Australian income tax in 2026-27, explained
Australia taxes income progressively: you don't pay one rate on your whole income, you pay a higher rate only on the slice of income above each threshold. So earning a little more never leaves you worse off overall — a common myth about "moving into a higher bracket."
The 2026-27 tax brackets (residents)
| Taxable income | Tax on this income |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 15c per $1 over $18,200 |
| $45,001 – $135,000 | $4,020 + 30c per $1 over $45,000 |
| $135,001 – $190,000 | $31,020 + 37c per $1 over $135,000 |
| $190,001 + | $51,370 + 45c per $1 over $190,000 |
The first $18,200 — the tax-free threshold — is taxed at nil. From 1 July 2026 the second bracket dropped from 16% to 15% (legislated), so most workers pay a little less than the year before.
On top of income tax: the Medicare levy
Most residents also pay the Medicare levy of 2% of taxable income (phased in gently above a low-income threshold). Higher earners without an appropriate level of private hospital cover pay an extra Medicare Levy Surcharge of 1–1.5% — which taking out hospital cover can remove.
The Low Income Tax Offset (LITO)
LITO reduces the tax of lower-income earners by up to $700, phasing out as income rises (it's gone by about $66,667). It's an offset, not a refund — it can reduce your tax to zero but not below.
A worked example
On a $90,000 salary as a resident in 2026-27, income tax works out to roughly $17,500 after LITO, plus about $1,800 Medicare levy — leaving around $70,700 take-home, an effective rate near 21%. Your marginal rate (the tax on your next dollar) is 30%.
Not a resident for tax?
Foreign residents and working-holiday makers use different rates, get no tax-free threshold and no LITO, and don't pay the Medicare levy. You declare your own residency status — the calculator lets you switch it.
Enter your salary for an exact 2026-27 estimate — tax, Medicare, LITO and take-home pay.
Income tax calculator →Related: how HECS repayments work · HECS calculator. General information only, not tax advice — check the ATO for your situation.