Australian income tax rates for 2025–26 and 2026–27 explained
Resident tax brackets for 2025–26 and 2026–27, the cut from 16% to 15% and then 14%, how marginal rates work and what sits on top of the brackets.
For Australian residents in the 2026–27 income year (1 July 2026 to 30 June 2027), the first $18,200 of taxable income is tax-free, income from $18,201 to $45,000 is taxed at 15%, income from $45,001 to $135,000 at 30%, income from $135,001 to $190,000 at 37% and income above $190,000 at 45%. On top of that most residents pay the 2% Medicare levy. The 15% rate replaced 16% from 1 July 2026, and legislation already passed cuts it again to 14% from 1 July 2027. If you are lodging your 2025–26 return now, use the 2025–26 table below, where the second bracket is still 16%.
This is the pillar guide for the rates section. It explains the brackets, the difference between marginal and average rates, and links to the other guides covering the Medicare levy, offsets, HELP, super caps, Division 293 and capital gains. Everything here is general information, not tax advice.
The resident tax tables side by side
The thresholds have not moved since the Stage 3 changes took effect on 1 July 2024. What changes is the rate on the second bracket.
| Taxable income | 2025–26 | 2026–27 | 2027–28 (legislated) |
|---|---|---|---|
| $0 – $18,200 | Nil | Nil | Nil |
| $18,201 – $45,000 | 16c per $1 over $18,200 | 15c per $1 over $18,200 | 14c per $1 over $18,200 |
| $45,001 – $135,000 | $4,288 + 30c per $1 over $45,000 | $4,020 + 30c per $1 over $45,000 | $3,752 + 30c per $1 over $45,000 |
| $135,001 – $190,000 | $31,288 + 37c per $1 over $135,000 | $31,020 + 37c per $1 over $135,000 | $30,752 + 37c per $1 over $135,000 |
| $190,001 and over | $51,638 + 45c per $1 over $190,000 | $51,370 + 45c per $1 over $190,000 | $51,102 + 45c per $1 over $190,000 |
The base amounts in each row are simply the tax on all the income below that threshold. For 2026–27, tax on the first $45,000 is 15% × $26,800 = $4,020. Add 30% × $90,000 = $27,000 for the next bracket and you get $31,020 at $135,000.
The one-point cut is worth at most 1% × $26,800 = $268 a year in 2026–27 for anyone earning $45,000 or more, rising to $536 a year from 2027–28 compared with 2025–26. Someone earning $30,000 saves 1% × $11,800 = $118.
Marginal rate versus average rate
Australia's brackets are marginal: each rate applies only to the dollars inside that bracket. Moving into a higher bracket never makes your whole income taxed at the higher rate. This matters for decisions such as overtime, salary sacrifice and deductions.
Illustrative example for 2026–27, taxable income $100,000:
- First $18,200: nil.
- $18,201 to $45,000: 15% × $26,800 = $4,020.
- $45,001 to $100,000: 30% × $55,000 = $16,500.
- Income tax = $20,520. Medicare levy = 2% × $100,000 = $2,000.
- Total = $22,520, an average rate of 22.5%.
But the next dollar earned costs 30c of tax plus 2c of levy, a marginal rate of 32%. A $1,000 deduction therefore saves this person about $320, not $1,000 and not $225.
| Taxable income (2026–27) | Marginal rate incl. 2% Medicare levy |
|---|---|
| $18,201 – $45,000 | 17% (less in the levy phase-in range) |
| $45,001 – $135,000 | 32% |
| $135,001 – $190,000 | 39% |
| over $190,000 | 47% |
Low-income earners can face a higher effective marginal rate than the table suggests while the low income tax offset phases out and the Medicare levy phases in, which is explained in the linked guides.
What sits on top of the brackets
The bracket table gives you "tax on taxable income". Your final bill or refund also depends on:
- Medicare levy and surcharge. The 2% levy, reduced or nil for low incomes, plus a surcharge of 1% to 1.5% if your income is above the threshold and you do not hold appropriate private hospital cover. See Medicare levy and surcharge.
- Tax offsets. The low income tax offset of up to $700 reduces tax for incomes under $66,667. Others include the seniors and pensioners tax offset and the spouse super contribution offset. Most offsets are non-refundable: they can reduce tax to zero but not below.
- Study and training loans. Compulsory HELP repayments are collected through the tax system but are not tax. Since 2025–26 they are calculated on income above the threshold only. See HELP repayment thresholds.
- Super. Concessional contributions are taxed in the fund at 15%, which is why salary sacrifice can save tax; the caps and the extra Division 293 tax for high earners are in super contribution caps and Division 293.
- Capital gains. A net capital gain is added to taxable income and taxed at your marginal rates, often after a 50% discount (for most assets only on CGT events before 1 July 2027). See the CGT discount.
Who uses a different table
The resident table applies to people who are Australian residents for tax purposes for the whole year. Other people are taxed differently:
- Foreign residents do not get the tax-free threshold. Under the 2026–27 table published by the ATO, the first $135,000 is taxed at 30%, then 37% and 45%, and they do not pay the Medicare levy. Most offsets are not available.
- Part-year residents (arriving in or leaving Australia during the year) get a pro-rated tax-free threshold.
- Working holiday makers on subclass 417 and 462 visas are taxed at 15% on the first $45,000 under a separate table.
- Children under 18 pay special higher rates on most unearned income such as interest and dividends above a small amount.
Residency is a legal test, not a visa status. If you moved to or from Australia, or you work overseas, check the ATO's residency tests or speak with a registered tax agent before you choose a table.
Using this to estimate your tax
To estimate your own figure, follow the step-by-step income tax guide and use the take-home pay calculator. Take the income year carefully:
- Your 2025–26 return (lodged from July 2026, due 31 October 2026 for self-lodgers) uses the 16% table.
- Your pay during 2026–27 is withheld using tax tables built on the 15% rate. Employers had to update payroll from 1 July 2026; if your take-home pay did not change slightly in July, ask your payroll team.
- Planning for 2027–28 can assume 14%, unless Parliament changes the law again.
FAQ
Did the tax-free threshold change in 2026?
No. It is still $18,200 for residents. With the low income tax offset, a resident usually pays no income tax until about $22,866 of taxable income in 2026–27, although the Medicare levy can start before that.
Will I get the tax cut automatically?
Yes, for employees it flows through PAYG withholding during the year and is finalised when you lodge. You do not need to apply.
Are the bracket thresholds indexed to inflation?
No. Australian income tax thresholds are not automatically indexed. They only change when Parliament passes new rates, which is why wage growth gradually pushes people into higher brackets.
Does a higher bracket reduce my take-home pay?
Never overall. Only the dollars above the threshold are taxed at the higher rate. Interactions with means-tested payments, HELP and the Medicare levy surcharge can still make an extra dollar expensive, so check those separately.
Sources
- Australian Taxation Office — individual income tax rates, residency tests and the new legislation pages
- The Treasury — Budget papers announcing the 2026–27 and 2027–28 rate cuts
- Federal Register of Legislation — Income Tax Rates Act 1986 and amending Acts
