Tax on bonus Australia rules treat a bonus the same way as your normal wages. It is added to your taxable income for the year and taxed at your marginal rate, plus the 2% Medicare levy. There is no separate or higher “bonus tax” rate.
What often catches people out is the amount taken out of the bonus on payday. Your employer withholds tax using an ATO formula that can take up to 47% of the bonus, which is an estimate, not your final tax. The real figure is settled when you lodge your tax return.
This guide covers the 2026-27 tax rates, how withholding on a bonus works, whether you get super on it, and the rules for putting a bonus into super, with a worked example and figures checked against ATO sources.
Key takeaways
- A bonus is ordinary income. It is taxed at your marginal rate plus the 2% Medicare levy, the same as salary.
- Only the part of your income above a threshold is taxed at the higher rate. A bonus never pushes your whole salary into a higher bracket.
- PAYG withholding on a bonus is capped at 47% of the bonus. Any over-withholding comes back as a credit in your tax return.
- Bonuses for ordinary hours of work attract 12% super guarantee.
- You can only salary sacrifice a bonus into super if the arrangement is in place before you earn it.
How is a bonus taxed in Australia at a glance?
| Item | Rule for 2026-27 |
|---|---|
| How the bonus is taxed | Added to taxable income and taxed at your marginal rate |
| Resident tax rates | Nil to $18,200, then 15%, 30%, 37% and 45% |
| Medicare levy | 2% of taxable income |
| Medicare levy surcharge (no private hospital cover) | 1% to 1.5% once income for MLS purposes is over $105,000 (singles) or $210,000 (families) |
| Tax withheld by your employer | Worked out under ATO Schedule 5, capped at 47% of the bonus |
| Super guarantee | 12% if the bonus relates to ordinary hours of work |
| Salary sacrifice into super | Must be agreed before the bonus is earned; taxed at 15% in the fund |
| Concessional contributions cap | $32,500, including employer super guarantee |
Is a bonus taxed at a higher rate than salary?
No. Performance bonuses, Christmas bonuses, sign-on bonuses and similar cash payments from your employer are part of your employment income. They go into the same pool as your salary and are taxed at the same rates.
For Australian residents, the ATO resident tax rates for 2026-27 are:
| Taxable income | Tax on this income (2026-27) |
|---|---|
| $0 to $18,200 | Nil |
| $18,201 to $45,000 | 15c for each $1 over $18,200 |
| $45,001 to $135,000 | $4,020 plus 30c for each $1 over $45,000 |
| $135,001 to $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 |
These rates do not include the 2% Medicare levy. The bottom rate fell from 16% in 2025-26 to 15% from 1 July 2026, so the base amounts in each bracket are $268 lower than last year. You can test your own numbers with our income tax calculator.
Will a bonus push me into a higher tax bracket?
It can push part of your income into a higher bracket, but only the dollars above the threshold are taxed at the higher rate. Everything below the threshold keeps the rate it had before.
Say you earn $130,000 in 2026-27 and get a $10,000 bonus. Your taxable income becomes $140,000. The first $5,000 of the bonus is taxed at 30% ($1,500) and the next $5,000 at 37% ($1,850). Income tax on the bonus is $3,350, plus $200 Medicare levy, so $3,550 in total. Your salary is still taxed exactly as it was.
Watch out: the Medicare levy surcharge
A bonus can tip you over a Medicare levy surcharge threshold if you do not have private hospital cover. For 2026-27 the single threshold is $105,000. A single person on $100,000 who gets a $10,000 bonus moves to $110,000 and, with no other MLS income items, pays a 1% surcharge on the whole amount, which is $1,100. That is on top of the 2% Medicare levy.
Why does my bonus have so much tax taken out?
The amount your employer withholds from a bonus is worked out under ATO Schedule 5, the tax table for back payments, commissions and bonuses. It is designed to estimate the extra tax the bonus adds over a full year, not to charge a special rate.
Under Method A, which can be used for any bonus, your employer:
- works out the normal withholding on your regular pay for the period
- divides the bonus by the number of pay periods in the year (52, 26 or 12) and adds that to your regular pay
- works out the withholding on that higher amount and subtracts the normal withholding
- multiplies the difference back up by the number of pay periods
- withholds the lower of that figure and 47% of the bonus.
Because the formula is an estimate based on your pay in that period, the amount withheld will rarely match your final tax to the dollar. If the withholding is more than the tax you actually owe, the difference is credited when you lodge your individual tax return. If it is less, you will have tax to pay on your notice of assessment.
Tip
Check your payslip to see the bonus and the tax withheld from it, then run your full-year figures through our Australian pay calculator or tax refund calculator. That gives you a better idea of whether you are heading for a refund or a bill.
Do I get super on my bonus?
Usually, yes. The ATO treats bonuses that relate to your ordinary hours of work as ordinary time earnings and qualifying earnings, so your employer must pay the 12% super guarantee on them. This covers performance, Christmas, sign-on and referral bonuses.
