 a year ($26,800 × 1 percentage point). Nothing else in the table changes.
Frequently asked questions
Is the first $18,200 really tax-free for everyone?
For tax residents, yes — on taxable income after deductions are claimed. Non-residents for tax purposes get no tax-free threshold and pay from the first dollar under their own rate schedule.
Does my employer withhold the right amount?
Usually close. Employers withhold tax from each pay under the PAYG withholding system using the rates above. Lodging your annual return settles the difference — a refund if too much was withheld, or a bill if too little.
Does my super count toward the $18,200 threshold?
The superannuation guarantee (12% of ordinary time earnings from 1 July 2025) is paid by your employer on top of your salary and is not part of your personal taxable income. Salary-sacrificed amounts have their own separate rules.
I earn income in two countries. How do the brackets apply?
As a resident, you declare your worldwide income and the brackets apply to the total; tax you paid overseas generally earns you a foreign income tax offset under Australia's tax treaties.
Do I pay the Medicare levy on top of the bracket rates?
Yes — for most residents it is a flat 2% of taxable income added after the bracket calculation (with reductions or exemptions for low-income earners).
Sources
ATO — tax rates for Australian residents: https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents
ATO — your tax return: https://www.ato.gov.au/individuals-and-families/your-tax-return
ATO — businesses and organisations: https://www.ato.gov.au/businesses-and-organisations
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