Australia Tax Brackets 2026-27: How Much Tax You'll Pay on Your Income

Understanding how much tax you’ll pay is the first step to managing your finances. The 2026-27 financial year brings a real cut: from 1 July 2026 the second marginal rate fell from 16% to 15%, and it is legislated to fall again to 14% from 1 July 2027. Whether you’re planning your budget, considering a salary sacrifice arrangement, or just want to know where your money goes, this guide breaks down every bracket, every rate, and every real-world scenario.

The Australian tax system is progressive, meaning you pay a higher rate only on the portion of your income that falls within each bracket — not on your entire income. This is the single most important concept to understand before looking at any numbers.

The 2026-27 Tax Brackets: Complete Table

The following brackets apply to Australian residents for the full 2026-27 financial year (1 July 2026 to 30 June 2027). They incorporate the second-bracket rate cut from 16% to 15% that took effect on 1 July 2026 and is now law (source: ATO, as at July 2026).

Rate Card — 2026-27 Resident Tax Brackets:

• $0 to $18,200 — Nil (tax-free threshold)
• $18,201 to $45,000 — 15 cents for each dollar over $18,200
• $45,001 to $135,000 — $4,020 plus 30 cents for each dollar over $45,000
• $135,001 to $190,000 — $31,020 plus 37 cents for each dollar over $135,000
• $190,001 and above — $51,370 plus 45 cents for each dollar over $190,000

These rates do not include the Medicare levy. The Medicare levy is an additional 2% of your taxable income, applied on top of the income tax calculated above. Low-income earners may qualify for a reduction or full exemption from the Medicare levy — see our separate guide on the Medicare levy for full thresholds.

What changed for 2026-27? Only one number moved, but it moves for everyone: the rate on the $18,201–$45,000 band fell from 16 cents to 15 cents in the dollar on 1 July 2026. Because that band sits below every higher bracket, the saving flows through to every resident taxpayer earning above the tax-free threshold — a maximum of $268 a year, reached once taxable income passes $45,000. The bracket boundaries themselves ($45,000, $135,000, $190,000) are unchanged, and the fixed base amounts in the upper brackets fell by the same $268 as a result: $4,020, $31,020 and $51,370 respectively.

Worked Examples: Tax on Real Incomes

Let’s walk through the actual tax calculation for five common income levels. Each example includes the Medicare levy (2%) and shows both marginal and effective tax rates.

Example 1: $60,000 Taxable Income

This is a common full-time salary and sits squarely in the 30% bracket.

Tax on first $18,200: $0 Tax on $18,201–$45,000 ($26,800): $26,800 × 15% = $4,020 Tax on $45,001–$60,000 ($15,000): $15,000 × 30% = $4,500 Income tax: $8,520 Medicare levy: $60,000 × 2% = $1,200 Total tax and levy: $9,720 Effective tax rate (excl. Medicare): 14.2% Effective rate (incl. Medicare): 16.2% Take-home pay (before any deductions or HECS): approximately $50,280

Example 2: $90,000 Taxable Income

This sits in the middle of the 30% bracket and represents a solid professional income.

Tax on first $18,200: $0 Tax on $18,201–$45,000 ($26,800): $26,800 × 15% = $4,020 Tax on $45,001–$90,000 ($45,000): $45,000 × 30% = $13,500 Income tax: $17,520 Medicare levy: $90,000 × 2% = $1,800 Total tax and levy: $19,320 Marginal tax rate: 30% Effective tax rate (incl. Medicare): 21.5% Take-home pay: approximately $70,680

Example 3: $120,000 Taxable Income

Still within the 30% bracket, which runs all the way to $135,000, this is a senior professional income.

Tax on first $18,200: $0 Tax on $18,201–$45,000 ($26,800): $26,800 × 15% = $4,020 Tax on $45,001–$120,000 ($75,000): $75,000 × 30% = $22,500 Income tax: $26,520 Medicare levy: $120,000 × 2% = $2,400 Total tax and levy: $28,920 Marginal tax rate: 30% Effective tax rate (incl. Medicare): 24.1% Take-home pay: approximately $91,080

Example 4: $180,000 Taxable Income

This income crosses into the 37% bracket and is where you start seeing the Medicare Levy Surcharge if you don’t have private health insurance.

