Understanding exactly how much tax you pay — and how to legally minimise it — is one of the most valuable financial skills you can have. Here's a complete guide to Australian income tax for the 2025-26 financial year.
| Taxable Income | Tax Rate | Tax on This Bracket |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 19% | 19c for each $1 over $18,200 |
| $45,001 – $120,000 | 32.5% | $5,092 + 32.5c for each $1 over $45,000 |
| $120,001 – $180,000 | 37% | $29,467 + 37c for each $1 over $120,000 |
| $180,001+ | 45% | $51,667 + 45c for each $1 over $180,000 |
| Annual Income | Income Tax | Medicare Levy | Total Tax | Effective Rate |
|---|---|---|---|---|
| $50,000 | $6,717 | $1,000 | $7,717 | 15.4% |
| $80,000 | $17,547 | $1,600 | $19,147 | 23.9% |
| $100,000 | $24,497 | $2,000 | $26,497 | 26.5% |
| $150,000 | $43,217 | $3,000 | $46,217 | 30.8% |
| $200,000 | $63,667 | $3,600 | $67,267 | 33.6% |
The ATO's fixed rate method allows 67 cents per hour worked from home (2025-26). This covers electricity, internet, phone and stationery. You must keep a record of your hours.
If you use your car for work (not commuting), you can claim 88 cents per kilometre (2025-26 rate) for up to 5,000km using the cents per km method. Keep a logbook if you're claiming more.
Courses, textbooks, and professional development directly related to your current work are deductible. Note: courses to get a new job are generally not deductible.
Fully deductible if related to your income-earning work.
Interest, council rates, property management fees, repairs and depreciation are all deductible for investment properties.
Up to $700 offset for incomes under $37,500. Phases out to nil at $66,667. This is automatically applied — you don't need to claim it separately.
Note: LMITO ended after the 2021-22 financial year and is no longer available.
31 October each year if you're lodging yourself. If you use a registered tax agent, you may have until May the following year. Penalties apply for late lodgement.
$18,200 per year. If you earn less than this, you pay no income tax. You must claim the tax-free threshold on your Tax File Number declaration with your employer.
Concessional (pre-tax) super contributions are taxed at 15% inside the fund — much lower than most people's marginal rate. This is why maximising super is a key tax minimisation strategy.