Australian tax brackets FY2026-27 and FY2025-26

For Australian residents in FY2026-27: the first $18,200 is tax-free, then 15% to $45,000, 30% to $135,000, 37% to $190,000, and 45% above that. The 15% rate is new from 1 July 2026 (it was 16% in FY2025-26), under the Treasury Laws Amendment (More Cost of Living Relief) Act 2025. These rates don't include the 2% Medicare levy, which most residents pay on top.

No. The bracket rates are income tax only — most residents also pay the Medicare levy of 2% of taxable income on top (reduced or nil below $28,011 for singles), and the Medicare levy surcharge can add 1–1.5% more if you earn above the surcharge threshold without private hospital cover. That's why the tax at common incomes table on this page shows bracket tax and the total separately.

Your marginal rate is the bracket rate on your last dollar — earn one more dollar and that's what it's taxed at. Your effective (average) rate is your total tax divided by your whole income, which is always lower because the first $18,200 is tax-free and each bracket only taxes the slice of income inside it. Moving into a higher bracket never reduces your take-home pay: only the dollars above the threshold are taxed at the higher rate.

Two things. The second bracket's rate dropped from 16% to 15% — worth exactly $268 a year to anyone earning $45,000 or more — and the new $1,000 standard deduction for work-related expenses (ITAA 1997 s 25-130) first applies, automatically reducing a resident employee's taxable income by up to $1,000 without receipts. The bracket thresholds themselves are unchanged.

From 1 July 2027 (FY2027-28). The Treasury Laws Amendment (More Cost of Living Relief) Act 2025 legislated the second bracket's cut in two steps: 16% to 15% from FY2026-27, then 15% to 14% from FY2027-28. Both are already law, not proposals.

The tax-free threshold is $18,200: the first $18,200 of an Australian resident's taxable income each year is taxed at nil. It is the top row of the FY2026-27 bracket table. What it is not is the point where you start paying tax. Because the Low Income Tax Offset cancels the bracket tax on the income just above the threshold, a resident with no other adjustments pays no income tax at all until taxable income reaches $22,867, and pays no Medicare levy until $28,011 — a separate and higher threshold. Only Australian residents for tax purposes get the threshold; foreign residents pay from the first dollar.

Close, but the figure is $18,200, not $18,000 — the extra $200 is real money at the margin and the ATO's tables use the exact number. A resident with a taxable income of exactly $18,200 pays $0 in income tax and Medicare levy combined. Past that point the 15% rate applies to each extra dollar, but the Low Income Tax Offset absorbs it for a while: the first cents of actual income tax appear at $22,867, where the total comes to $0. Note the threshold applies to taxable income, which from FY2026-27 is up to $1,000 below a salary earner's gross pay because of the automatic standard deduction.

Yes, from one payer — normally whichever job pays you the most. The threshold is an amount per person per year, not per employer, so claiming it tells that payer to withhold as though the first $18,200 of what it pays you is untaxed. Claim it from two payers at once and both apply the same untaxed slice, too little tax comes out across the year, and the difference arrives as a bill when you lodge. If you have a second job, do not claim it there; that payer uses the no-threshold withholding scale instead. If your total income for the year will be under the threshold anyway, claiming it simply means little or nothing is withheld in the first place.

More tax is withheld from every pay than you will actually owe, and you get the excess back as a refund when you lodge. Not claiming it is not a penalty and it does not change your final tax bill — your assessment is worked out on your total taxable income for the year regardless of what any single payer withheld. It only changes the timing: you lend the money to the ATO through the year instead of holding it. The one case where not claiming is the right answer is a second job, where claiming it a second time would under-withhold and leave you owing money at lodgement.

No. Foreign residents for tax purposes pay 30c from the very first dollar up to $135,000, then 37% to $190,000 and 45% above — but they don't pay the Medicare levy. Working holiday makers (417/462 visas) have their own scale starting at 15% up to $45,000. Neither gets the Low Income Tax Offset or the standard deduction.