Australian income tax brackets 2026–27 explained

Australia taxes personal income on a progressive scale: the more you earn, the higher the rate on your top slice of income, but only on that slice. Understanding how the brackets fit together is the difference between dreading a pay rise and knowing exactly what you’ll keep from it.

The 2026–27 resident tax rates

For Australian residents in the 2026–27 financial year (1 July 2026 to 30 June 2027), the rates are:

Taxable income	Rate on income in this band
$0 – $18,200	Nil
$18,201 – $45,000	15%
$45,001 – $135,000	30%
$135,001 – $190,000	37%
$190,001 and over	45%

The first $18,200 you earn each year is the tax-free threshold: no income tax at all. The second bracket was cut from 16% to 15% on 1 July 2026, and under current legislation it falls again to 14% from 1 July 2027, so most taxpayers see a small reduction two years running.

These rates are for residents for tax purposes. Working holiday makers and non-residents are taxed on different schedules, and they don’t get the tax-free threshold in the same way.

How progressive brackets really work

The single most common misunderstanding about tax is the fear that earning one dollar more will “bump you into a higher bracket” and cost you money overall. It doesn’t. Each rate applies only to the income inside its band.

Take someone on a $50,000 taxable income:

• The first $18,200 is taxed at nil: $0.
• The next $26,800 (from $18,201 to $45,000) is taxed at 15%: $4,020.
• The final $5,000 (from $45,001 to $50,000) is taxed at 30%: $1,500.

Total income tax: $5,520. Even though this person is “in the 30% bracket,” only their last $5,000 is taxed at 30%. A pay rise is always worth taking: you keep the majority of every extra dollar.

Marginal rate vs effective rate

Two numbers describe your tax, and they are not the same:

• Your marginal rate is the rate on your next dollar earned. For the $50,000 earner above, that’s 30%: it’s what an extra shift, bonus or pay rise gets taxed at.
• Your effective rate (or average rate) is total tax divided by total income. For the same person, $5,520 on $50,000 is about 11%.

The gap between the two is why “I’m on 30% tax” can be misleading: the average bite is far smaller than the top rate. When you’re deciding whether extra work or a salary-sacrifice arrangement is worth it, the marginal rate is the number that matters; when you’re budgeting, the effective rate is.

What the brackets don’t include

The rates above are income tax only. On top of them, most people also pay:

• The 2% Medicare levy on taxable income (reduced for low-income earners). See our Medicare levy guide for the detail.
• A compulsory HECS/HELP repayment if you have a study loan, worked through in the HECS/HELP guide.

And they don’t subtract tax offsets (such as the low-income tax offset), which can reduce the tax you actually pay. That’s why a payslip figure and a simple bracket calculation can differ.

Run your own numbers

To see the income tax and Medicare levy on any taxable income (plus your effective and marginal rate), use the income tax calculator. If you’d rather see your whole pay packet, including employer super and any study loan, the take-home pay calculator puts it all together.

These figures are drawn from the ATO’s published 2026–27 rates. They’re a general guide, not personal tax advice; confirm your position with the ATO or a registered tax agent.