The exception is a bonus paid solely for work done entirely outside your ordinary hours, such as a one-off bonus for working a Sunday. That is treated like overtime and does not attract super guarantee.
Under Payday Super, which applies to earnings paid from 1 July 2026, the super on a bonus must generally reach your fund within 7 business days of payday. Employers who need help with this can read about our payroll services.
Can I put my bonus into super to pay less tax?
You can, if you set up a salary sacrifice arrangement with your employer in time. The ATO says an effective arrangement cannot include bonuses or commissions you accrued before you entered the arrangement. In practice, that means agreeing to it before you do the work the bonus is paid for.
Salary sacrificed super is a concessional contribution. It is taxed at 15% in the fund instead of at your marginal rate. Keep these limits in mind:
- The concessional contributions cap is $32,500 for 2026-27 (up from $30,000), and your employer’s super guarantee counts towards it.
- If your income and concessional contributions together are more than $250,000, Division 293 tax adds a further 15% on some or all of those contributions. Our guide on Division 293 tax explains how it works.
- Money in super is generally locked away until you meet a condition of release, such as retirement.
For more on how these arrangements are set up, see our salary sacrifice guide.
Worked example: how much tax on a $10,000 bonus?
The facts
Priya is an Australian resident employee on a salary of $85,000. She receives a $10,000 performance bonus. She has private hospital cover, no other income and no deductions. Her salary is above $66,667, so she gets no low income tax offset. We compare the tax if the bonus is paid in 2025-26 with the tax if it is paid in 2026-27, and then look at salary sacrificing it.
Old rates: bonus paid in 2025-26
- Taxable income: $85,000 + $10,000 = $95,000
- Income tax: $4,288 + 30% x ($95,000 – $45,000) = $4,288 + $15,000 = $19,288
- Medicare levy: 2% x $95,000 = $1,900
- Total: $21,188
- Without the bonus: $4,288 + 30% x $40,000 = $16,288, plus $1,700 Medicare levy = $17,988
- Tax on the bonus: $21,188 – $17,988 = $3,200 (32%)
New rates: bonus paid in 2026-27
- Taxable income: $95,000
- Income tax: $4,020 + 30% x ($95,000 – $45,000) = $4,020 + $15,000 = $19,020
- Medicare levy: 2% x $95,000 = $1,900
- Total: $20,920
- Without the bonus: $4,020 + 30% x $40,000 = $16,020, plus $1,700 Medicare levy = $17,720
- Tax on the bonus: $20,920 – $17,720 = $3,200 (32%)
Priya’s total tax is $268 lower in 2026-27 because of the cut to the bottom rate. The tax on the bonus itself does not change, because every dollar of it falls in the 30% bracket. She keeps $6,800 of the bonus in cash either way.
Option: salary sacrifice the bonus in 2026-27
- Priya agrees with her employer before the bonus is earned to sacrifice the full $10,000 into super.
- Contributions tax in the fund: 15% x $10,000 = $1,500
- Amount added to her super: $10,000 – $1,500 = $8,500
- Compared with cash: $8,500 – $6,800 = $1,700 more kept, but it stays in super
- Her income is well under $250,000, so Division 293 does not apply, and her employer’s 12% super guarantee plus the $10,000 stays well under the $32,500 cap.
Whether this suits Priya depends on whether she needs the cash now. If you want to work through the tax on bonus Australia figures for your own situation, our individual tax accountants can help.
Frequently asked questions
Are bonuses taxed at a higher rate in Australia?
No. A bonus is added to your taxable income and taxed at your marginal rate plus the 2% Medicare levy, the same as your salary. The amount withheld on payday can look higher because PAYG withholding on bonuses is an estimate that can be up to 47% of the bonus, but your actual tax is worked out in your tax return.
Why was so much tax taken out of my bonus?
Employers use ATO Schedule 5 to work out withholding on a bonus. The formula spreads the bonus across the year’s pay periods to estimate the extra tax, and withholding is capped at 47% of the bonus. If too much was withheld, the extra is credited back when you lodge your tax return.
Do I get super on my bonus?
Usually yes. Bonuses that relate to your ordinary hours of work, such as performance, Christmas, sign-on and referral bonuses, attract the 12% super guarantee. A bonus paid solely for work done entirely outside ordinary hours does not.
Can I salary sacrifice my bonus into super?
Yes, but only if you agree to the arrangement with your employer before the bonus is earned. Bonuses accrued before the arrangement starts cannot be sacrificed. Sacrificed amounts are taxed at 15% in the fund and count towards the $32,500 concessional contributions cap for 2026-27.
Will a bonus push all my income into a higher tax bracket?
No. Australia uses marginal tax rates, so only the part of your income above a threshold is taxed at the higher rate. The rest of your income is taxed exactly as it was before the bonus.
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Talk to a registered tax agent
Not sure how your bonus will affect your tax or super? Speak with a registered tax agent at Nanak Accountants & Associates on 1300 626 258, or book a consultation with our team. We help employees with individual tax returns and planning across Australia.
This article is general information only and is not personal financial or tax advice. Information checked against ATO sources on 27 October 2026.
