How Australian income tax works
Australia uses a progressive marginal tax system — you pay more tax as you earn more, but only on the portion of income that falls within each bracket. A common misconception is that earning more can leave you worse off; this isn't possible in a marginal system.
2024–25 tax brackets (Stage 3 tax cuts)
$0 – $18,2000%Tax-free threshold
$18,201 – $45,00019%On income above $18,200
$45,001 – $135,00032.5%On income above $45,000
$135,001 – $190,00037%On income above $135,000
$190,001+45%On income above $190,000
What's deducted from your pay
For most Australian employees, three things are deducted:
- Income tax — withheld by your employer under PAYG and paid to the ATO. Your tax bracket determines the rate on each portion of your income.
- Medicare levy — 2% of taxable income. Funds Australia's public health system. Applies to most taxpayers earning above ~$26,000.
- Low Income Tax Offset (LITO) — technically a reduction, not a deduction. Reduces your tax bill by up to $700 if you earn under $66,667.
HECS/HELP repayments, salary sacrifice arrangements, and private health insurance rebates are not included in this calculator as they vary significantly by individual.
Take-home pay by income (2024–25)
| Gross salary | Income tax | Medicare | Take-home | Effective rate |
|---|---|---|---|---|
| $60,000 | $10,708 | $1,200 | $48,092 | 18.2% |
| $80,000 | $16,258 | $1,600 | $62,142 | 22.3% |
| $100,000 | $22,108 | $2,000 | $75,892 | 24.1% |
| $120,000 | $29,358 | $2,400 | $88,242 | 26.5% |
| $150,000 | $40,258 | $3,000 | $106,742 | 29.5% |
| $200,000 | $60,258 | $4,000 | $135,742 | 32.1% |