2026–27 Income Tax Calculator Australia

How the income tax calculator works

This calculator works out the tax the ATO charges on your taxable income for a full income year. It shows every tax bracket separately, so you can see exactly how much of your income falls into the 15%, 30%, 37% and 45% bands, and how much tax each band produces. It then adds the Medicare levy, any Medicare levy surcharge and any compulsory HELP repayment, and runs the same figures for the other income year so you can see what the 1 July 2026 tax cut is worth to you.

It is different from our pay calculator, which starts from your salary and shows take-home pay per week or fortnight. Use this one when you know your total income for the year, want to include deductions, need the family surcharge test, or want to check the tax figure on your notice of assessment.

People use it in three main ways. Employees use it before tax time to check the figure their notice of assessment should show. Investors and sole traders use it to estimate the tax on a year that includes rent, dividends, capital gains or business profit, so they know how much to set aside. And anyone weighing up a pay rise, a bonus, a salary packaging offer or a large deduction can run the numbers both ways and see the real after-tax difference, because the calculator shows both the total and the marginal rate on the next dollar.

The calculation, step by step

1. Work out taxable income. Total assessable income minus the deductions you will claim. If deductions are more than income, taxable income is $0.
2. Split taxable income across the brackets. Residents use the five resident brackets for the year you choose. Foreign residents use the three foreign resident brackets, which tax from the first dollar.
3. Add up the tax in each bracket. This is the tax on taxable income before offsets.
4. Subtract the low income tax offset. Residents earning under $66,667 get up to $700, but never below zero tax.
5. Add the Medicare levy. 2% of taxable income for residents, reduced in the low-income phase-in band, nil for foreign residents.
6. Test for the Medicare levy surcharge. Without private hospital cover, compare your income for MLS purposes (taxable income plus reportable fringe benefits) with the single threshold, or your combined family income with the family threshold. The surcharge rate is charged on your own income for MLS purposes.
7. Add any HELP repayment using the marginal study loan rates for the year.
8. Compare years. The same inputs are run through the other year’s rates to show the difference.

The formulas

Resident income tax rates: 2026–27 and 2025–26

Source: ATO, Tax rates – Australian resident. These rates do not include the 2% Medicare levy.

Foreign resident tax rates

Source: ATO, Tax rates – foreign resident. Foreign residents do not get the tax-free threshold or the low income tax offset and do not pay the Medicare levy. The ATO has published the 2025–26 table; the 2026–27 rates for foreign residents are unchanged because the 1 July 2026 cut only applies to the resident 16% band.

Low income tax offset

Medicare levy surcharge thresholds

Source: ATO, Medicare levy surcharge income, thresholds and rates. Family thresholds rise by $1,500 for each dependent child after the first. The 2025–26 family thresholds were $202,000, $236,000 and $316,000.

How it works in plain English

Income tax in Australia is charged on taxable income, using rates set each year under the Income Tax Rates Act 1986. The system is progressive: the more you earn, the higher the rate on your extra income, but each rate only applies to the slice of income inside its bracket. This is why the tax table on this page shows the tax for each bracket separately. A pay rise or a bonus is always worth something after tax, even if it pushes you into a new bracket.

The Medicare levy is a separate charge of 2% under the Medicare Levy Act 1986. People on low incomes pay a reduced levy or none. The Medicare levy surcharge is an extra 1% to 1.5% for people above the income thresholds who do not hold appropriate private patient hospital cover. It is designed to encourage higher earners to use private hospital insurance and to reduce demand on the public system.

Two things often catch people out. First, deductions lower your tax by your marginal rate, not dollar for dollar, so a $1,000 deduction is worth $320 to most middle-income earners. Second, the surcharge and HELP tests use wider income measures than taxable income, adding back items such as reportable fringe benefits, so salary packaging can change them even when your income tax stays the same.

Income tax on common incomes in 2026–27

The table shows income tax, Medicare levy and total tax for common taxable incomes, assuming you are a resident with private hospital cover (or under the surcharge threshold) and no HELP debt. The last two columns show how much less you pay than in 2025–26.

The saving tops out at $268 for anyone earning more than $45,000, because the only rate change in 2026–27 was the cut from 16% to 15% on the $26,800 of income between $18,201 and $45,000. People earning between $18,200 and $45,000 save one cent for every dollar above $18,200, less any change in their low income tax offset.

Bracket creep, deductions and the value of a pay rise

Because the bracket thresholds are not indexed to inflation, a pay rise that only keeps up with prices can still push more of your income into a higher bracket. This is known as bracket creep. At $80,000, a 4% rise to $83,200 adds $3,200 of income, of which $2,176 reaches your pocket after the 30% bracket and the 2% levy. Your average tax rate rises from 20.2% to 20.6% even though your real income has not changed. Tax cuts such as the 2026 reduction partly offset this effect.

The flip side is that deductions save the most for people on higher marginal rates. The table below shows what a $1,000 deduction is worth at different incomes in 2026–27, including the Medicare levy.

