ATO tax rates for 2025-26 are unchanged from last year, but a legislated cut arrives on 1 July 2026: the rate on income between $18,201 and $45,000 drops from 16% to 15%, and to 14% a year later. This guide gives you both years’ brackets side by side, the Medicare levy thresholds, worked examples and what to do about it.
Everything below is taken from the ATO’s Australia’s income tax brackets page for residents and was checked on 6 October 2026. If you want a quick number rather than the detail, use our income tax calculator.
The brackets below are the ATO’s published figures, not estimates. Where a 2026-27 figure differs from 2025-26 it is marked in bold in the table.
Key takeaways
- 2025-26 brackets are the same as 2024-25: 0%, 16%, 30%, 37% and 45%, with the tax-free threshold at $18,200.
- From 1 July 2026 the 16% rate becomes 15%, and from 1 July 2027 it becomes 14%. Everyone earning $45,000 or more saves $268 a year from each step.
- Medicare levy is on top – 2% of taxable income, with no levy below $28,011 for singles in 2025-26.
- LITO still applies: up to $700 for incomes to $37,500, phasing out at $66,667.
- Your marginal rate is not your effective rate. A $60,000 earner has a 30% marginal rate but pays about 14.6% overall before Medicare.
Resident tax brackets at a glance
| Taxable income | 2025-26 (1 Jul 2025 – 30 Jun 2026) | 2026-27 (from 1 Jul 2026) |
|---|---|---|
| $0 – $18,200 | Nil | Nil |
| $18,201 – $45,000 | 16c for each $1 over $18,200 | 15c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,288 plus 30c for each $1 over $45,000 | $4,020 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,288 plus 37c for each $1 over $135,000 | $31,020 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,638 plus 45c for each $1 over $190,000 | $51,370 plus 45c for each $1 over $190,000 |
Rates exclude the 2% Medicare levy. Source: ATO, tax rates for Australian residents.
What are the ATO tax rates for 2025-26?
For the year from 1 July 2025 to 30 June 2026, Australian residents pay no tax on the first $18,200, then 16% up to $45,000, 30% up to $135,000, 37% up to $190,000 and 45% above that. These are the brackets introduced by the revised Stage 3 cuts on 1 July 2024, carried through unchanged for a second year.
Australia taxes income progressively. Your income is split into slices and each slice is taxed at its own rate, so moving into a higher bracket only changes the rate on the dollars above the threshold – never on your whole income.
What changes on 1 July 2026 and 1 July 2027?
Two further cuts to the second bracket were legislated in 2025. The ATO already publishes the 2026-27 table:
- 2026-27: the 16% rate on $18,201 – $45,000 falls to 15%. Tax on $45,000 drops from $4,288 to $4,020, and every higher bracket’s fixed amount drops by the same $268.
- 2027-28: the rate falls again to 14%, worth another $268 a year to anyone earning $45,000 or more.
Thresholds do not move, so bracket creep continues for people whose wages rise. Employers’ PAYG withholding schedules change from 1 July 2026, so most employees will see the cut in their first pay of July 2026 rather than at tax time. Other measures announced in May are covered in our guide to the Federal Budget 2026-27 tax changes; background on the Stage 3 redesign is on the Treasury website.
How much tax will you pay? Three worked examples
| Taxable income | Tax 2025-26 | Tax 2026-27 | Effective rate 2025-26 (before Medicare) |
|---|---|---|---|
| $60,000 | $8,788 | $8,520 | 14.6% |
| $100,000 | $20,788 | $20,520 | 20.8% |
| $120,000 | $26,788 | $26,520 | 22.3% |
| $200,000 | $56,138 | $55,870 | 28.1% |
How the $60,000 figure is built (2025-26)
- First $18,200: nil.
- $18,201 to $45,000 ($26,800) at 16% = $4,288.
- $45,001 to $60,000 ($15,000) at 30% = $4,500.
- Total income tax = $8,788. Add Medicare levy of 2% ($1,200) for most people, less any offsets.
In 2026-27 the second step becomes $26,800 at 15% = $4,020, so the total falls to $8,520. Deductions, offsets, HECS-HELP repayments and private health insurance all move the final figure, which is why the estimate at lodgement and the Notice of Assessment can differ.
What about the Medicare levy?
