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, despite the 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 you can avoid by taking out hospital cover.
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, so 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, 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, and 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.