Tax on first $18,200: $0 Tax on $18,201–$45,000: $4,020 Tax on $45,001–$135,000 ($90,000): $90,000 × 30% = $27,000 Tax on $135,001–$180,000 ($45,000): $45,000 × 37% = $16,650 Income tax: $47,670 Medicare levy: $180,000 × 2% = $3,600 Total tax and levy: $51,270 Marginal tax rate: 37% Effective tax rate (incl. Medicare): 28.5% Take-home pay: approximately $128,730 Note: without eligible private hospital cover, a single earner on $180,000 sits in the top Medicare Levy Surcharge tier of 1.5% ($2,700), bringing total government charges to $53,970.

Example 5: $250,000 Taxable Income

This income is firmly in the top bracket, where every additional dollar earned costs 47 cents in combined tax and Medicare levy. Division 293 tax may also apply on concessional super contributions for incomes over $250,000.

Tax on first $18,200: $0 Tax on $18,201–$45,000: $4,020 Tax on $45,001–$135,000: $27,000 Tax on $135,001–$190,000 ($55,000): $55,000 × 37% = $20,350 Tax on $190,001–$250,000 ($60,000): $60,000 × 45% = $27,000 Income tax: $78,370 Medicare levy: $250,000 × 2% = $5,000 Total tax and levy: $83,370 Marginal tax rate: 45% (47% including Medicare) Effective tax rate (incl. Medicare): 33.3% Take-home pay: approximately $166,630

Marginal vs Effective Tax Rate: Why Both Matter

Your marginal rate is what you pay on your next dollar of income. If you earn $60,000 and get a $1,000 bonus, that bonus is taxed at 30% (plus 2% Medicare), so you keep $680. This is the rate that matters for decisions like whether to work overtime, take on a side gig, or salary sacrifice into super.

Your effective (average) rate is your total tax divided by your total income. For the $60,000 earner above, the effective rate is 16.2% including Medicare — far lower than their 32% marginal rate. This gap exists because the first $18,200 is tax-free and the next $26,800 is taxed at just 15%. The difference between marginal and effective rates is largest at moderate incomes and narrows as income rises.

Why this matters: when comparing Australia’s tax burden to other countries, always compare effective rates. Australia’s marginal rates look high (top rate of 47% including Medicare), but effective rates for typical earners are competitive internationally.

Medicare Levy: The Extra 2%

The Medicare levy is 2% of your taxable income for most Australian residents. It’s calculated as part of your tax return and appears as a separate line item on your notice of assessment.

You may be eligible for a reduction or a full exemption from the Medicare levy if your taxable income falls below the low-income thresholds. Those thresholds are re-indexed each year and are published by the ATO, with separate and higher figures for families, seniors and pensioners; a family threshold also rises for each dependent child. Between the exemption point and the top of the phase-out range you pay a reduced levy on a sliding scale rather than the full 2%. Check the current-year figures on the ATO website before relying on them, and see our dedicated Medicare levy guide for how the levy and the Medicare Levy Surcharge interact.

Non-Resident Tax Rates

If you’re a foreign resident for tax purposes, different rates apply. You do not receive the tax-free threshold, and the lower brackets are compressed:

• $0 to $135,000: 30% on every dollar
• $135,001 to $190,000: $40,500 plus 37% of the excess over $135,000
• $190,001 and above: $60,850 plus 45% of the excess over $190,000

Foreign residents do not receive the resident 15% bracket and do not pay the Medicare levy.

Working holiday makers (subclass 417 and 462 visas) have their own scale: 15% on the first $45,000, then $6,750 plus 30% to $135,000, $33,750 plus 37% to $190,000, and $54,100 plus 45% above that. This is a concessional arrangement designed for backpackers and temporary workers.

