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Australia has five income tax brackets, the Medicare levy, the low-income tax offset, and hundreds of pages of tax law. That makes understanding your personal tax rate more complicated than it should be.
Key Takeaways
- Australia uses a progressive tax system, so higher tax rates only apply to part of your income.
- Most Australian residents pay no tax on the first $18,200 they earn. This is the tax-free threshold.
- Tax brackets differ for residents, foreign residents and working holiday makers.
- New tax changes are coming from 1 July 2026, including lower rates for the first tax bracket.
- Understanding your tax bracket can help you estimate your refund and plan ahead.
What are the tax brackets in Australia?
Tax brackets in Australia are set by the Federal Government and the Australian Taxation Office (ATO).
You fall into a tax bracket, depending on your taxable income for the financial year. This includes money earned from employment plus other forms of income such as interest from your savings account.
There are different income tax brackets for Australian residents, foreign residents and working holiday makers.
2026 Budget Update for 2026/27 Financial Years
Percentage cuts for the lowest tax bracket
From 1 July 2026, the rate for the lowest tax bracket will decrease from 16% to 15%. This means you’ll pay one cent less on every dollar you earn between $18,201 and $45,000.
From 1 July 2027, the new 15% tax rate will drop a further percentage to 14%.
These changes mean a tax saving of $268 for individuals earning $45,000 or more in the 2026-27 financial year, rising to $536 in the 2027-28 financial year.
Working Australians Tax Offset
The Working Australians Tax Offset (WATO) is a new offset introduced in the 2026 federal budget that will provide additional tax relief for low and middle-income earners in the workforce. It will give working Australians an annual tax offset of up to $250, directly reducing the amount of tax you owe.
$1000 Instant Tax Deduction
From the 2026-27 financial year, eligible workers will be able to claim an automatic $1,000 tax deduction without needing to keep receipts. This measure is designed to reduce the record-keeping burden for individuals with standard work-related expenses, but it is important to check if it’s right for you.
Australian resident tax brackets and rates for 2024–25 and 2025–26
If you know your annual income, use the table below to see which tax bracket you’ll likely fall into.
Note: The 2024-25 and 2025-26 tax brackets include Stage 3 tax Cuts revisions to provide more relief to low and middle income earners.
For Australian residents, the first $18,200 you earn comes under the tax-free threshold. Then, for every dollar you earn above $18,200 the relevant tax rates apply.
Note: The below tax tables do not include the Medicare levy which is an additional 2% of your taxable income. For more information on the Medicare levy please click here.
| Taxable Income | Tax rate |
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 16 cents for each $1 over $18,200 |
| $45,001 – $135,000 | $4,288 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,288 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,638 plus 45c for each $1 over $190,000 |
Australian resident tax brackets and rates for the 2026–27 financial year
| Taxable Income | Tax rate |
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 15 cents for each $1 over $18,200 |
| $45,001 – $135,000 | $4,020* plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,020* plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,370* plus 45c for each $1 over $190,000 |
*This includes the tax cut of up to $268 from 1 July 2026 the Government announced in their May Budget.
Ready to get your 2026 tax refund?
It takes just a few minutes online, with live online support to help boost your refund.
Tax rates for foreign residents
Foreign residents for tax purposes must still declare income earned in Australia, including employment income, rental income, or any capital gains on Australian assets. However, their tax rates are different to residents.
The main differences are that foreign residents don’t receive the tax-free threshold and they generally don’t pay the Medicare levy (subject to holding a Medicare entitlement statement).
2024–25 & 2025–26 Foreign residents tax table
| Taxable Income | Tax rate |
| $0 – $135,000 | 30c for each $1 |
| $135,001 – $190,000 | $40,500 plus 37c for each $1 over $135,000 |
| $190,001 and over | $60,850 plus 45c for each $1 over $200,000 |
2023-24 Foreign residents tax table
| Taxable Income | Tax rate |
| $0 – $120,000 | 32.5c for each $1 |
| $120,001 – $180,000 | $39,000 plus 37c for each $1 over $120,000 |
| $180,001 and over | $61,200 plus 45c for each $1 over $180,000 |
Income tax rates for working holiday makers
The ATO considers you a working holiday maker if you hold a visa subclass of:
- 417 (working holiday)
- 462 (work and holiday)
People classified as working holiday makers have an additional tax bracket to non-residents.
Working holiday makers do not receive the tax-free threshold, however, the ATO taxes the first $45,000 they earn at only 15c per dollar (15%) rather than the non-resident rate of 30c per dollar.
You can read more about working holiday maker tax here.
2024–25 + 2025–26 Working holiday maker tax table
| Taxable Income | Tax rate |
| $0 – $45,000 | 15c for each $1 |
| $45,001 – $135,000 | $6,750 plus 30c for each $1 over $45,000 |
| $135,001 – 190,000 | $33,750 plus 37c for each $1 over $135,000 |
| $190,001 and over | $53,250 plus 45c for each $1 over $190,000 |
2023–24 Working holiday maker tax table
| Taxable Income | Tax rate |
| $0 – $45,000 | 15c for each $1 |
| $45,001 – $120,000 | $6,750 plus 32.5c for each $1 over $45,000 |
| $120,001 – $180,000 | $31,125 plus 37c for each $1 over $120,000 |
| $180,001 and over | $53,325 plus 45c for each $1 over $180,000 |
Etax calculates your tax bracket automatically
The Etax online tax return includes an in-built tax calculator that estimates your tax refund automatically.
Just add your income and deductions, and the calculator works out which tax bracket you fall into and gives you an accurate refund estimate. Etax even adds pre-existing ATO data to save you time, and finds deductions based on your job and previous tax return.
Give Etax a try today. It’s available online 24/7, 365 days a year!
Frequently asked questions
A tax bracket is an income range with a set tax rate. Australia uses five brackets for residents. You do not pay the same rate on all your income, only on the portion that falls within each bracket.
There are five income tax brackets for Australian residents, starting with the tax-free threshold for those earning up to $18,200.
Australian residents pay no income tax on the first $18,200 they earn in a financial year. This is called the tax-free threshold.
The rates for 2025–26 are the same as 2024–25. Please see the table above. Note that these rates do not include the Medicare levy.
No. Foreign residents do not receive the tax-free threshold and are taxed at different rates. See the foreign resident tax table above.
The Medicare levy is an additional 2% of taxable income that most Australian residents pay on top of their income tax. Foreign residents generally do not pay the Medicare levy.
Your tax bracket is based on your taxable income for the financial year. You can use the Etax tax calculator to enter your income and get an automatic refund estimate, including which bracket applies.
The lowest tax bracket rate will drop from 16% to 15% from 1 July 2026, saving eligible earners up to $268. There are also new offsets introduced in the 2026 federal budget. Read our budget update above for details.
Ready to get your 2026 tax refund?
It takes just a few minutes online, with live online support to help boost your refund.
