2026–27 PAYG Withholding Calculator

How the PAYG withholding calculator works

This calculator follows the ATO’s statement of formulas exactly, the same method payroll software uses. You enter the gross earnings for one pay, the pay frequency and the answers on the employee’s tax file number declaration and any withholding or Medicare levy variation declaration. The calculator picks the right scale, converts the pay to a weekly equivalent, applies the coefficients, rounds the way the ATO requires and converts back to your pay period. It shows every step so you can check it.

It is built for small business owners running their own payroll, bookkeepers checking a payroll system, and employees who want to understand the tax on their payslip. For a full-year view of an employee’s take-home pay, use our pay calculator; this tool shows what to withhold from each individual pay.

Why not just use a published tax table? The ATO’s weekly, fortnightly and monthly tax tables are produced from exactly these formulas, but they list amounts in steps, and payroll software uses the formulas directly. Using the formulas gives the precise figure for any pay, including unusual amounts and allowances, and lets you see where each dollar comes from. The working panel next to the result shows the value of x, the coefficients used, the unrounded result and every rounding step, so a bookkeeper can reconcile it line by line with a payroll report or an employee’s payslip. If your software shows a different figure, the working panel makes it easy to see whether the difference comes from the scale, an allowance, the study loan component or a rounding step. The yearly panel multiplies each pay out to a full year, including the 12% super guarantee the employer pays on top, which is handy when budgeting for a new hire.

The calculation, step by step

1. Add taxable allowances to the gross earnings for the pay.
2. Choose the scale from the declaration: Scale 2 if the tax-free threshold is claimed, Scale 1 if not, Scale 3 for foreign residents, Scale 4 if no TFN was given, Scale 5 or 6 for a Medicare levy exemption.
3. Find the weekly earnings x. Weekly: drop the cents and add 99 cents. Fortnightly: halve first. Monthly: add 1 cent if the amount ends in 33 cents, then × 3 ÷ 13. Quarterly: ÷ 13.
4. Apply the formula y = a·x − b using the coefficients for the scale and the range x falls in, and round to the nearest dollar.
5. Convert back: × 2 for fortnightly, × 13 ÷ 3 rounded to the dollar for monthly, × 13 for quarterly.
6. Subtract tax offsets claimed on a withholding declaration: 1.9%, 3.8%, 8.3% or 25% of the annual amount for weekly, fortnightly, monthly or quarterly pay.
7. Add the study loan component from Schedule 8 if the employee has a HELP or other study loan, using the same x and conversion rules.

Which scale applies

Scale 2 coefficients (tax-free threshold claimed), from 1 July 2026

Scale 1 coefficients (no tax-free threshold), from 1 July 2026

Study loan component coefficients (Schedule 8), from 1 July 2026

Sources: ATO, Coefficients to use in formulas for withholding from weekly payments and ATO, Schedule 8: study and training support loans components, both published 17 June 2026. Scales 3, 5 and 6 are built into the calculator with the same published coefficients.

How it works in plain English

Withholding is designed so that, by the end of the year, an employee with a steady salary and no other income has had roughly the right amount of tax taken out. The formulas build in the year’s tax rates, the low income tax offset, the Medicare levy and its low-income phase-in, all converted into a weekly amount. The 99 cents added to x puts every pay at the top of its whole-dollar band, which means withholding errs very slightly on the high side.

The coefficients changed on 1 July 2026 because the bottom tax rate fell from 16% to 15%. That is why Scale 2’s second band now starts at 0.1500, and why most employees saw their take-home pay rise by about $5 a week, or $10.31 a fortnight, from the first pay in July. Employers who used old tax tables after that date over-withheld.

The legal basis is Schedule 1 to the Taxation Administration Act 1953, which requires payers to withhold, and the withholding schedules the Commissioner of Taxation makes under it. The study loan component is set by Schedule 8 and changed in 2025–26 to match the marginal repayment system.

Withholding on common salaries from 1 July 2026

For a resident employee claiming the tax-free threshold with no study loan or offsets, the scales give these amounts. Annual totals depend on the pay frequency because of rounding in each pay.

Compare the annual totals with the actual tax on the same salary: on $80,000 the employee owes $16,120 in 2026–27 (income tax plus Medicare levy). Weekly withholding of $311 totals $16,172, very slightly more, so the employee is likely to get a small refund even with no deductions.

