Question 1

How is Australian income tax calculated for FY 2025-26?

Accepted Answer

Australian resident income tax is progressive: each rate applies only to the income that falls within its bracket, not your whole salary. For FY 2025-26 the first $18,200 is tax-free, $18,201 to $45,000 is taxed at 16%, $45,001 to $135,000 at 30%, $135,001 to $190,000 at 37%, and anything over $190,000 at 45%. The Medicare levy adds a flat 2% on income above $28,011.

Question 2

How does Australia tax foreign residents?

Accepted Answer

Foreign residents (non-residents for tax purposes) do not get the $18,200 tax-free threshold. For FY 2025-26 tax applies from the first dollar at 30% up to $135,000, then 37% to $190,000, and 45% above. The Medicare levy does not apply, because foreign residents are not entitled to Medicare. Switch to "Foreign resident (full year)" in the residency selector to see the curve.

Question 3

What is the part-year tax-free threshold and how is it calculated?

Accepted Answer

When you become or stop being an Australian resident mid-year, the $18,200 tax-free threshold is reduced. Following the ATO A2 instructions, the threshold is $13,464 plus $4,736 pro-rated by the number of full months you were an Australian resident. The Medicare levy is also scaled by the same months-as-resident fraction in this visualiser (the ATO simple calculator skips the levy entirely, so this is a deliberate simplification). Select "Part-year resident" and drag the months slider.

Question 4

What is the Medicare levy and who pays it?

Accepted Answer

The Medicare levy is a 2% flat charge on taxable income that helps fund Australia's public healthcare system. Most resident taxpayers pay it once their income passes the lower threshold ($28,011 for FY 2025-26). The real system has a phase-in band just above the threshold where the levy ramps from 0% up to 2%. This visualiser applies a single hard cutoff to keep the curve readable. The Medicare Levy Surcharge for high-income earners without private health is separate and not included here.

Question 5

What's the difference between marginal and effective tax rate?

Accepted Answer

Your marginal tax rate is the rate you pay on the next dollar you earn, which is the rate of your highest bracket. Your effective tax rate is your total tax divided by your total income, and it is lower than your marginal rate because the lower brackets tax most of your income at lower rates. A $200,000 salary sits in the 45% marginal bracket but has an effective rate of around 30%.

Question 6

Where does my Australian income tax go?

Accepted Answer

The Australian Taxation Office collects income tax into consolidated revenue, so no individual dollar is earmarked for a specific program. The "Where your tax goes" section on this page scales the federal government's published expense mix to your tax bill, using the 14 GFS function categories from Budget Paper No. 1. The largest slices are social security and welfare, "other purposes" (GST distribution to states, public debt interest, the contingency reserve, and natural disaster relief), and health.

Question 7

Does this calculator include HELP/HECS, LITO, the Medicare Levy Surcharge, or super?

Accepted Answer

No. This is a visualiser, not a tax-return tool. It deliberately excludes the Low Income Tax Offset (LITO and former LMITO), HELP/HECS student loan repayments, the Medicare Levy Surcharge (MLS) for high earners without private health, superannuation contributions, the Temporary Budget Repair Levy (FY 2014-15 to 2016-17), and working-holiday-maker brackets. The footer disclaimer lists every exclusion.

Question 8

How accurate is this calculator?

Accepted Answer

Bracket data and Medicare levy thresholds are sourced directly from the Australian Taxation Office and are exact for every year displayed. The maths is identical to the ATO's progressive marginal formula. The intentional simplifications listed above mean your real-world tax bill can differ. Use myTax or talk to an accountant for anything that matters.

Question 9

Where do these brackets come from?

Accepted Answer

All bracket and Medicare levy data comes from the Australian Taxation Office (ato.gov.au). The bracket table footer links to the ATO resident, foreign-resident, and A2 part-year tax-free threshold pages directly. The visualiser covers FY 2015-16 through FY 2026-27 (12 years), including the Stage 2 and Stage 3 tax cuts.

Taxable income	Marginal rate	Tax on this income
$0 to $18,200	0%	Nil
$18,201 to $45,000	16%	16c for each $1 over $18,200
$45,001 to $135,000	30%	$4,288 plus 30c for each $1 over $45,000
$135,001 to $190,000	37%	$31,288 plus 37c for each $1 over $135,000
$190,001 and above	45%	$51,638 plus 45c for each $1 over $190,000

How much tax?Australian income tax calculator FY 2025-26

Where your tax goes

Fun facts

Australian resident tax brackets for FY 2025-26

Frequently asked questions

Methodology