HECS Repayment Threshold 2025-26: Official Rates & Brackets

For the 2025-26 financial year, the minimum HECS repayment income threshold is $67,000. Cross that line and you start paying — stay under it and you owe nothing. From 1 July 2025, a new marginal bracket system replaced the old flat-rate method, so you only pay on the dollars you earn above each threshold, not on your total income.

Key Takeaways

• The 2025-26 HECS repayment threshold is $67,000 — up from $54,435 the year before
• Repayments now use a marginal bracket system, not a flat percentage on total income
• Your "repayment income" (RI) can be higher than your salary — fringe benefits, rental losses, and salary-sacrificed super all get added back
• A 20% debt reduction was applied to eligible balances before indexation on 1 June 2025
• Voluntary repayments can be made any time via myGov, but they don't reduce your compulsory repayment for that income year

2025-26 HECS-HELP Repayment Threshold and Rates (Official ATO Table)

These official brackets came into effect on 1 July 2025.

Official Thresholds and Marginal Repayment Rates for 2025-26

Only the income above $67,000 is charged in the first bracket. And repayment income isn't always the same as your taxable income — more on that below.

When You Start Paying HECS in 2025-26

You start paying HECS-HELP debt the moment your repayment income crosses $67,000. At exactly $67,000? You owe nothing. At $67,001? You're paying 15 cents on that one dollar above the threshold. That's it.

What "Marginal" Actually Means for HECS

Think of it exactly like tax brackets. You only pay the specified rate on the portion of income that falls within each bracket — not on everything you earn. There's one exception though: if your RI hits $179,286 or more, you pay a flat 10% of your total RI. That's the top bracket and it works differently.

Quick Examples

1. RI = $67,000: Repayment is $0.
2. RI = $70,000: ($70,000 − $67,000) × $0.15 = $450.
3. RI = $127,064: $8,700 + [($127,064 − $125,000) × $0.17] = $9,051.

How to Check Your HECS Repayment Details

1. Find Your Repayment Income (RI) Inputs

Before you can work anything out, you need to gather these numbers from your income statement and tax records:

• Taxable income
• Reportable fringe benefits amount
• Total net investment loss (including rental losses)
• Reportable super contributions
• Exempt foreign employment income

2. Match Your RI to the 2025-26 Bracket Table

Find your total RI in the left column of the table above, then use the formula on the right to work out what you owe. Simple as that.

3. Confirm Your Study Loan Status with the ATO (myGov)

Check your official loan balance directly with the ATO — don't guess.

1. Sign in to your myGov account.
2. Open the Australian Taxation Office service.
3. Select "Tax," then "Loan accounts."
4. Check your HELP/HECS balance, indexation adjustments, credits, and any recent activity.

Repayment Income (RI) Explained: What Counts in 2025-26

Here's the thing most people get wrong: your RI is often higher than the salary that hits your bank account. The ATO adds back several amounts that may have reduced your taxable income, and that can push you over a threshold you thought you were safely under.

Repayment Income vs. Taxable Income

Your taxable income is the starting point. To get your repayment income (RI), the ATO adds back specific items on top. One notable exclusion: any assessable First Home Super Saver (FHSS) released amounts are taken out of your taxable income for this calculation.

What the ATO Includes in Repayment Income (RI)

Your RI is the sum of:

• Taxable income
• Reportable fringe benefits (as shown on your income statement) — for example, a company car provided by your employer for personal use
• Total net investment loss (including net rental losses) — if a rental property made a paper loss that reduced your taxable income, the ATO adds that loss back to figure out your RI
• Reportable super contributions — any extra pre-tax contributions you make via salary sacrifice are added back
• Exempt foreign employment income

So if you negative gear a property and salary sacrifice into super, your RI could be meaningfully higher than what you actually take home. Worth knowing before you assume you're under the threshold. Our HELP/HECS Calculator can project your repayment timeline based on your income and current balance — including how long until it's gone.

Worked Repayment Examples

Here's how the maths plays out for different income levels using the new marginal system.

Sample Compulsory Repayments Using the 2025-26 Marginal System

*Repayments are rounded to the nearest dollar.

Detailed Calculation for RI of $150,000 for 2025-26

An individual with a repayment income of $150,000 falls into the $125,001 – $179,285 bracket. Here's how it works step by step:

1. Identify the base amount: This bracket starts with a base repayment of $8,700. That's the total repayment for income up to $125,000 — calculated as ($125,000 - $67,000) × 0.15 = $8,700.
2. Calculate the income above the lower limit: $150,000 (RI) - $125,000 (lower limit) = $25,000.
3. Apply the marginal rate: $25,000 × 0.17 = $4,250.
4. Add the base amount and the marginal portion: $8,700 + $4,250 = $12,950.

So the exact HECS repayment for a $150,000 repayment income in 2025-26 is $12,950.