Tested against the ATO’s own examples

The ATO publishes worked examples with its schedules. This calculator reproduces all six to the dollar:

Jabe’s example also includes a Medicare levy adjustment for a family with five children, which reduces the final amount to $219. Family Medicare levy adjustments are not built into this calculator, so use the ATO tax withheld calculator for employees who have lodged a Medicare levy variation declaration claiming a family reduction.

The declarations that decide withholding

Tax file number declaration

Every new employee completes a TFN declaration, either on paper or through their employer’s onboarding system. It records their TFN, whether they are an Australian resident for tax purposes, whether they claim the tax-free threshold, and whether they have a study and training support loan. The employer must send the declaration information to the ATO and keep a copy. If the employee does not provide a TFN within 28 days, Scale 4 applies.

Withholding declaration

Employees use a withholding declaration to change their withholding without starting a new job: to claim or stop claiming the tax-free threshold, to tell the employer about a study loan, or to claim tax offsets such as the zone offset. Changes apply from the next pay after the employer receives it.

Medicare levy variation declaration

Employees who are exempt from the Medicare levy, such as some foreign residents and defence personnel, or who qualify for a reduction because of low family income, can lodge a Medicare levy variation declaration. Full and half exemptions use Scales 5 and 6; family reductions use an adjustment formula on top of Scale 2.

Payments that use different rules

The standard scales cover regular salary and wages. Other payments have their own methods, which this calculator does not apply:

• Bonuses, commissions and back pay: the ATO allows a method that spreads the extra payment across the periods it relates to, so a single large pay is not taxed as if it recurred every week.
• Unused leave paid on termination: annual leave and long service leave paid out when an employee leaves have their own withholding rates depending on when the leave accrued and whether the termination is a genuine redundancy.
• Employment termination payments: redundancy and other termination payments above the tax-free amount are withheld at special rates up to caps.
• Working holiday makers: employees on 417 or 462 visas use separate rates, starting at 15%, and employers must be registered as employers of working holiday makers.
• Seasonal workers, directors’ fees and payments to contractors under voluntary agreements also have specific rules.

What employers must do with withheld tax

1. Register for PAYG withholding before the first payday, through your ABN registration or the Business Portal.
2. Collect a TFN declaration from each new employee and lodge it with the ATO.
3. Withhold each pay using the correct scale and report it through Single Touch Payroll on or before payday.
4. Give employees a payslip within one working day, showing gross pay, tax withheld and super.
5. Pay the withheld amounts to the ATO: quarterly for small withholders, monthly for medium withholders, and within days for large withholders.
6. Finalise STP data by 14 July so each employee’s income statement is tax ready.

Withheld tax is held in trust for the ATO. Directors can become personally liable for unpaid PAYG withholding under the director penalty regime, so it should be set aside, not used as working capital.

For employees: reading the tax on your payslip

If you want to check your own pay, enter your gross pay for the period, your pay frequency and the answers you gave on your TFN declaration. The result should match the tax on your payslip to the dollar. If it does not, the most likely reasons are a different scale (for example, the employer thinks you have not claimed the tax-free threshold), a study loan you did or did not tell them about, an allowance that is included or excluded, or a bonus taxed under a special method. Your employer can tell you which scale they use. Remember that withholding is only an estimate; your real tax is settled when you lodge your return, which our tax refund estimator can predict.

Worked example: a monthly pay, step by step

Monthly pay has the most steps, so here is one in full. Aisha earns $7,500 a month, claims the tax-free threshold and has no study loan or offsets.

1. Check for 33 cents. $7,500.00 does not end in 33 cents, so no extra cent is added.
2. Weekly equivalent. $7,500 × 3 ÷ 13 = $1,730.77. Drop the cents: $1,730. Add 99 cents: x = $1,730.99.
3. Find the band. On Scale 2, $1,730.99 is in the “less than $2,596” band, so a = 0.3200 and b = 181.7319.
4. Weekly amount. y = 0.32 × 1,730.99 − 181.7319 = 372.1849, rounded to $372.
5. Convert to monthly. $372 × 13 ÷ 3 = $1,612.00.
6. Result. Withhold $1,612 a month; net pay is $5,888.

Over 12 months that is $19,344 withheld on a $90,000 salary. Aisha’s actual 2026–27 tax and Medicare levy on $90,000 is $19,320, so withholding is only $24 higher than her tax for the year.