Tax Tables for PAYG Withholding

If you’re an employee, your employer uses ATO tax tables to calculate how much to withhold from each pay. The tables are published by the ATO in weekly, fortnightly, and monthly versions. The withholding formula is:

1. Calculate your annual salary equivalent
2. Work out the annual tax using the brackets above
3. Subtract any tax offsets you’ve claimed on your TFN declaration
4. Divide by the number of pay periods

Your employer also withholds additional amounts if you have a HELP/HECS debt, SFSS debt, or Trade Support Loan — this is the STSL (Study and Training Support Loans) component.

The tax withheld is an estimate. At the end of the financial year, you lodge a tax return and the ATO reconciles what was withheld against your actual tax liability. If too much was withheld, you get a refund. If too little, you receive a bill. The tax brackets above represent your actual liability — tax withheld is just the prepayment.

Budgeting Your Take-Home Pay

Using the brackets above, here’s a quick reference for annual take-home pay at common incomes (assuming standard resident rates, no HECS, no special offsets, full Medicare levy):

Income $50,000 → Take-home ~$43,480 Income $70,000 → Take-home ~$57,080 Income $100,000 → Take-home ~$77,480 Income $150,000 → Take-home ~$110,430 Income $200,000 → Take-home ~$143,912

These are approximate and assume no deductions, no private health insurance rebate, and no other offsets. Your actual take-home pay will depend on your specific circumstances: HECS debt, salary sacrifice arrangements, reportable fringe benefits, and any tax deductions you claim all affect the final number.

Use the Income Tax Calculator to work out your exact take-home pay based on your specific income, deductions, and circumstances. Visit /calculators/income-tax/ to get a precise calculation in seconds.

Frequently Asked Questions

What are the Australian tax brackets for 2026-27?

For the 2026-27 financial year, the tax brackets for Australian residents are: $0–$18,200 tax-free, $18,201–$45,000 at 15%, $45,001–$135,000 at 30%, $135,001–$190,000 at 37%, and $190,001+ at 45%. The 15% rate took effect on 1 July 2026, down from 16%, and is legislated to fall again to 14% from 1 July 2027. The Medicare levy of 2% applies on top of these rates, with low-income earners potentially eligible for a reduction or exemption.

What is the difference between marginal and effective tax rate?

Your marginal tax rate is the rate applied to your last dollar of income — it determines the tax impact of earning an extra dollar. Your effective (or average) tax rate is your total tax divided by your total taxable income, expressed as a percentage. For example, someone earning $90,000 has a marginal rate of 30% but an effective rate of approximately 20.1%. The effective rate is always lower than your marginal rate because of the tax-free threshold and the progressive bracket system.

What is bracket creep and how does it affect me?

Bracket creep occurs when wage inflation pushes you into a higher tax bracket without any real increase in purchasing power. Since Australia’s tax brackets are not automatically indexed to inflation (unlike some other countries), your income can rise with inflation while your tax rate increases, leaving you with the same or less real spending power. The 1 July 2026 cut to the second bracket returns some of that value to low and middle income earners, but without ongoing indexation, bracket creep will continue over time.

Are tax rates different for non-residents?

Yes, foreign residents pay different tax rates in Australia. For 2026-27, non-residents pay 30% on the first $135,000 of income, then $40,500 plus 37% on $135,001–$190,000, and $60,850 plus 45% above $190,001. Non-residents do not receive the $18,200 tax-free threshold and do not pay the Medicare levy. Working holiday makers (subclass 417 and 462 visas) are taxed at 15% on the first $45,000, then $6,750 plus 30% to $135,000, $33,750 plus 37% to $190,000, and $54,100 plus 45% above that.

Disclaimer: This article provides general estimates only and does not constitute financial, tax, or legal advice. Rates, thresholds, and rules change. Always refer to the ATO, your state revenue office, or a licensed professional for your specific circumstances. Last updated: July 2026.