Between $37,500 and $66,667 the low income tax offset shrinks as income rises, which adds 5 or 1.5 cents to the effective marginal rate. That is why someone on $60,000 saves slightly more from a deduction than someone on $80,000.

Three real Australian examples

All figures below come from this calculator’s own engine.

Three expert tips to lower your income tax legally

Common deductions that lower your taxable income

Every deduction reduces your taxable income, which this calculator then taxes. To claim a deduction, you must have spent the money yourself, it must be directly related to earning your income, and you need a record to prove it. The most common claims are:

• Working from home: the ATO fixed rate method covers energy, phone and internet, stationery and computer consumables for each hour you work from home, provided you keep a record of your hours.
• Car expenses: for work trips other than normal travel between home and work, using the cents per kilometre method (up to 5,000 km) or the logbook method.
• Clothing: compulsory or registered uniforms, occupation-specific clothing and protective gear, and the cost of laundering them.
• Self-education: courses that maintain or improve the skills used in your current job.
• Tools and equipment: items costing $300 or less can be claimed immediately; more expensive items are depreciated.
• Memberships and subscriptions: union fees, professional association fees and work-related publications.
• Gifts and donations: donations of $2 or more to deductible gift recipients.
• Managing your tax affairs: registered tax agent fees and the cost of travelling to see them.
• Investment expenses: interest, management fees and other costs of earning interest, dividends or rent.

You cannot claim private expenses such as normal home-to-work travel, everyday clothing, or costs your employer reimbursed. If total work-related claims are over $300 you need written evidence for all of them. The ATO uses data matching and benchmarks for each occupation, so claims that are unusually high for your job are more likely to be reviewed.

What counts as assessable income

Enter the total of all your assessable income in the calculator. As well as salary and wages, this includes:

• bonuses, commissions, overtime, allowances and leave paid out when you finish a job (some lump sums are taxed at special rates);
• Centrelink payments that are taxable, such as JobSeeker and the Age Pension;
• interest from savings accounts and term deposits;
• dividends, plus franking credits attached to them (the credits then reduce your tax);
• net rental income, or a rental loss that reduces your other income;
• net capital gains after the 50% discount for assets held more than 12 months;
• business or sole trader profit, and income from the sharing economy such as ride-sharing or renting out a room.

Some amounts are not assessable, including most gifts, inheritances, the family home sale (main residence exemption), and Family Tax Benefit payments. If you receive franking credits, include the credits in your income here; the credits themselves will then be offset against your tax when you lodge, which this calculator does not do.

Residents, foreign residents and working holiday makers

The difference between resident and foreign resident tax is large. A resident earning $90,000 pays $17,520 of income tax and $1,800 of Medicare levy, a total of $19,320. A foreign resident earning the same pays $27,000 and no Medicare levy, because foreign residents pay 30% from the first dollar up to $135,000. Working holiday makers on 417 and 462 visas have their own rates, starting at 15% on the first $45,000, which this calculator does not model. If you arrive in or leave Australia part way through the year, your tax-free threshold is reduced pro rata, so the full-year resident result here will understate your tax.

How Australian income tax rates have changed

Income tax rates have changed several times in recent years as the government legislated the Stage 3 tax cuts and then further reductions to the bottom rate:

Compared with 2023–24, a resident earning $80,000 pays $1,947 less income tax in 2026–27: $16,467 then against $14,520 now. We will add the 2027–28 rates to this calculator when the ATO publishes them.

Investment income, capital gains and franking credits

Investment income is added to your other income and taxed at the same marginal rates; there is no separate tax rate for interest, rent or shares. That means the same $1,000 of bank interest costs $220 in tax for someone earning $40,000 (15% tax, 5% of lost offset and the 2% levy) but $470 for someone earning $220,000.

Capital gains. When you sell shares, an investment property or crypto for more than you paid, the net capital gain is added to your assessable income in the year of sale. If you held the asset for at least 12 months, individuals get a 50% discount, so only half the gain is taxed. A $40,000 gain on shares held for two years adds $20,000 to taxable income. For someone already earning $100,000, that $20,000 is taxed at 32% (30% plus levy), costing $6,400. Spreading sales across two income years, or selling in a year when your other income is lower, can reduce the tax because more of the gain falls in a lower bracket.

Franking credits. Australian company dividends often come with franking credits for company tax already paid. You include both the cash dividend and the credit in assessable income, then the credit is subtracted from your tax. Someone on the 30% rate who receives a $700 fully franked dividend includes $1,000 of income, owes $320 including the levy, and uses the $300 credit to pay most of it. If your marginal rate is below 30%, the excess credit is refunded. To use this calculator, add grossed-up dividends to your income and subtract the credits from the result yourself.

Rental property. Enter your net rent after interest, rates, insurance, repairs and depreciation. If the result is a loss, that is negative gearing: the loss reduces your taxable income from other sources, and the tax saving is the loss multiplied by your marginal rate. Use our negative gearing calculator to see the full picture, including the cash cost of holding the property.

