The Australian income tax system uses progressive tax brackets — meaning you pay a higher rate only on the portion of your income above each threshold. Here’s exactly how your tax is calculated for the 2025-26 financial year, with the Stage 3 tax cuts already in effect.
2025-26 Tax Brackets — Stage 3 Tax Cuts in Effect
| Taxable Income | Tax Rate | Tax on this portion |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 16% | 19c per $1 over $18,200 |
| $45,001 – $135,000 | 30% | $4,288 + 30c per $1 over $45,000 |
| $135,001 – $190,000 | 37% | $31,288 + 37c per $1 over $135,000 |
| $190,001+ | 45% | $51,638 + 45c per $1 over $190,000 |
Take-Home Pay Examples — 2025-26
| Annual Salary | Income Tax | Medicare Levy | Total Tax | Take-Home | Monthly |
|---|---|---|---|---|---|
| $60,000 | $8,288 | $1,200 | $9,488 | $50,512 | $4,209 |
| $80,000 | $14,288 | $1,600 | $15,888 | $64,112 | $5,343 |
| $100,000 | $20,288 | $2,000 | $22,288 | $77,712 | $6,476 |
| $130,000 | $29,288 | $2,600 | $31,888 | $98,112 | $8,176 |
| $180,000 | $47,638 | $3,600 | $51,238 | $128,762 | $10,730 |
Stage 3 Tax Cuts — What Changed from 1 July 2024
The Stage 3 tax cuts that took effect from 1 July 2024 included significant restructuring of tax brackets. The main changes:
- The 19% rate (applying to $18,201–$45,000) was reduced to 16%
- The 32.5% rate was reduced to 30%, and its ceiling was raised from $120,000 to $135,000
- The 37% bracket was restored (it was previously planned to be abolished)
- The 45% threshold remained at $190,000
These changes particularly benefited middle-income earners earning $45,000–$135,000.
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Disclaimer: General information only. Not financial advice. Always consult a licensed professional before making financial decisions.