Employer Withholding vs. What You Actually Repay

What your employer withholds throughout the year isn't always your final bill — it's an estimate. The ATO settles the real number at tax time.

Why Your Employer Withholds During the Year

When you start a new job, you complete a TFN declaration and tick whether you have a study loan. If you say yes, your employer withholds extra tax to cover your estimated compulsory repayment. But they're working off projected income, not your final RI — so there's often a difference.

What Happens if You're Under the Threshold But Withholding Occurred

If your employer withheld HECS amounts during the year but your final RI came in at $67,000 or less, don't stress. The ATO reconciles everything when you lodge your return. Any excess withholding gets refunded as part of your tax refund. Your employer can't refund this money directly — it all goes through the ATO.

Stopping HECS Withholding After Repayment

Once your HECS-HELP loan is fully repaid, you need to tell your employer to stop the extra withholding. Here's what to do:

1. Confirm loan balance: Check your official loan account in myGov and make sure your HELP debt balance is $0.
2. Complete new form: Get and fill out a new 'Tax File Number Declaration' form (NAT 3092).
3. Update status: On the form, indicate that you no longer have a HECS-HELP, VET FEE-HELP, or TSL debt.
4. Submit to employer: Hand the completed form to your employer. They'll adjust your withholding from that point forward. They can't stop withholding while any debt remains outstanding.

Indexation and Your HECS Balance

Your loan balance doesn't sit still between repayments. Indexation is applied once a year and it can undo progress if you're not watching it.

When Indexation Applies

Indexation happens on 1 June each year. It adjusts your debt to maintain its real value over time. Generally, it only applies to debt that's been outstanding for more than 11 months.

How Indexation Is Set

From 1 June 2023, the indexation rate is the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). This change was designed to stop debt from growing faster than wages during high inflation periods — a real problem in 2022 and 2023.

The 20% Debt Reduction Applied on 1 June 2025

A 20% debt reduction was applied to loan balances before indexation on 1 June 2025. This shows up as a credit or adjustment in your ATO loan account on myGov.

Conditions for the 20% reduction:

• The reduction applied automatically only to outstanding eligible student loan balances that existed on 1 June 2025, before indexation (3.2%) was applied.
• If your balance was zero on 1 June 2025, you weren't eligible.

How the reduction and indexation were applied:

1. Calculate outstanding balance: The outstanding balance as at 1 June 2025 was determined.
2. Apply 20% reduction: The 20% reduction was applied to that balance.
3. Apply indexation: Indexation (3.2% for 2025) was then applied to the post-reduction balance.
4. Visibility in myGov: The reduction was recorded as a credit on individual loan accounts, and the indexation was shown as an adjusted amount — visible in your linked myGov ATO account and via the ATO mobile app.
5. Processing timeline: Updates began mid-November 2025, with most accounts updated by mid-December 2025. Additional cases were completed by early 2026.

2025-26 Changes Compared With 2024-25

The system changed significantly for most people with HECS debt — and for the better, especially if you're on a lower or middle income.

Key Changes at a Glance

1. Lifted the minimum repayment threshold from $54,435 to $67,000.
2. Switched to marginal repayment brackets instead of a flat percentage on total income.
3. Reduced compulsory repayments for incomes near the threshold compared to the old method.

Comparison Example: Old vs. New Repayment

Under the 2025-26 rules, someone with a repayment income of $70,000 has a compulsory repayment of just $450. Under the old 2024-25 system, that same income would have triggered a higher repayment — calculated as a flat percentage of total income, not just the amount above the threshold.

That's a meaningful difference for people hovering just above the minimum.

Voluntary Repayments and Timing

You don't have to wait for the ATO to take your compulsory repayment at tax time. You can chip away at your loan whenever you like.

When Voluntary Repayments Can Be Made

You can make voluntary repayments to the ATO at any time via your myGov account — using BPAY or a credit card. There's no minimum amount, and no penalty for paying extra.

How Voluntary Repayments Interact With Compulsory Repayments

Paying voluntarily reduces your total loan balance. But — and this is important — it does not reduce your compulsory repayment amount for that income year. Your compulsory repayment is always calculated based on your RI when you lodge your return, regardless of what you've already paid voluntarily.

So if you want to pay it down faster before the 1 June indexation date, that's a smart move. Just don't assume it'll lower your tax bill.

Wrapping Up

Want to see your exact repayment rate for any income level? The HELP Repayment Threshold tool has every 2025-26 bracket at a glance.

The 2025-26 HECS threshold of $67,000 and the switch to marginal brackets are a genuine improvement for most borrowers — especially those on lower incomes who used to cop a big bill the moment they crossed the old threshold. Knowing your actual repayment income (not just your salary) is the most important thing you can do to avoid surprises at tax time. Check your myGov account, understand what gets added back, and if you've recently cleared your debt, update your employer straight away.