The Medicare levy is 2% of taxable income and sits on top of the brackets above. Low-income earners pay a reduced levy or none at all. For 2025-26 the ATO’s thresholds are:
| 2025-26 | No levy at or below | Full 2% levy from |
|---|---|---|
| Singles | $28,011 | $35,013 |
| Seniors and pensioners (eligible for SAPTO), single | $44,268 | $55,335 |
Family thresholds are higher and increase for each dependent child; the ATO’s Medicare levy reduction for low-income earners page has the full table. The levy is separate from the Medicare levy surcharge, which applies to higher earners without private hospital cover – see how to avoid the Medicare levy surcharge, or our explainer on what the Medicare Levy charge is.
Which offsets reduce the tax you pay?
The Low Income Tax Offset (LITO) is the main one. It is worth up to $700 for taxable incomes up to $37,500, reduces by 5c per dollar between $37,500 and $45,000, then by 1.5c per dollar until it reaches nil at $66,667. The ATO applies it automatically when you lodge – you do not claim it. Our LITO guide has worked examples. Seniors and pensioners may also get SAPTO, and the private health insurance rebate works as an offset for those who hold eligible cover.
Marginal rate vs effective rate
Your marginal rate is the tax on your last dollar; your effective rate is total tax divided by total income. In 2025-26 a $60,000 earner has a 30% marginal rate but an effective rate of about 14.6% before Medicare. Use the marginal rate to judge a pay rise, overtime or a deduction; use the effective rate to understand your overall position.
Common mistakes with the tax brackets
- Claiming the tax-free threshold from two employers. Only claim it from one job. Claim it twice and too little is withheld all year – the classic cause of a surprise bill. See the two-jobs tax-free threshold mistake.
- Forgetting the Medicare levy. Budget on your bracket rate plus 2%.
- Turning down overtime “because it pushes me into the next bracket”. Only the extra dollars are taxed at the higher rate; you always keep more than half of them.
- Using an old table. From July 2026 the second bracket is 15%, and from July 2027 it is 14%. Check the year before you calculate.
How can you plan around the rates?
- Salary sacrifice to super is taxed at 15% inside the fund instead of your marginal rate – most valuable at 30% and above. See how salary sacrifice works.
- Time deductible spending into the year with the higher marginal rate where you have a choice.
- Check PAYG withholding if you regularly get a large refund or bill; the ATO calculator or your payroll team can adjust it.
- Hold CGT assets more than 12 months for the 50% discount so the gain is taxed at half your marginal rate.
- Get structure advice if you run a business – our tax planning services look at income splitting, trusts and company rates. For official guidance on any figure here, start at the ATO.
Rule of thumb
Earning $45,000 or more? The 2026 and 2027 cuts are worth $268 each – $536 a year combined by 2027-28 – and arrive automatically through your pay. Nothing to claim, but worth knowing when you compare one year’s refund to the next.
FAQ about ATO tax rates
What are the ATO tax rates for 2025-26?
For Australian residents in 2025-26: nil on the first $18,200; 16c in the dollar from $18,201 to $45,000; $4,288 plus 30c for each dollar over $45,000 up to $135,000; $31,288 plus 37c over $135,000 up to $190,000; and $51,638 plus 45c for each dollar over $190,000. The 2% Medicare levy is extra.
What changes to tax rates on 1 July 2026?
The rate on income between $18,201 and $45,000 falls from 16% to 15% for 2026-27. Every bracket above that keeps its rate, but the fixed amounts shift down, so tax on $45,000 becomes $4,020 instead of $4,288. Anyone earning $45,000 or more saves $268 for the year. A further cut to 14% is legislated for 1 July 2027.
How much tax do I pay on $100,000 in 2025-26?
$20,788 in income tax ($4,288 on the first $45,000 plus 30% of the next $55,000), before the 2% Medicare levy of $2,000 and before any offsets. In 2026-27 the same income pays $20,520.
Do the ATO tax rates include the Medicare levy?
No. The published brackets exclude the Medicare levy, which is 2% of taxable income for most people. For 2025-26 no levy is payable if your taxable income is $28,011 or less, and it phases in up to $35,013 (higher thresholds apply to seniors and pensioners and to families).
Is the tax-free threshold still $18,200?
Yes. The tax-free threshold is $18,200 for 2025-26 and 2026-27. If you have two jobs, claim it from one employer only, otherwise too little tax is withheld and you get a bill at tax time.
Talk to a registered tax agent
If you want your individual tax return lodged by people who work with these tables every day, or advice on structuring income before 30 June, speak with Nanak Accountants on 1300 626 258 or book your free 15 minute consultation.
This article is general information only and is not personal financial or tax advice. Bracket figures and Medicare levy thresholds were checked against the ATO’s published tables on 6 October 2026.
