2025–26 Tax Brackets
Australia uses a progressive tax system. You don't pay one flat rate on all your income — you pay increasing rates on each portion above each threshold. The tax-free threshold means your first $18,200 is always tax-free.
| Taxable Income | Tax Rate | Tax on This Bracket |
|---|---|---|
| $0 – $18,200 | Nil | $0 |
| $18,201 – $45,000 | 16c per $1 over $18,200 | $4,288 |
| $45,001 – $135,000 | 30c per $1 over $45,000 | $27,000 |
| $135,001 – $190,000 | 37c per $1 over $135,000 | $20,350 |
| $190,001+ | 45c per $1 over $190,000 | — |
What Changed
The Stage 3 tax cuts took effect on 1 July 2024. The old 32.5% bracket was replaced with a 30% rate, and the 37% bracket now starts at $135,001 instead of $120,001. The 19% bracket was cut to 16%. These rates continue into 2025–26.
How the Progressive System Works
If you earn $90,000, you don't pay 30% on the whole amount. You pay nothing on the first $18,200, then 16% on the next $26,800 ($4,288), then 30% on the remaining $45,000 ($13,500). Total: $17,788 — an effective rate of 19.8%, not 30%.
This is before Medicare levy (2%) and any offsets like LITO. Your actual take-home depends on your full tax situation.
Frequently Asked Questions
What is the tax-free threshold?
The first $18,200 you earn each financial year is tax-free. You don't need to do anything special to claim it — just make sure you've ticked 'yes' to claiming the tax-free threshold on your TFN declaration with your employer.
How much tax do I pay on $100,000?
On a $100,000 salary in 2025–26, your income tax is $20,788 (before Medicare levy). That's an effective tax rate of 20.8%. Add 2% Medicare levy ($2,000) and your total is $22,788.
Did tax rates change in 2025?
The current brackets took effect on 1 July 2024 as part of the Stage 3 tax cuts. No changes were made for 2025–26 — the same rates apply.
What's the highest tax bracket?
The top marginal rate is 45 cents per dollar on income above $190,000. With 2% Medicare levy, the effective top rate is 47%.