Tax Brackets Australia 2026-27: Pay & After-Tax Income Guide

Australia's 2026-27 income tax brackets start at 0% on earnings up to $18,200 and rise to 45% for income above $190,000. But here's what most people miss — your take-home pay depends on more than just your marginal rate. Medicare levy, offsets, and deductions all change the final number.

Key Takeaways

• The tax-free threshold for 2026-27 is $18,200. You pay nothing on income up to that point.
• Tax is calculated progressively — each bracket only applies to the income within that range, not your entire salary.
• The 2026-27 rates are unchanged from 2025-26. No new brackets this year.
• From 1 July 2027, the 15% bracket is legislated to drop to 14% for income between $18,201 and $45,000.
• The Low Income Tax Offset (LITO) can reduce your tax bill by up to $700 if you earn under $66,667.

Your 2026-27 Resident Tax Rates

The rates below apply to Australian tax residents for income earned between 1 July 2026 and 30 June 2027. If you're a resident, you get the tax-free threshold — non-residents don't.

Resident Tax Bracket Table (2026-27)

These rates cover income tax only. They don't include the Medicare levy, and they don't factor in any offsets you might be eligible for — like the LITO, which could knock a chunk off your final tax bill.

Your Income Is Taxed Progressively

Your salary doesn't get taxed at one flat rate. Your marginal tax rate is the rate you pay on your last dollar of income. Your effective tax rate is the actual percentage of your total income that ends up going to the ATO — and it's always lower than your top marginal rate.

So if you're earning $100,000 and someone tells you you're "in the 30% bracket," don't panic. You're not paying 30% on all of it.

How to Calculate Your Income Tax: Step by Step

1. Start with taxable income — your total income minus any deductions you can legitimately claim.
2. Apply the rates across brackets — only the slice of income within each bracket gets taxed at that rate.
3. Add up the tax from each bracket — that's your gross income tax bill.
4. Add the Medicare levy (usually 2%) if your income is over the threshold.
5. Subtract any offsets you qualify for — like the LITO — to get your final tax payable.

From Salary to Pocket: After-Tax Income Examples for 2026-27

Want to know what you'd actually take home? The table below shows real numbers at common income levels, after income tax and the 2% Medicare levy. These figures don't include offsets like the LITO, so your actual take-home may be a bit higher.

Worked Examples: Total Tax and Take-Home Pay

Your effective tax rate is simply total tax divided by taxable income. It gives you the real picture — what percentage of your money actually goes to the government.

If you're eligible for the LITO or other offsets, your after-tax income will be higher than the figures shown here. Want to run your own numbers? The Salary Tax Calculator does the full calculation — income tax, Medicare levy, LITO, and HECS if you have it — in seconds.

The Medicare Levy (2%): Australia's Public Health Contribution

The Medicare levy is a separate charge that funds Australia's public health system. For most working Australians, it's straightforward — 2% of your taxable income, calculated alongside your income tax.

2026-27 Medicare Levy Thresholds for Low Incomes

If you're on a lower income, you may pay a reduced rate or nothing at all.

• Singles: Exempt up to $27,222. Phases in from $27,223 to $34,027. Full 2% applies at $34,027 and above.
• Single seniors and pensioners: Exempt up to $43,020. Phases in from $43,021 to $53,775. Full 2% applies at $53,775 and above.
• Families: Exempt up to $45,907 (plus $4,216 per dependent child). Phases in to $57,383 (plus $5,270 per child). Full 2% applies from that point upward.
• Families (seniors and pensioners): Exempt up to $59,886 (plus $4,216 per dependent child). Phases in to $74,857 (plus $5,270 per child). Full 2% applies at $74,857 (plus $5,270 per child) and above.

If your income falls between the lower and upper thresholds, you pay a reduced rate — not the full 2%. And in specific cases (like not being entitled to Medicare benefits), you may be exempt entirely. But that's a fairly narrow test and won't apply to most Australian residents.

Medicare Levy Surcharge (MLS): The Cost of Skipping Hospital Cover

The MLS is an extra charge on top of the standard Medicare levy. You're hit with it if your income exceeds a certain threshold and you don't hold an appropriate private patient hospital cover — for yourself and any dependents.