Withholding versus actual tax: why refunds and bills happen

The scales are designed for an employee whose only income is a steady wage from one employer. In that case, a year of withholding lands within a few dollars of the tax owed, as Aisha’s example shows. Differences arise when:

• the employee has deductions, which the scales do not know about, so too much is withheld and a refund follows;
• pay varies during the year, for example overtime in some months, which can push individual pays into higher bands;
• there are two jobs and the tax-free threshold is claimed from both, so too little is withheld;
• the employee has other income such as interest, rent or a side business, on which nothing is withheld;
• salary sacrifice reduces pay but reportable contributions are added back for the study loan and surcharge tests;
• the year has 53 weekly or 27 fortnightly paydays, which slightly changes the total.

An employee who regularly receives a large refund because of deductions, such as a negatively geared investment property, can apply to the ATO for a PAYG withholding variation. The ATO then tells the employer to withhold at a lower rate, so the employee receives the benefit in each pay rather than once a year.

Salary sacrifice and withholding

When an employee salary sacrifices into super or another benefit, the employer reduces their gross pay by the sacrificed amount before applying the withholding scales. An employee on $1,500 a week who sacrifices $150 a week to super has withholding worked out on $1,350. On Scale 2 that reduces weekly tax from $299 to $251, so the $150 sacrifice costs only $102 in take-home pay. The sacrificed amount is taxed at 15% when it reaches the super fund and counts towards the concessional contributions cap of $32,500. Employers must still pay the full 12% super guarantee on the employee’s ordinary earnings before the sacrifice.

Withholding from suppliers who do not quote an ABN

PAYG withholding is not only for employees. If a business buys goods or services from another business that does not provide its ABN, the payer generally must withhold 47% of the payment and send it to the ATO, unless an exception applies, such as payments of $75 or less excluding GST, or a supplier who gives a written statement that the work is a private hobby. This rule encourages suppliers to register for and quote an ABN, and it is reported on an annual PAYG withholding where ABN not quoted report.

Common payroll withholding mistakes

• Using last year’s tables after 1 July. In 2026–27 this over-withholds about $5 a week for most employees.
• Forgetting allowances. Taxable allowances must be added to earnings before working out x.
• Missing a study loan. If the TFN declaration says yes to a study loan, the Schedule 8 component must be added.
• Rounding at the wrong step. Round the weekly amount to the dollar first, then convert; for monthly pay, round again after × 13 ÷ 3.
• Treating a bonus as normal pay instead of using the ATO’s method for bonuses and back pay.
• Not applying Scale 4 when an employee has not provided a TFN within 28 days.

Casual and part-time employees

Casual and part-time staff use the same scales as full-time employees, applied to whatever they earn in each pay. Because their hours often change, their withholding changes too. A casual who works 10 hours one week and 35 the next will have very little withheld in the quiet week and much more in the busy one, because each pay is treated as if it continued all year. Over a whole year these swings mostly balance out.

The scales also build in the tax-free threshold for low earners. On Scale 2, nothing is withheld when weekly earnings are below $362, so a student working a few shifts a week often has no tax taken out. That is correct if the job is their only income. If they also have another job, they should claim the threshold from only one employer, otherwise both will withhold too little, as Ella’s example shows.

Casual employees usually receive a 25% casual loading in place of paid leave. The loading is part of their ordinary pay and is included in earnings for withholding. Employers must pay the 12% super guarantee on casual employees’ ordinary time earnings regardless of how much they earn.

What counts as earnings for withholding

The figure you enter for each pay should include everything subject to withholding in that pay period:

• Ordinary pay for the hours worked, including casual loading.
• Overtime and penalty rates for weekends, public holidays and shifts.
• Leave taken during employment, such as annual leave and personal leave, paid as normal salary. Annual leave loading is included too; Scales 1 and 2 apply whether or not the employee receives leave loading.
• Taxable allowances, such as tool, uniform, laundry and car allowances, entered in the allowances field. Some allowances are excluded up to the ATO’s reasonable amounts, such as overtime meal allowances and certain travel allowances.
• Commissions paid regularly with salary.

Leave on termination, employment termination payments and lump-sum back pay use their own methods and should not simply be added to a normal pay. Salary-sacrificed amounts are taken out before you work out earnings.

Paying family members, directors and working owners

If you pay your spouse, children or other relatives as employees, the same withholding rules apply: they complete a TFN declaration and you withhold using the scales and pay super. Wages must be reasonable for the work done to be deductible to the business. A child under 18 earning wages from genuine work is taxed at normal adult rates on that income.

Company directors who receive directors’ fees or salary are paid through PAYG withholding like any other employee. Sole traders and partners in a partnership cannot pay themselves wages; their drawings are not wages, and they pay tax on their share of the business profit through their own tax return and PAYG instalments. If you operate through a company, paying yourself a salary through payroll keeps your tax spread across the year instead of arriving as a single bill.