Bonuses, back pay and lump sums

For income tax purposes, a bonus is simply more salary. It is added to your income for the year and taxed at your marginal rate, even though your employer may withhold a different amount from the pay it arrives in. To see what a bonus will cost in tax, run the calculator twice: once without the bonus and once with it, and compare the totals. On a $90,000 salary, a $10,000 bonus adds $3,200 of income tax and Medicare levy.

Some lump sums are treated differently. Back pay for earlier years over $1,200 can qualify for a tax offset so it is not taxed as if it were all earned this year. Unused annual leave and long service leave paid when you leave a job, and genuine redundancy and employment termination payments, have their own rules and caps, and super lump sums are taxed under the superannuation rules. If you receive one of these, use our redundancy pay and leave calculators, or check your income statement, which shows these amounts separately.

Reading your notice of assessment

After you lodge, the ATO sends a notice of assessment to myGov. It is the official version of the calculation on this page. The key lines are:

• Taxable income: should match your income minus deductions in this calculator.
• Tax on taxable income: the bracket total, the same as the “Tax on taxable income” line in our summary.
• Less non-refundable tax offsets: includes the low income tax offset and any other offsets you are entitled to.
• Plus Medicare levy and Medicare levy surcharge: as calculated here.
• Less PAYG instalments and credits for tax withheld: the tax already paid during the year by your employer or through instalments.
• Plus HELP compulsory repayment: added on top of your tax.
• Result of this notice: a refund if the credits were more than your total, or an amount payable if they were less.

If your notice shows a different tax on taxable income from this calculator for the same taxable income and year, the most common reasons are part-year residency, a different residency status, or an offset you did not include. Our tax refund estimator adds the PAYG withholding step so you can predict the result line itself.

Common mistakes when estimating income tax

• Applying your top rate to all your income. Someone earning $150,000 is in the 37% bracket, but their tax is $36,570, not 37% of $150,000 ($55,500). Only the $15,000 above $135,000 is taxed at 37%.
• Forgetting the Medicare levy. The ATO rate table excludes it, so a calculation using the brackets alone is about 2% of your income too low.
• Treating a deduction as a dollar-for-dollar saving. A $2,000 deduction does not cut your tax by $2,000; at $80,000 it saves $640.
• Using last year’s rates. Calculators not yet updated for 2026–27 still use the 16% rate and the old surcharge and HELP thresholds, so they overstate tax by up to $268 and can show a surcharge or HELP repayment that no longer applies.
• Ignoring the family surcharge test. A partner earning over $105,000 may still pay no surcharge if the couple’s combined income is under the family threshold, and the reverse can also happen when both partners earn well.
• Leaving out income. Interest, dividends with franking credits, capital gains and side income must all be included. The ATO receives data from banks, share registries, crypto exchanges and sharing-economy platforms, so missing amounts are usually picked up.
• Confusing tax payable with the refund. Your refund or bill is the difference between this total and the tax already withheld from your pay, not the total itself.

Before you lodge: a short checklist

1. Check that your income statement in myGov is marked “tax ready” before you lodge.
2. Add income that is not pre-filled, such as cash jobs, side business income, crypto disposals and foreign income.
3. Gather receipts for every deduction and make sure you can show how each one relates to earning your income.
4. Confirm your private health insurance details so the surcharge and rebate are worked out correctly.
5. Run this calculator with your final figures so you know roughly what to expect before you press submit.
6. Lodge by 31 October, or speak with a registered tax agent before then if you want to use their later lodgment program.

How we tested this calculator

We checked the engine against the ATO’s published examples and by hand at every threshold:

The engine, the tables on this page and the three examples all read from one set of rates. The calculator does not include the zone and overseas forces offsets, the seniors and pensioners tax offset, the private health insurance rebate adjustment, franking credit offsets, working holiday maker rates, part-year residency or the low-income exemption from the surcharge for people with MLS income under the minimum, so check those separately if they apply to you.

Everyday words and the official ATO terms

Income tax calculator FAQs

Definitions and eligibility

Maths and technical rules

State and territory differences

Edge cases and ATO compliance

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Editorial transparency and sources

We check every rate in this calculator against the Australian Taxation Office when new rates are published, at the start of each income year on 1 July, and after every Federal Budget. The rates on this page were last checked on 28 October 2026. Where the ATO has not yet published a 2026–27 figure (the Medicare levy low-income thresholds and the foreign resident table), the latest published figure is used and labelled. Read our editorial policy and methodology, and report an error through our contact page.

General Advice Warning: this calculator and page provide general information and estimates for educational purposes only. They do not take into account your objectives, financial situation or needs, and are not tax, financial or legal advice. Your actual tax is worked out by the ATO when you lodge your return. Consider speaking with a registered tax agent before acting. AUFinanceCalculators.com does not hold an Australian Financial Services Licence and is not a registered tax agent. See our full disclaimer.

Official sources

• ATO: Tax rates for Australian residents
• ATO: Tax rates for foreign residents
• ATO: Medicare levy surcharge thresholds and rates
• ATO: Study and training loan repayment rates
• Moneysmart: Income tax