Australian Income Tax Brackets: A Complete Guide

Australia taxes personal income on a progressive scale, which means the more you earn, the higher the rate on each additional slice of income. Understanding the tax brackets is the first step to knowing how much tax you actually pay, planning ahead, and making the most of deductions and offsets. This guide sets out the current Australian resident tax brackets, explains how progressive tax really works, shows what you pay at common income levels, and covers the cost-of-living tax cuts that have lowered the rates. All figures are drawn from the Australian Taxation Office (ATO).

Current Australian Tax Brackets (2026-27)

These are the resident individual tax rates for the 2026-27 financial year, which runs from 1 July 2026 to 30 June 2027. They apply to the income you are earning now. The rates exclude the 2% Medicare levy, which is calculated separately.

How Progressive Tax Actually Works

The single most common misunderstanding about tax is the belief that moving into a higher bracket taxes all of your income at the higher rate. It does not. Each rate applies only to the portion of your income that falls within that bracket. A pay rise that pushes you into a higher bracket can never leave you worse off overall.

How Much Tax Do You Pay at Different Incomes?

These figures show income tax plus the 2% Medicare levy for a resident individual in 2026-27, before any deductions, offsets beyond the low income tax offset, or HELP repayments. They are a guide, not a precise assessment.

The Cost-of-Living Tax Cuts: Now in Effect

The current brackets are the result of tax cuts that are now law and in effect, not proposals. It is worth understanding what changed, because the rates have been lowered twice in recent years.

The Stage 3 cuts (from 1 July 2024)

The Stage 3 tax cuts took effect on 1 July 2024 and form the foundation of the current tax structure. They lowered the second rate from 19% to 16%, cut the third rate from 32.5% to 30%, lifted the 37% threshold from $120,000 to $135,000, and raised the 45% threshold from $180,000 to $190,000. These are settled law and apply now.

The further cut (from 1 July 2026)

On top of Stage 3, a further cost-of-living cut lowered the second bracket from 16% to 15% on 1 July 2026, which is reflected in the current brackets above. It is worth up to $268 a year for anyone earning over $45,000. A further reduction of that bracket to 14% is legislated to take effect on 1 July 2027, so the rate on income between $18,201 and $45,000 is scheduled to fall again.

Offsets and the Medicare Levy

Your bracket is only part of the picture. A few other things change what you actually pay:

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  The Medicare levy adds 2% for most taxpayers, reduced or removed for low incomes. Our guide to the Medicare levy explains the thresholds.
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  The low income tax offset (LITO) provides up to $700 for lower-income earners, phasing out as income rises, and is applied automatically.
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  The tax-free threshold of $18,200 applies to residents only, and only through one employer if you have more than one job. Our tax-free threshold guide covers how to claim it correctly.
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  Deductions reduce your taxable income before the brackets are applied, so claiming everything you are entitled to can move you down a bracket at the margin. See our guide to tax deductions in Australia.

Non-Residents and Working Holiday Makers

The brackets above are for Australian residents for tax purposes. Non-residents do not receive the tax-free threshold and are taxed from the first dollar, generally at 30% up to $135,000, then 37% and 45% on the higher bands, and they generally do not pay the Medicare levy. Working holiday makers have their own separate rate scale. Applying resident rates to a non-resident, or the reverse, is a common and costly error, so residency status should be confirmed before lodging.

How The Kalculators Can Help

Knowing the brackets is the start; using them well is where an accountant helps. We make sure you claim every deduction and offset you are entitled to, so your taxable income and your bracket work in your favour, and we plan ahead where timing a deduction or contribution changes your position. Our tax return services in Adelaide handle individuals and businesses, and if you want to lift your refund, our guide to maximising your tax refund pairs with this one.