Setting up payroll for your first employee

Taking on a first employee is the moment most small businesses meet PAYG withholding. Before the first pay run:

1. Register for PAYG withholding with the ATO, using your ABN.
2. Choose payroll software that supports Single Touch Payroll; the ATO lists free and low-cost options for micro employers.
3. Have the employee complete a TFN declaration and a super standard choice form, and check whether a modern award covers their job.
4. Set up workers’ compensation insurance with your state or territory scheme.
5. Work out the first pay: gross wages, tax to withhold using this calculator or your software, super at 12%, and net pay.
6. Report the pay through STP on or before payday and give the employee a payslip within one working day.
7. Set aside the withheld tax and super in a separate account until they are paid.

With one employee earning $1,150 a week, you will withhold $186 a week, about $9,700 a year, which makes you a small withholder who pays the ATO quarterly. Add a second full-time employee and you will usually pass $25,000 a year and move to monthly payments.

The PAYG withholding year at a glance

Using the calculator to plan a pay change

Because the calculator shows the exact amount an employer will withhold, it is a quick way to see what a change in pay means for each payslip.

A pay rise. An employee moving from $1,500 to $1,600 a week sees weekly withholding rise from $299 to $331, so the $100 rise adds $68 to net pay. That 32% difference is the 30% tax rate plus the 2% Medicare levy, the same marginal rate they will pay at tax time.

A second job. Before accepting extra shifts elsewhere, run the second job on Scale 1 to see how much will be withheld from it. If the combined income will be higher than either job alone suggests, the employee can ask the second employer to withhold an extra amount so there is no bill after 30 June.

Changing pay frequency. Moving from monthly to fortnightly pay does not change the tax for the year, but because each period is rounded separately, the annual withholding totals can differ by a few dollars, as the salary table above shows.

Starting a HELP debt. A graduate whose study loan has just started should tick the study loan box once their income is high enough. On $2,800 a fortnight the extra withholding is only $20, but on $3,000 it rises to $50, so the component grows quickly once pay passes the threshold.

Quarterly and irregular pay periods

Some directors and small business owners are paid quarterly. The calculator divides the quarterly amount by 13 to get the weekly equivalent, applies the formula, and multiplies the rounded weekly amount by 13. A quarterly payment of $48,000 gives a weekly equivalent of $3,692.30, so x = $3,692.99, the weekly amount is $1,080 and the quarterly withholding is $14,040. For daily or casual payments that are not tied to a regular pay period, the ATO has a separate method based on the number of days worked; contact the ATO or use its tax withheld calculator for those.

How withholding changed on 1 July 2026

Each year’s schedules are built from that year’s tax rates, so the coefficients change whenever the rates, the low income tax offset or the Medicare levy thresholds change. The 2026–27 schedules reflect the cut in the bottom tax rate from 16% to 15%. For a typical employee claiming the tax-free threshold, weekly withholding fell by about $5. The Medicare levy phase-in thresholds used in the formulas are $538 and $673 a week, equivalent to $28,011 and $35,013 a year. Payday Super also began on 1 July 2026, so employers now pay the 12% super guarantee each payday alongside PAYG withholding, rather than quarterly.

Everyday words and the official terms

Three real Australian examples

All figures are produced by this calculator’s engine using the 2026–27 coefficients.

Three expert tips for getting withholding right

PAYG withholding FAQs

Definitions and eligibility

Maths and technical rules

State and territory differences

Edge cases and ATO compliance

Related calculators

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Next steps in other sections:

Editorial transparency and sources

We copy the coefficients directly from the ATO’s statements of formulas each time new schedules are published, usually in June for payments from 1 July, and test the engine against the ATO’s own worked examples. The figures on this page were last checked on 28 October 2026. Read our editorial policy and report errors on our contact page.

General Advice Warning: this calculator provides general information for educational purposes. It does not take into account your objectives, financial situation or needs and is not tax advice. Employers remain responsible for withholding correctly and should use the ATO tax withheld calculator or payroll software for their records. It does not apply Medicare levy adjustments for spouses and dependants, the 53 or 27 pay rules, or the special methods for bonuses, back pay, leave and termination payments. AUFinanceCalculators.com does not hold an Australian Financial Services Licence and is not a registered tax or BAS agent. See our full disclaimer.

Official sources

• ATO: Schedule 1, statement of formulas
• ATO: Coefficients for weekly payments
• ATO: Examples of calculating withholding amounts
• ATO: Schedule 8, study loan components
• business.gov.au: Pay your employees