Here's the thing most people miss: the MLS is calculated on your "income for MLS purposes," which can be higher than your ordinary taxable income. It includes:

• Taxable income
• Reportable fringe benefits (RFBA)
• Net investment losses
• Exempt foreign employment income
• Certain superannuation lump sum payments
• Deductible super contributions (if you're self-employed or made personal contributions)

Reportable fringe benefits (RFBA) are the grossed-up taxable values of employer-provided fringe benefits above a threshold, reported on your income statement. They're included in your MLS income base — but not in your ordinary taxable income.

Reportable superannuation contributions (like salary-sacrifice super) affect various means tests, but they're not included in the MLS base.

MLS Thresholds and Rates (2026-27)

For families, the thresholds increase by $1,500 for each dependent child after the first. The MLS applies to your full "income for MLS purposes" once you cross the relevant threshold.

Low Income Tax Offset (LITO): Up to $700 Off Your Tax Bill

The LITO is a non-refundable tax offset that directly reduces how much income tax you owe. Non-refundable means if the offset is larger than your tax bill, you'll get it down to zero — but you won't receive the difference as a cash refund.

The good news? The ATO calculates it automatically if you're an Australian resident for tax purposes. You don't need to do anything special to claim it.

LITO Amounts for 2026-27

The offset amount phases out as your income rises:

• $37,500 or less: Maximum offset of $700.
• $37,501 – $45,000: $700 minus 5 cents for every $1 earned above $37,500.
• $45,001 – $66,667: $325 minus 1.5 cents for every $1 earned above $45,000.
• $66,668 or more: $0.

So if your taxable income is $50,000, your LITO works out to $325 minus (($50,000 - $45,000) x 0.015) = $325 - $75 = $250. That $250 comes straight off your income tax bill.

Taxable Income vs. Gross Salary: What the Brackets Actually Apply To

The brackets don't apply to your gross salary — they apply to your taxable income. These are different numbers and the gap between them matters.

Definitions

• Salary (Gross): Your total pay from your employer before anything is deducted.
• Taxable Income: The figure you actually pay tax on. It's your total income minus allowable deductions.

What Changes Your Taxable Income

1. Income sources: Salary, wages, bonuses, allowances, bank interest, dividends, and capital gains all count.
2. Deductions: Work-related expenses — travel, uniforms, self-education — reduce your taxable income, provided you've kept records.
3. Adjustments: Some items (like reportable fringe benefits) don't add to taxable income but do affect your eligibility for things like the Medicare Levy Surcharge.

Your personal situation is unique. These rules apply differently depending on your circumstances, and it's worth understanding how they interact before you lodge your return.

Pay Packets and Tax Withheld: Why Your Refund Varies

The amount you receive each payday is an estimate — not a final figure.

PAYG Withholding vs. Final Tax

Your employer withholds tax under the Pay As You Go (PAYG) system and sends it to the ATO throughout the year. Think of it as a prepayment toward your eventual tax bill. When you lodge your return after 30 June, the ATO does the final calculation.

You'll get a refund if too much was withheld. You'll get a bill if not enough was withheld. Common reasons the two numbers don't line up include HECS-HELP debts, salary packaging arrangements, bonuses, a second job, or changes in residency status during the year.

Non-Resident Tax Rates (2026-27)

Not an Australian tax resident? The rules are different — and generally less favourable.

Non-Resident Tax Brackets for 2026-27

As a non-resident, you don't get the tax-free threshold — so you're paying tax from the first dollar. And you generally don't pay the Medicare levy either, since you're not entitled to Medicare benefits.

Residency for tax purposes is a specific legal test based on your circumstances. It's not the same as your visa status or nationality.

What's Changing After 2027?

The 2026-27 rates are locked in — but there is one scheduled change coming.

Legislated Changes from 1 July 2027

• From 1 July 2027 (2027-28 income year): The resident tax rate for the $18,201 – $45,000 bracket drops from 15% to 14%.

No other marginal-rate changes are currently legislated for the remaining brackets.

Wrapping Up

Australia's 2026-27 tax brackets are unchanged from last year — five brackets, a $18,200 tax-free threshold, and a top rate of 45%. But your actual take-home pay depends on more than just the brackets. The Medicare levy, the LITO, your deductions, and whether you hold private hospital cover all feed into your final number. Use the tables and examples above to get a solid read on where you stand, and remember that small things — like claiming legitimate work expenses — can meaningfully reduce your taxable income.